FSA has worked diligently to effectively address current circumstances in the farm loan program and has developed effective strategies for the future. An example of these strategies is our national delinquency training. We are confident that these efforts will be fruitful and our clients will reap the benefits of enhanced service at the local office.

Foreclosure on Civil Rights

Finally, last December the Secretary temporarily halted foreclosure sales on delinquent farm loans until a determination can be made on each case as to whether there is any evidence of discrimination or inconsistency in program delivery. These foreclosure sales will be delayed until the files have been reviewed for compliance with all program requirements as well as compliance with the Equal Credit Opportunity Act and USDA civil rights procedures and regulations. The sales will resume upon completion of the review on individual cases where the review plainly demonstrates that there are no issues regarding discrimination or inequitable treatment. The review is proceeding smoothly.

Concluding Remarks

Mr. Chairman, in closing, I want to re-emphasize the progress made since October 1, 1996. This has been an extremely difficult time for FSA employees. They have had all of their regular duties, plus reorganization, 1996 Farm Bill implementation, and Production Flexibility Contract sign-up to contend with. As I mentioned earlier, FSA processed a high volume of loans and helped many, many farmers this past year. I know that the members of the next panel have

some concerns with our programs, and we want to hear those concerns, and address them. Our goal is constant improvement. I just don't want all of the tremendous accomplishments and hard work of FSA employees to be forgotten. These dedicated employees have worked hard for rural America's farmers and ranchers.

We look forward to working with you to achieve the objectives of the loan programs and provide the assistance and service that family farmers so richly deserve.

I appreciate the opportunity to testify today and I will be happy to respond to your

questions.

STATEMENT BY HAROLD BOB BENNETT
TEXAS STATE EXECUTIVE DIRECTOR
FARM SERVICE AGENCY
FIELD HEARING

BEFORE THE

HOUSE COMMITTEE ON AGRICULTURE

SUBCOMMITTEE ON FORESTRY, RESOURCE CONSERVATION,
AND RESEARCH

FEBRUARY 21, 1997 - LUBBOCK, TEXAS

First, I want to thank you, Chairman Combest, for bringing the Subcommittee on Forestry, Resource Conservation and Research to Lubbock, Texas, for this field hearing. As you know, Lubbock is in the center of some of the most productive farmland in the country. Agriculture is one of the top three industries in Texas. Our agricultural industry is very diverse and intense, thus requiring large amounts of capital. This capital and credit comes from many

sources

both public and private. Hopefully, from today's comments and with the support of all of us involved in agricultural finance, we will be able to improve and enhance all of our roles in

agricultural financing.

I would like to begin by stating unequivocally that we, in the Farm Service Agency (FSA) of Texas, are working to improve our current record in delivering our part of agricultural credit to our producers. We are satisfied that we are in the process of making some very necessary and long-awaited changes and improvements that will alleviate many of the past problems. We feel these changes will enable us to be more efficient, more effective, and more expeditious in loan making and loan servicing.

We made a conscious decision early-on that extensive training would be necessary to accomplish many of our long-term goals. We knew this would cause some short-term problems

because we were taking employees out of their workplace. However, we felt the long-term benefits of a highly trained work force would ultimately prove to be invaluable and offset the short-term, negative effects. Our goal is to deliver a high quality and timely service to our

customers.

Before I get into the report on our current status and our plans for the future, I would like to point out the progress we have made to date.

As you know, Mr. Chairman, change is always hard, and we have had our share of troubles as we have implemented USDA's reorganization, however, by June 1996 we had made more loans to more producers for more dollars than at the same time the year before. We accomplished this in addition to reducing our delinquencies. At the same time we also were implementing disaster assistance in more than 200 counties affected by the drought, plus implementing the provisions of the Federal Agriculture Improvement and Reform Act of 1996 (1996 Farm Bill) in record time.

On the following pages we will provide exhibits and information on the current status of agricultural credit as it relates to those programs administered by the FSA in Texas. We have included all information as of December 31, 1996, that reflects the number of borrowers, the amount owed, delinquencies, and timelines required to complete the loan making process. We have provided pertinent information regarding the direct and guaranteed loan program, possible effects of the 1996 Farm Bill, and hopefully, some discussion points that will enable us to deliver our programs in a more efficient manner.

We have some very specific goals for 1997 and plans to achieve those goals. Our first goal is to complete all loans in the mandated time by April 1, 1997. To accomplish this will require cooperation by all interested parties, including producers, bankers, and the FSA. We will continue training all FSA employees to increase our pool of well-trained employees. We have already increased the number of employees with loan-approval authority which will expedite approval.

We have taken and will continue to seek many steps to provide assistance to our loan officers to expedite approval and the loan application process. We plan to use our contracting authority, possible reassignments of temporary details, and the use of overtime to provide the manpower to expedite loan processing.

Our second goal is to settle all guaranteed loan loss claims in a timely and current manner. We will continue training our employces and customers to prepare and analyze applications and loss claims in a proper and consistent manner. We have already begun the process of streamlining the review process and will continue to use District Directors and State Office personnel to expedite settlement of loss claims.

Our third goal is to continue the reduction of our delinquent direct loan accounts. These delinquent accounts have accumulated for several years. We hope to reduce the delinquent dollar amount by $100 million in 1997. We have several employees who spend a considerable amount of time in the resolution and settlement of these accounts.