WEDNESDAY, MARCH 17, 1982. FARMERS HOME ADMINISTRATION WITNESSES FRANK W. NAYLOR, UNDER SECRETARY, SMALL COMMUNITY AND RURAL DEVELOPMENT CHARLES W. SHUMAN, ADMINISTRATOR, FARMERS HOME ADMINISTRATION MICHAEL E. BRUNNER, ASSOCIATE ADMINISTRATOR NEAL SOX JOHNSON, ACTING DEPUTY ADMINISTRATOR, PROGRAM OPERATIONS CHARLES A. JEWELL, DEPUTY ADMINISTRATOR, FINANCIAL AND ADMINISTRATIVE OPERATIONS JAMES C. ANDERSON, ACTING DIRECTOR, BUDGET DIVISION JAMES. V. LOUGHRAN, ASSISTANT GENERAL COUNSEL, COMMUNITY DE- BACKGROUND OF FmHA Mr. WHITTEN. We are glad to turn to the Farmers Home Administration now. All of us on this Committee realize how important the Farmers Home Administration is to the rural areas of our country. Sometimes I am asked why the responsibilities of the Farmers Home Administration are as broad as they are. When I first came here there was $500 million authorized for farm housing that never had been implemented into a program at all. Someone who wanted to pass a housing program for urban areas put the authorization in to get farm votes and no one ever implemented it. The Congress then insisted and it progressed to where if you farmed, you were eligible. But if you farmed, frequently your finances were not at a level to make you eligible so we broadened the program to rural residents. Over the years, Members from the small town areas insisted that the Agriculture department was better qualified to handle the housing programs than any other organization. They feared that if rural problems got mixed in with the urban ones in the housing area that the city folks would come first because of their numerical superiority alone. So we have done all we could to keep an adequate housing program in both areas. You are familiar with the fact that this Subcommittee initiated the urban gardening program and studies of wholesale marketing facilities, 4-H Club work, and other efforts to assist the urban segment. The Department must have known we wanted to do something to show we were interested. So they cut all those projects out every year so we could put them back. We expect to put them back again this year. Just remember, with less than three percent of our population engaged in agriculture, it becomes difficult to get the support of an urban Congress for farm programs. I am disturbed at some of the policy changes we have seen proposed. I can't help but believe that somebody at the budget office level did not understand that meat, bread and potatoes are still basic. It is an amazing fact that only three percent could grow all of these things for us, make the heavy investment, take the great risks and now bear the costs which greatly exceed their income. Someone at the Department just has not understood that. I think history shows that if farm income goes down, the farmers fold and there is no one left to look after the land. After all, our real wealth is what nature has to give and not money. I appreciate the effort that many of you have made to meet our rural problems. I would like in your presentation for you to describe the changes in policy that you have made to meet these needs. I have heard complaints that you are slow in paying sometimes so I am going to let you tell it your way and only interrupt when you hit problem areas. But I do want to say at the outset that farming and the small farm are basic to our national prosperity. Right now, the picture is not good income-wise or otherwise. So the agency that deals with these economic programs is probably the most important part of the Department. We need other help but if the farmers don't have finances they can't farm. I am going to turn it over to Mr. Naylor, the Under Secretary. The reason we always have the Secretary's Office represented here is so policy questions can be answered by someone from the Secretary's Office and not someone under Civil Service. Mr. Naylor, we will let you proceed and present your case as you see it. We are interested in the success of your efforts. We know you folks have some problems with the Office of Management and Budget. Their intentions are probably good. First, you might introduce anyone here who is new to the Committee and we will have a biographical sketch inserted in the record. [The biographical sketches follow:] FRANK W. NAYLOR, JR., UNDER SECRETARY OF AGRICULTURE FOR SMALL COMMUNITY AND RURAL DEVELOPMENT Frank W. Naylor, Jr., has been Under Secretary of Agriculture for Small Community and Rural Development since May 20, 1981. He exercises general supervision over the Farmers Home Administration, the Rural Electrification Administration, including the Rural Telephone Bank, and of the Office of Rural Development Policy. He serves on the Policy and Coordination Council of the Department of Agriculture, chaired by Secretary John Block, and provides policy leadership for the Department and coordinates inter-departmental policy in the area of small community and rural development. Before accepting his present position, Mr. Naylor served since 1976 as Senior Vice President of the 11th Farm Credit District, Sacramento, California. In that post, he was responsible for administrative operations and services for three banking corporations that served a five-state area. Frank Naylor first came to Washington in 1969 to join the U.S. Department of Agriculture as Deputy Administrator of the Federal Crop Insurance Corporation. In 1972, he moved to the U.S. Veterans Administration as Executive Assistant to the Administrator, where he developed management alternatives for the delivery of improved medical services and other benefits to veterans. From 1973 to 1976, Mr. Naylor was Associate Administrator and Administrator of the Farmers Home Administration. His work involved managing a nationwide rural credit operation, including agricultural, mortgage, farm and community development loans. Before coming to Washington, Mr. Naylor was Staff Manager for the Metropolitan Life Insurance Company in Kansas City, Missouri. A native of Kansas, Mr. Naylor graduated from the University of Kansas, Lawrence, in 1961. He holds the Navy Commendation Medal, saw combat duty in Vietnam, and is a former national chairman of the Vietnam Veterans Committee. He has been active in the American Legion and several civic organizations, including the Chamber of Commerce. Mr. Naylor and his wife Karen have two children. CHARLES W. SHUMAN Charles W. Shuman was appointed administrator of Farmers Home Administration by President Reagan in April 1981. Shuman, 46, operated a cattle and grain farm with two brothers in Sullivan, Illinois, and was a member of the investment brokerage firm of Blunt, Ellis & Loewi of Decatur, Illinois. He served as Illinois State Director of Farmers Home from 1971 to September 1977. During that period, he also served temporarily as director of the agency's national finance office in St. Louis. Shuman is a graduate of the University of Illinois with a degree in agriculture, and was a delegate to the Illinois constitutional convention of 1970. Mr. Shuman and his wife, Mary, have two daughters: Carol, a sophomore at the University of Illinois, and Linda, a high school student. MICHAEL E. BRUNNER, AssoCIATE ADMINIStrator, Farmers Home ADMINISTRATION Michael E. Brunner was appointed associate administrator of the Farmers Home Administration by Secretary of Agriculture John R. Block on December 14, 1981. He had served in the Department since April 1981 as a departmental legislative officer specializing in agricultural marketing and inspection services. Before joining USDA, Mr. Brunner was director of congressional relations for the American Meat Institute in Washington, D.C. Previously he served as legislative assistant to Rep. Garry Brown (R.-Mich) from 1975 to 1977, and to Rep. Orval Hansen (R.-Idaho) from 1973 to 1975. Mr. Brunner served on the audit staff of the certified public accounting firm of Ernst and Ernst in Denver, Colo., from 1970 to 1972, then was assistant director of administrative services for the Education Commission of the States, also in Denver, in 1972 and 1973. Mr. Brunner was born on January 26, 1943, in Cleveland, Ohio. He is a graduate of Bowling Green State University, Bowling Green, Ohio, where he received his bachelor of science and master of business administration degrees. He also earned a master of public administration degree at George Washington University, Washington, D.C., and served as an accounting instructor on the faculties of the University of Indiana and Bowling Green State University. During military service as an army captain in 1968 and 1969, he was detachment commander of a preventative medicine unit in Korat, Thailand. Mr. Brunner and his wife Elizabeth, live in Arlington, Va., with their twin sons, age 11. He is active in community affairs, serving as a member of the Arlington County School Board. NEAL SOX JOHNSON Neal Sox Johnson was named Acting Deputy Administrator for Program Operations of Farmers Home Administration in January 1982 after having served as executive assistant to the administrator since April 1981. Johnson, 48, formerly lived in Arlington, Texas, where he was self-employed as a management consultant and real estate broker. He previously served with FmHA in Washington as executive assistant to the administrator from 1973 to 1977. After graduation from Henderson State University in Arkadelphia, Ark., in 1955 and service in the army, Johnson worked as a design draftsman in Texas and taught high school math and science in Arkansas. In 1962, he returned to his hometown of Murfreesboro, Ark., to become a partner and general manager of C & J Construction Company. He started his own company in 1966, and sold it in 1971. Johnson has been named in several editions of Who's Who in America for Universities and Colleges, Politics and Government. He and his wife, Carmen Louise, have three grown children. INTRODUCTION OF AGENCY WITNESSES Mr. NAYLOR. Mr. Chairman, thank you very much. We have always enjoyed the opportunity of working with you and your Committee and have had an excellent working relationship for many years. It has been my privilege to be affiliated with this Administration and prior Administrations and to have the opportunity to work with you. I have not brought a prepared statement for myself today. However, I do have with me Mr. Charles Shuman, the Administrator of the Farmers Home Administration, who is a presidential appointee. I am very proud that we have been able to bring him in to take on the very difficult and formidable task of managing the Farmers Home Administration. He is a farmer and has been active in farming for many years. He is also a first-rate manager and one with an excellent understanding and compassion for the needs of farmers in this country today. We have our 1983 budget before you. With your permission, I am going to ask Mr. Shuman to review the principal details of it with you and introduce the staff members that he has brought with him from the Farmers Home Administration. Mr. WHITTEN. That is good. Mr. Shuman. Mr. SHUMAN. Thank you, Mr. Chairman. Members of the Committee, it is a pleasure for me to appear before you here today and have this opportunity to discuss the fiscal year 1983 Budget for the Farmers Home Administration. I will introduce the people that I brought with me to help with this presentation this morning. On my left is Mr. Jim Anderson, Acting Director of our Budget Division. On his left is Mr. Charles Jewell, Deputy Administrator for Financial and Administrative Operations for the Farmers Home Administration; my Associate Administrator, Mr. Mike Brunner; and on the far right, Mr. Neal Sox Johnson, Acting Deputy Administrator for Program Operations. We also have with us today Mr. Jim Loughran, Assistant General Counsel, Community Development Division, Office of the General Counsel. I do have a prepared statement that has been distributed, so I won't read that at this time. I would appreciate that it be made a part of the record. Mr. WHITTEN. It will be included in the record. BUDGET HIGHLIGHTS Mr. SHUMAN. If I might, I will briefly highlight some of the major points in the Budget. As of the end of fiscal year 1981, the Farmers Home Administration had 1.4 million active borrowers carrying a total loan volume of about $55 billion of direct and guaranteed loans. We expect that this loan portfolio will exceed $60 billion by the end of this fiscal year. As we move into the second year of this Administration, the Federal Government will become less and less involved in the lives and decisions of individual citizens. We are going to be competing as a Federal Government for less resources, especially financial resources. At the same time, however, our national economy and our well-being will continue to be based, in large part, on the agricultural sector. We fully recognize the need for our credit programs to be considered in light of this Administration's policies of limiting the growth and involvement of the Federal Government in the dayto-day lives of every American. We in Farmers Home share with farmers themselves the belief that adequate income from farming, unhindered by burdensome governmental interference, is the number one goal of the Department of Agriculture. Our role in Farmers Home is to provide credit to farmers and other rural residents who are unable to obtain sufficient financing elsewhere at rates they can afford. Our first and foremost responsibility is to provide realistic credit counseling and servicing for our borrowers. We are placing greater emphasis on this basic mission of the agency. Another objective of the Farmers Home Administration's present policy is to provide greater assistance to our county office staffs. Mr. Chairman, we are requesting a total of almost $5.8 billion for all of our Farmers Home Administration programs in fiscal year 1983. This is somewhat less than you approved for the current year and envisions the termination of several of the smaller limited purpose programs. Now, if I may, I will turn to some of the specific requests by program in the budget for 1983 as presented by President Reagan and in his message of February 8th. The 1983 budget proposes a generally trimmer Farmers Home Administration program. However, the main line programs needed to provide a backup source of credit to farmers who cannot get credit from some other source remain strong. The overall Federal loan program dollar level needed to achieve these objectives in 1983 will be reduced somewhat through the increased participation of the private credit market through our improved loan graduation review procedures and subordination of Farmers Home Administration owned or held security. The 1983 budget request for loan authorizations in our farm program area is $3.9 billion. The farm operating loan level is estimated to be about $1.4 billion for 1982 and we are requesting over $1.5 billion for 1983. This is an increase in program level over the last several years which we think will come closer to meeting the real needs for operating credit. Farm operating loans would be the primary source of Farmers Home Administration credit for meeting annual operating expenses. |