Chapter 7: Borrowing and Credit: 1970-1979

In the early 1970s, many analysts were grimly forecasting that the world's need for food would outstrip its productive capacity. This view was widely accepted during the decade and was one basis for policies that encouraged rapid expansion of production and exports. Most analysts now believe that the world's capacity to produce food, augmented by technological advances, will be adequate for the foreseeable future. The problems of hunger are now seen as more related to income distribution and local political or production problems rather than to a systemic shortage of global supplies.

The Senate Agriculture Committee confronting these issues in the 92nd Congress was chaired by Senator Herman Talmadge, a Democrat from Georgia. Talmadge had taken the helm upon the death of Senator Allen Ellender of Louisiana in July 1972. Senator Talmadge represents a continuation of Southern Senators chairing the Committee in an unbroken line from the 84th Congress in 1955, when Ellender of Louisiana became chair to the 100th Congress in 1987, when Senator Patrick Leahy of Vermont assumed the chairmanship after Senator Jesse Helms of North Carolina. When Senator Talmadge became Chairman, the committee consisted of eight Democrats and six Republicans. The geographical distribution of the members of the Committee was six from the South, four from the Central States, three from the West, and Senator Aiken of Vermont continuing to represent the Eastern States.

Assisting the Senators, the Agriculture Committee staff stood at seven in 1970. The Committee had a chief clerk, a counsel, an economist, an assistant chief clerk, and three clerical assistants. It was during this decade that the staff of the Committee began to increase rapidly. The Committee staff rose from seven in 1970 to 21 in 1975, and 32 by 1980. It is during this period that records first indicate minority staff members in addition to majority staff. By 1980, the committee could boast a staff director, a minority staff director, a chief economist, an economist, a press secretary, a general counsel, two assistant counsels, and a legal assistant, eight professional staff members, a research assistant, a finance secretary, a printer, a hearing clerk, and ten staff assistants.

Beginning the decade with the Agricultural Act of 1970, the Agriculture Committee departed from traditional supply control techniques of acreage allotments. Cropland set-aside rules replaced allotments for grains and cotton. Loan rates were set low enough to be near the world market price so as not to preclude commercial export sales, as they had in some earlier periods. Domestic wheat marketing certificates were continued, but in a modified version that preceded the deficiency payment provisions enacted in 1973. This legislation also placed, for the first time, a statutory limit on the annual amount of farm program payments that could be made to any one individual, $55,000 per person per crop.

Spending on agricultural programs, which in 1970 stood at a little over $5 billion annually, rose to just over $11 billion annually at the close of the decade. The peak, however, came in fiscal year 1986 when spending reached $31 billion. In contrast, outlays over the decade of the `60s fell in the $2-4 billion range. (Historical Tables: Budget of the United States Government, Fiscal Year 1998, Washington, D.C., Government Printing Office, 1997, Table 3.1, Outlays by Superfunction and Function: 1940-2002, pp. 42-49.)

It was the Agriculture and Consumer Protection Act of 1973 that set the traditional pattern for later farm bills. It was a truly omnibus farm bill (incorporating commodity price support provisions, P.L.-480 extension, export reporting requirements, soil conservation, and food stamp program expansion), and had a four year life. The omnibus nature of the legislation created a political coalition of support from farm as well as urban interests. The four-year life span put the next farm bill on the congressional agenda the year after the presidential election, thereby preventing it from becoming entangled in election year politics.

From 1960 to 1970 the farm population declined from fifteen million to nine million and dropped from 8.7 percent of the total U.S. population to under five percent. Net farm income from farming rose from just over $11 billion annually to $14 billion. Farmers assets' including land doubled during this period from $174 billion to $279 billion by 1970. Clearly, the agricultural community had undergone significant change. (Economic Report of the President, Washington, D.C., Government Printing Office, 1997, pp. 408-409.)

The 1973 act made several important changes to existing farm programs. First, the limit on farm program payments, established in 1970, was continued at lower level of $20,000 per person. Second, the concept of target prices and deficiency payments was introduced. (Target prices are price levels guaranteed by the Federal Government, and deficiency payments are made to qualifying farmers whenever market prices fall below target prices.) With deficiency payments, loan rates could be kept below world market prices but farm income could be supported at levels sufficient to cover their production costs. This legislation provided a substantial shift toward market oriented farm policy that coincided with an upsurge in export demand. Third, direct disaster payments for production shortfalls of wheat, feed grains, and cotton programs were added.

The Food and Agriculture Act of 1977 continued the market-oriented loan and target price policies of the 1973 legislation, as well as payment limitations, but at levels limited to $50,000 per person. Exports had become an increasingly important market and source of income to America's farmers, and an important positive element in the nation's trade balance. However, export markets can be unstable, and unexpectedly slow growth in foreign demand compared to more rapidly growing production resulted in low prices and created pressure for higher support levels in the 1977 legislation. The instability problem of a market-oriented agriculture was addressed by the establishment of an extended storage program for grains, known as the farmer-owned reserve. The farmer-owned reserve provided economic incentives for farmers to isolate their grain from the market when prices were depressed and release the grain to commercial buyers when short supplies created sufficiently high market prices.

During most of the 1970s, the U.S. benefited from rapidly expanding world markets for agricultural exports. As a result of this growth in demand, U.S. farm prices and incomes strengthened and agricultural surpluses declined. Washington's 1971 decision to "float" the dollar effectively cut the price of U.S. products and helped start the export boom of the 1970s. To ensure that the United States remained competitive in expanding foreign markets, Congress enacted the Agricultural Export Trade Expansion Act of 1978 (P.L. 95-501), which created four major initiatives to foster and expand U.S. agricultural exports. The legislation authorized intermediate export credit programs, the establishment of U.S. trade offices around the world, told the Secretaries of State and Agriculture to jointly raise the level of agricultural representation abroad from attache to counselor and provided eligibility for short-term agricultural export credit to the People's Republic of China.

In the area of research and extension, the Rural Development Act of 1972 (P.L. 92-419), further broadened USDA authorities to include work in rural development and small farm agriculture. The Rural Development Act of 1972 recognized the growing diversity of needs in rural America by expanding existing programs and authorizing new programs designed to improve job opportunities, to increase incomes through investment resources, and to generally enhance the quality of rural life. Among its provisions, this Act authorized the FmHA to make loans to rural residents for small businesses, to guarantee loans made by commercial lenders for rural business and industry, to increase the authorization for water and waste disposal grants, to raise the population limit on towns included in FmHA-financed systems to 10,000 and to make loans for other essential community facilities.

Additionally, in 1973, Congress expanded the Rural Electrification Administration's (REA) ability to finance its rural electric and telephone programs. One amendment to the Rural Electrification Act of 1973 established a revolving fund incorporating current assets and each year's loan repayments as a source of funds to make direct loans at subsidized interest rates. The amendment increased the interest rate on loans. Another amendment authorized REA to guarantee loans made to rural electric and telephone cooperatives by other Government and private lenders. These loan guarantees account for most of the financing obtained by these cooperatives today. Today the REA has largely achieved its objective of providing electric and telephone service to rural areas in the United States. Nearly 99 percent of all the farms in America are electrified, with REA-financed loans, cooperatives serving almost 25 million consumers. In addition, 95 percent of all farms today have telephone service with REA financing serving over 15 million telephone subscribers. (U.S. Department, Office of Communications, Agriculture Fact Book 1997, Washington, D.C., Government Printing Office, 1997, p. 83.)

In the late 1960s and early 1970s, several Government studies and congressional hearings were initiated in response to concerns about the adequacy and efficiency of the Federal-State agricultural research system. Specific criticisms pointed both to a lack of coordination, to duplication of research efforts, and to the lack of long-term planning. In response to these criticisms, in 1977, Congress passed The National Agricultural Research, Extension, and Teaching Policy Act, as title XIV of the Food and Agriculture Act of 1977.

This Act reiterated the historic role of the Department of Agriculture as the lead federal agency for agricultural research. The Act also initiated several new programs of research including a competitive research grant program oriented toward basic research and available to researchers outside the traditional land-grant institutions, a special nonformula grant program directed to selected high-priority research topics such as energy or small farm operations, and the National Food and Human Nutrition Research and Extension Program which includes the employment of professional and paraprofessional aides to engage in direct nutrition education for low income families.

In addition, the act set up two new advisory panels. The joint Council on Food and Agricultural Sciences has the primary responsibility of fostering coordination of agricultural research, extension, and teaching activities of the Federal Government, the States, colleges and universities, and other public and private institutions and persons involved in the food and agricultural sciences. The National Agricultural Research and Extension Users Advisory Board is assigned responsibility to review and assess the policies, plans, and goals of research and extension programs.

Responding to growing concerns about land and water conservation in the 1970s, Congress enacted the Land and Water Resources Conservation Act of 1977(P.L. 95-192), commonly referred to as the Resources Conservation Act or RCA. Analysis of resource data to develop and implement the initial RCA program stimulated some change in the national debate on conservation. These analyses showed that despite intensive control efforts, erosion was still occurring at unacceptable levels on large portions of the country's cropland. The Senate Agriculture Committee took the lead in using this information to redefine the conservation agenda by creating new and innovative approaches to solving this ongoing problem. The Act required the Soil Conservation Service to conduct a continuing appraisal of soil, water, and related resources, and to use that appraisal as the basis for developing a national comprehensive soil and water conservation program.

Renewed attention now focused on the national forests. The Forest and Rangeland Renewable Resources Planning Act of 1974 (P.L. 93-378) established a comprehensive long-range planning process for the national forests. The Act directs the Secretary of Agriculture to assess the forest and rangeland resources of the United States every 10 years and requires a recommended Renewable Resources Program to be prepared and submitted to Congress every 5 years. The program, in concert with other Federal, State and local efforts, addressed the resource problems identified in the Assessment. This program, together with the President's Statement of Policy, provides general direction for the management of the national forests and for budget requests of the Forest Service.

As an important component of the Committee's jurisdiction over the U.S. Forest Service, the Senate Agriculture Committee has been involved in wilderness legislation when it affects acquired national forest lands. The Committee played an integral part in the enactment of the Eastern Wilderness Act of 1975 (P.L. 94-148) which designated more than 200,000 acres of wilderness areas on the eastern national forests. In the 98th Congress, the Committee reported, and Congress passed, bills to add more than 350,000 acres of wilderness in 10 States to the National Wilderness Preservation System.

The National Forest Management Act of 1976 (P.L. 94-588) amended the RPA by requiring an integrated management plan for each unit of the National Forest System. In this Act, Congress gave explicit guidance on the processes to be followed and the considerations to be included in developing these plans. The plans for each national forest are to be coordinated, through regional plans, with the RPA Assessment and RPA Program. Finally, the Cooperative Forestry Assistance Act of 1978 (P.L. 95-313) consolidated and clarified the Forest Service programs for assisting private forest owners and State agencies. Technical and financial assistance for rural landowners was separated from assistance for urban forestry projects. The programs of coordinated control for insects and diseases and for forest fires were clarified. A new program was established to assist State resource agencies in developing long-range integrated resource management plans that could be coordinated with the RPA Assessment and RPA Program for the National Forests.

During this decade, diet and nutrition were high on the Committee's agenda. For example, the Food and Agriculture Act of 1977 contained a major subtitle, the National Food and Human Nutrition Research and Extension Program, which encouraged the Department of Agriculture to conduct more human nutrition research, establish a national nutrition education program and, with federal health officials, develop a system to monitor America's nutritional status.

The Agriculture and Consumer Protection Act of 1973 (P.L. 93-86) additionally expanded food stamp eligibility and provided for nationwide implementation of the program, requiring all counties that were still offering commodities to convert to food stamps. The Food Stamp Act of 1977 (P.L. 95-400) revamped the program, eliminating the purchase requirement for all households and simplifying qualifying standards. Although the new law also capped annual spending and reduced the universe of potentially eligible households, elimination of the buy-in requirement caused a net expansion of participation to those who had always qualified but had simply not signed up before. By 1996, the program had grown to about 25 million participants and a cost of over $26.5 billion.

Separate programs aimed at supporting low-income pregnant and lactating mothers and their young children also were evolving during this period. The first effort, launched administratively by the Agriculture Department in 1969, distributed certain types of commodities to pregnant women and infants. This new effort was eventually written into the Food and Agriculture Act of 1977 (P.L. 95-113) as the commodity supplemental food program (CSFP).

A similar program for the same clientele known as the special supplemental food program for women, infants, and children (WIC) would soon overtake CSFP in both caseload and funding. Since its creation, WIC has grown into a $1.5 billion yearly effort providing special food packages, health screening, and nutritional counseling.

Between 1970 and 1980, total spending for all child nutrition grew from about $2.4 billion to more than $8 billion; the Federal contribution alone had climbed during the period from $750 million to over $4.7 billion. The largest federally-supported child nutrition program by far was for school lunches, which by the 1995-96 school year served an average of nearly 26 million students daily in more than 94,000 schools.

The Committee generally gained its present name, size, and jurisdiction as a result of the Senate committee reorganization of 1977. It was during this period that the Committee on Agriculture and Forestry took on the additional title of Nutrition. From 1825 until 1884, nearly 60 years, the name of the committee was the Committee on Agriculture. "Forestry" was added in 1884, and the name Committee on Agriculture and Forestry lasted until 1977, some 93 years. By the year 2000, the Committee will have had its present name, the Committee on Agriculture, Nutrition and Forestry, for 23 years.

As production increased and exports rose, farmers increasingly looked to the federal government for an ongoing supply of affordable credit. The Farm Credit Act of 1971(P.L. 92-181) recodified all the Acts that had established the System and broadened its lending authorities. In addition, changes made were to modernize the System to meet changing and projected farm and rural credit needs.

The 1972 Rural Development Act was also a response to the growing demand for affordable credit. Among its most important provisions, this Act broadened the role of FmHA by authorizing it to guarantee farm loans made by commercial lenders and by raising the lending limit on a farm operating loan. These provisions reflected growing Congressional concern about providing adequate financial assistance not only to farmers but to the greater rural community as well.

Finally, the Agricultural Credit Act of 1978 (P.L. 95-334), added a new major emergency credit program to deal with the problem of farmers being squeezed by increasing costs and declining income. The economic emergency program authorized FmHA to make or guarantee loans up to $400,000 to agricultural producers to provide temporary credit assistance to those who otherwise would not be able to maintain a viable agricultural enterprise. Reflecting concern about the cost of other FmHA programs, Congress also changed the interest rate for farm ownership loans to reflect the government's cost of borrowing. The changing nature of government and growth of the federal debt were soon to bring wrenching change to the relatively easy credit period of the 1970's.

By 1979, at the beginning of the 96th Congress, Senator Talmadge had been Chairman since January 1971, spanning nearly the entire decade. The Committee had changed little over the decade, despite the death of Senator Hubert Humphrey in January 1978. At the outset of the 96th Congress, the Committee consisted of ten Democrats and eight Republicans, including Senator Richard Lugar of Indiana, who had joined the Committee during the previous Congress. The Committee consisted of seven members from the West, six from the South, four from the Central States, and Senator Patrick Leahy of Vermont representing the East. Senator Leahy joined the Committee at the beginning of the 94th Congress in 1975, continuing Vermont's unbroken representation on the Agriculture Committee begun by Senator George Aiken in 1941.

In 1979, at the end of the 95th Congress, there were seven subcommittees. The Subcommittee on Environment, Soil Conservation and Forestry was chaired by Senator James Eastland of Mississippi; the Subcommittee on Agricultural Credit and Rural Electrification was chaired by Senator Edward Zorinsky of Nebraska; the Subcommittee on Agricultural Production, Marketing, and Stabilization of Prices was chaired by Senator Walter Huddleston of Kentucky; the Subcommittee on Agricultural Research and General Legislation was chaired by Senator Patrick Leahy of Vermont; the Subcommittee on Rural Development was chaired by Senator Richard Clark of Iowa; the Subcommittee on Foreign Agricultural Policy was chaired by Senator Richard Stone of Florida; finally, the Subcommittee on Nutrition, created during the 95th Congress, was chaired by Senator George McGovern of South Dakota. (Committee on Agriculture, Nutrition, and Forestry, United States Senate, Legislative Calendar, January 1981, p. III.)