OCR Text |
Show the funds, to make loans to settlers on either pub- lic or private lands in reclamation projects. Titles I and II of the Bankhead-Jones Farm Ten- ant Act, as amended, and the provisions of the Water Facilities Act of August 28, 1937, as amended, authorize three types of Farmers Home Administration loans applicable to the credit needs of settlers, in addition to those needs which can be met with private and other credit. 1. Real-estate loans for the purchase and de- velopment of farms may be made for the full cost of purchasing and developing family type units. These loans are scheduled for repayment in 40 years on an amortized basis. Administratively, the loans are limited to $12,000. Real-estate loans made by private lenders on family type units may be insured by the Farmers Home Adminis- tration; the amount of these loans may not exceed 90 percent of the cost of purchasing and devel- oping the units. 2. Water facility loans to individuals and asso- ciations may be made for the installation of irri- gation and farmstead water facilities. Repay- ment schedules on these loans are limited to 20 years. Funds may be included for the prepara- tion of land for irrigation. 3. Production and subsistence operating loans may be made for the purchase of livestock, seed, feed, fertilizer, farm equipment, supplies, and other similar purposes. These loans must be re- paid within 5 years and cannot exceed $3,500 to any one borrower in 1 year. The total amount outstanding to any borrower cannot exceed $5,000. The amount of capital needed by the settler in developing an irrigated farm on new land will be influenced greatly by the general level of eco- nomic activity, size and type of farm, amount of land preparation required, and the number and complexity of farm irrigation structures required. As in the case of any business venture character- ized by slow capital turn-over and therefore large annual fixed costs, the time in the economic cycle at which the capital investment is made will have a profound effect on the financial success of the undertaking. An estimate of the capital required to acquire, develop, and equip a family-sized farm, made by the Farmers Home Administra- tion based on prices and costs of 1949, placed the figure at $23,000 to $25,000.9 The types and amounts of financial aid avail- able through the FHA when coupled with the larger net worth10 of current settlers enhance the prospects of successful settlement and farm de- velopment. These prospects can be achieved only if ample funds are appropriated to the FHA. Critical Factors in the Extension of Credit.-In determining the basis on which credit should be made available to settlers the following should be considered: 1. Irrigated farms should be financed as units, so that the land, the buildings, the irrigation works, and the stock, if any, are considered as a going concern, which is the security for the loan. 2. Credit should be readily available when and as needed to promote efficient farm development and operation, and to enable the settler and his family to maintain from the outset a reasonable level of living. 3. To the extent practicable, freedom of action, by the settler would be permitted under the credit program. Technical guidance and assist- ance should be made available and adherence to it required as necessary to the protection of loans. 4. Funds advanced should be repayable in full, but the amount due annually should be limited to that which can be paid from antici- pated farm income, and should be regulated by the automatic application of a formula reflecting significant changes in farm income. The amount and sources of capital will vary widely among farms of a given project depending on the circumstances and desires of the individual settler and the planned rate of farm develop- ment. But the fact must be faced that a sizable capital investment is required in developing a new irrigation farm, that availability of credit in 9 Credit Needs in the Columbia River Drainage Area, 1950 through 1955-Farmers Home Administration, U. S. Department of Agriculture, July 13, 1949, p. 3. 10 (a) Estimated by local agricultural leaders and FHA. officials to average $5,300 in the Columbia Basin drainage area during 1950-55. It was also estimated that about $ 11,000 of loans per farm would be required at 1949 prices. (fe) April 10, 1950, announcement of sale of farm units on federally owned lands of Columbia Basin project required applicants to have a net worth of at least $3,700. 169 |