Agricultural debt restructuring, accounting, and public policy: A study of the Farmers Home Administration

Abstract

Federal credit policies toward agriculture reflect the human values of maintaining the farm production sector largely as an industry characterized by small-scale, family farms. The Farmers Home Administration has implemented various credit programs designed to carry out this policy objective. As a result of the prolonged financial crisis in the farm economy, the agricultural community is becoming more aware of the controversies surrounding the mission of FmHA and its debt restructuring program. This paper discusses the debt restructuring program administered by the Farmers Home Administration (FmHA), as authorized by the Agricultural Credit Act of 1987, and amended by the recently enacted Farm Bill of 1990. It discusses the key provisions of the Agricultural Credit Act authorizing FmHA to establish a debt restructuring and debt forgiveness program aimed at achieving the public policy objective of keeping financially stressed farmers in business, whenever possible.