"As the average age of the family farmer in Iowa continues to climb, we need to encourage members of the next generation to stay on the farm and build their livelihoods in agriculture," Grassley said. "Helping to maintain independent family farmers will have a positive social and economic ripple effect in our small towns and rural areas."
The Agricultural Bond Enhancement Act would increase access to a low-interest lending program for beginning farmers. The loan program uses federal tax-exempt "aggie" bonds to finance low-interest loans made available through private lenders participating in the program. These aggie bonds are subject to the volume cap for industrial revenue bonds and must compete with industrial projects for bond allocation. As a result, aggie bond availability is severely limited in many states.
The bi-partisan, bi-cameral bill introduced today would remove aggie bonds from under the private activity bond cap and, in turn, free lending authorities to extend a greater number of aggie bond loans. Grassley and Sen. Kent Conrad introduced the measure in the Senate. Reps. Jim Nussle and Leonard Boswell advanced the bill in the House of Representatives.
Grassley called aggie bonds "important tools for first-time farmers who need capital to buy farmland and equipment." In Iowa, the program is a proven success. To date, it has loaned $262.3 million to 2,603 qualified beginning farmers. The default rate has been only 1.5 percent of the number of loans and 1.75 percent of the dollar volume.
Grassley first pushed for pilot projects in 1981 to establish the aggie bonds program. The program was re-authorized several times and introduced in other states during the 1980s. In 1993, Grassley won congressional approval to make the aggie bond program permanent. Grassley also led efforts in 1996 to expand the lending program to allow first-time farmers to qualify for aggie bonds to purchase family farms from their parents or other relatives. He also expanded eligibility by doubling the size of farmland that a person could already own and still qualify for the lending program. Last fall, Grassley won approval to raise the cap for private activity bonds.
In partnership with his son, Robin, Grassley is the only working family farmer in the U.S. Senate. He is a senior member of the tax-writing Finance Committee and serves on the Senate Agriculture Committee.