Testimony of Roger Johnson
Agriculture Commissioner
House Bill 1118
Senate Agriculture Committee
Roosevelt Park Room
February 28, 2003

Chairman Flakoll and members of the Senate Agriculture Committee, I am Jeff Knudson, presenting testimony on behalf of Agriculture Commissioner Roger Johnson. I am here today in support of HB 1118, which will provide the Bank of North Dakota with authority to transfer unobligated interest buy down funds between the Beginning Farmer and Agriculture Partnership in Assisting Community Expansion (AG PACE) loan programs. Transfer ability between the programs already exists however; the current law only allows transfers during the last six months of the biennium.

In addition to farm real estate, the last Legislature expanded the Beginning Farmer Loan Program to include purchases of equipment and livestock. At the time of inception, the loan activity anticipated by this expansion was unknown. However, the beginning farmer chattel program is already showing great popularity and success since implementation. Activity in the real estate portion of this program has also increased during the last two years. The Agricultural Mediation Service reports an increase in their assistance to beginning farmers of nearly 100 percent during the last fiscal with the year end total being the highest since 1995. This encouraging trend in beginning farmer activity certainly illustrates the importance and success of investments in beginning farmer initiatives.

AG PACE is also an important agricultural loan program that I strongly support. The program provides a financing opportunity to encourage farm diversification, on-farm business development and expansion, irrigation development, nontraditional crop and livestock production, and value-added venture investments.

Loan demand in both of these programs is likely to vary due to a wide variety of factors. Federal farm policy changes, commodity and livestock market prices, production conditions, and new value-added initiatives may all contribute to cyclical activity levels in the two programs.

Passage of this bill will allow Bank of North Dakota to manage the limited interest buy down funds according to varying loan demands for these programs during the biennium. This management flexibility will help avoid a potential "stockpiling" of unfunded loans because of a funding shortage in one program when excess funds are available in the other program.

Chairman Flakoll and committee members, I urge a do pass on HB 1118. I would be happy to answer any questions you may have.