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Session:
State Capitol, Room 110 Juneau, AK 99801-1182 Phone: (907) 465-4859 Fax: (907) 465-3799 Send E-Mail |
Loans from the Agricultural Revolving Loan Fund
Posted: March 4, 2000
Contact: Representative John Harris's office at (907) 465-4859.
Agriculture is important to Alaska, but because state statutes have not kept pace with the changing needs and outside financial pressures, our agricultural loan program is in jeopardy. Sponsor Substitute for House Bill 203 works to answer these needs, protect the state’s interest in the ARLF by making it more attractive to borrowers, and continue to help Alaska’s farmers by making the following changes, as embodied in the Finance Committee Substitute:
- It changes the fixed 8 percent interest rate to one “comparable to that charged by other agricultural lending institutions in the state…” This change will allow the ARLF to compete on an equal footing with other loan funds, such as the federal Farm Service Agency and the Alaska Rural Rehabilitation Corporation.
- It allows the board to set guidelines to restructure loans for individual farmers who have experienced an agricultural disaster. The CS removes a requirement that such restructuring could only happen after area-wide disasters had been declared in three out of five years.
- A third change redefines the composition of the loan committee to replace a loan officer with a board member, since the loan application would have been previously processed by the loan officer.
- The CS adds an immediate effective date. Alaska’s agricultural revolving loan fund has approximately $6 million continuing to revolve to and from Alaska’s farmers. It has about five years of useful life left at the rate it is being used. A reduction in the interest rate will reduce the returning income to the fund; however, changes in CS SSHB 203 (Fin) will help to ensure that distressed farmers will be able to continue to meet their payments on schedule. In addition to funding loans, the ARLF is used to fund the operating budget of the division of agriculture, which is a significant reason why the loan fund is not performing ideally. However, some additional income to the ARLF is expected through the sale of agricultural land.