AN EVALUATION OF HAWAII'S
AGRICULTURE LOAN SYSTEM
A. In general, based on the number and kinds of responses received to questionnaires sent to farmers, lenders, and major landowners, the agriculture loan system appears to be meeting the credit demands of the great majority of the agricultural community in Hawaii.
B. The system, however, may be improved in three areas:
(1) By responding to the needs of new farmers who have no farming experience;
(2) By ensuring that the three major lending sectors (banks, Farm Credit Services Hawaii, and government lenders) all participate in the system fairly and equitably; and
(3) By resolving the stalemate that exists with regard to the problem stemming from state-leased lands that has resulted in less credit being available to farmers.
C. The State may be able to provide more loan funds to farmers by adopting loan programs along the lines of those available in other states such as the "Aggie bond" program and the "Linked Investment Program".
II. Anticipated Questions
A. Will more loans be made available to farmers as a result of this study?
Answer: It is important to remember that there is a delicate balance that exists between the three major lending sectors in Hawaii. The legislature, in its attempt to assist farmers with more loan moneys must be very cognizant of this balance because the demise of any one of them could severely upset the farm loan market and its farmer beneficiaries.
B. Is there any hope for new farmers without any experience to obtain a farm loan?
Answer: Yes, the credit demand by inexperienced farmers is not being met by any of the three major lending sectors. More state funding to micro lenders who service inexperienced farmers would greatly improve the supply of funds to these farmers.
C. What else can be done to improve the loan system?
Answer: Better access to loan information. The Department of Agriculture is in the process of providing this very service so that farmers are more aware of the different types of available loan services.