STAND. COM. REP. NO. 321

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 978
                                     




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Agriculture, to which was referred H.B.
No. 978 entitled: 

     "A BILL FOR AN ACT RELATING TO AGRICULTURE,"

begs leave to report as follows:

     The purpose of this bill, as referred to your Committee, is
to encourage private lenders to provide financing for diversified
agriculture by reducing private lender's risks through the
Department of Agriculture's ability to guarantee loans.

     Your Committee finds that agricultural lending poses higher
risks in comparison to conventional commercial lending due to
competition, increase government regulations, changing consumer
preferences, insect and disease pests, droughts, storms, and
other extremes of nature.  Your Committee further finds that with
the closures and downsizing of the State's sugar and pineapple
plantations, prime agricultural land are available for
diversified agricultural development and expansion.

     The proposed bill encourages private lenders to provide
financing for diversified agriculture as their risks are reduced
by the Department of Agriculture's loan guarantee.  This proposed
program waives the credit elsewhere process, which can be lengthy
and time consuming, and limits the interest charged on the loan
to two percent above the prime rate charged by the private
lender.  The ceiling of two percent over the prime rate ensures
that financing is provided at reasonable rates as the loan
guarantee reduces and limits the lender's risk.

 
 
                                 STAND. COM. REP. NO. 321
                                 Page 2

 
     Testimony in support of this bill was received from the
Department of Agriculture.
     As affirmed by the record of votes of the members of your
Committee on Agriculture that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
978 and recommends that it pass Second Reading and be referred to
the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Agriculture,



                                   ______________________________
                                   FELIPE P. ABINSAY, JR., Chair