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3 

 the Food, Agriculture, Conservation, and Trade Act of 1990, and 

 developments in the general economy. 

 General Economic Developments 



Despite the recent recession, general economic developments 

 have worked, on balance, to help U.S. agriculture so far in the 

 1990's. Weak economic growth and sluggish employment conditions 

 restrained consumer incomes and domestic demand for agricultural 

 products. At the same time, however, lower interest rates and a 

 lower inflation rate have helped to keep a lid on farm expenses. 

 Economy-wide, short-term interest rates have declined to near 

 30-year lows resulting in lower interest rates for farmers. By 

 some measures, short-term bank lending rates available to 

 agriculture are at their lowest level since the early 1970 's. 



As you know, the Clinton Administration is working on an 

 economic package. Accordingly, I am not in a position to provide 

 you with the Administration's position on funding for specific 

 programs or activities. As soon as the President's fiscal year 

 1994 budget is released, I will be pleased to provide you with 

 the Department's views. Clearly the Clinton economic package 

 will be designed to help solidify the gains the economy has made 

 during the past few months and to help boost growth in rural 

 areas. Excess industrial capacity suggests that there is little 

 chance of rekindling inflation and little change in interest 

 rates is expected for farm borrowers. 



In other developed countries, particularly in the European 

 Community (EC) and Japan, economic growth is likely to be weak in 

 1993, limiting expansion in agricultural trade. However, there 



