Administration has temporarily shelved a plan that would have let its lenders make loans to farmers and ranchers outside their districts.

Since the government-sponsored Farm Credit System was created in 1916 to ensure that all farmers would have access to credit, its lenders have been prohibited from entering new regions without permission from lenders already operating there.

To offer borrowers more options, the Farm Credit Administration -- which regulates the system's 202 lenders -- has proposed dropping the geographic restriction and opening all markets to all Farm Credit lenders.

The change, first proposed about a year ago, was to be voted on by the system's three-member board in September. However, Farm Credit officials said this week that the so-called "customer choice" proposal was put on hold after Sen. Thad Cochran, R-Miss., asked that it be reviewed further.

The board will not revisit the proposal until 2000 at the earliest, according to a Farm Credit spokeswoman.

Recent comment letters have shown that Farm Credit lenders are sharply divided over the proposal. Supporters have said the change would let lenders retain customers who are expanding into other areas. They also argued that the new rule would position them to better compete against banks for larger farm credits.

But opponents complained that the rule change would only benefit large lenders with the resources to "cherry-pick" the best customers in other markets.

Commercial banks have also opposed the proposal. -- Alan Kline

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