Farm Credit System
Encyclopedia
The Farm Credit System is a federally chartered network of cooperative
s and related service organizations that lends to agricultural producers, rural homeowners, farm-related businesses, and agricultural, aquatic, and public utility cooperatives in the United States
. Federal oversight by the Farm Credit Administration
(FCA) is designed to provide for the safety and soundness of FCS institutions.
in 1916. Current authority is in the Farm Credit Act of 1971
(P.L. 92-181, as amended; 12 U.S.C. 1200 et seq.).
Consistent with this of serving rural America, it also make loans for the purchase of rural homes, to finance rural communication, energy and water infrastructures, to support agricultural exports, and to finance other eligible entities.
s (ACAs) that in turn provide short-, intermediate-, and long-term loans, and 9 Federal Land Bank Associations (FLCAs) that in turn provide long-term loans, to farmers, ranchers, producers and harvesters of aquatic products, rural residents for housing, and certain farm-related businesses. As government-sponsored enterprise
s, their combined debt stood at US$ 61.9 billion as of July 1997.
There exist 4 Farm Credit Banks (FCBs):
FCBs were created on July 6, 1988, in 11 of the 12 then-existing FCS districts when the Federal Land Bank and Federal Intermediate Credit Bank in each district merged. The mergers were required by the Agricultural Credit Act of 1987.
, which has the authority of an FCB and provides loan funds to 4 ACAs, as well as the authority of a Bank for Cooperatives (BC) that provides loans to of all kinds to agricultural, aquatic, and public utility cooperatives.
(ACA) obtains funds from a Farm Credit Bank (FCB) or an Agricultural Credit Bank (ACB) to provide short-, intermediate-, and long-term credit to farmers, ranchers, producers and harvesters of aquatic products, and to rural residents for housing. An ACA also makes loans to these borrowers for basic processing and marketing activities, and to farm-related businesses.
The ACA is the result of the merger of a Federal Land Bank Association (FLBA) or a Federal Land Credit Association (FLCA) and a Production Credit Association (PCA) and has the combined authority of the two institutions. All ACAs operate with a parent-subsidiary structure, with the ACA as the parent and a wholly owned PCA and FLCA as subsidiaries.
(FFCBFC) markets the securities — chiefly bonds and discount notes — that the banks sell in the Nation’s capital markets to raise loan funds. This is how FCS institutions obtain the majority of their loan funds.
(GSE) that provides a secondary market
in agricultural loans such as mortgages
for agricultural real estate and rural housing. The company purchases loans from agricultural lenders, and sells instruments such as mortgage-backed securities
(MBSs) backed by those loans.
They were created by the Federal Farm Loan Act
of 1916. On May 20, 1988, the FLB of Jackson was placed in receivership and liquidated. As a result of the Agricultural Credit Act of 1987
, on July 6, 1988 the 11 remaining FLBs merged with the Federal Intermediate Credit Banks (FICBs) in their respective districts to form Farm Credit Banks (FCBs).
They were created under the Agricultural Credits Act of 1923 . As a result of the Agricultural Credit Act of 1987
, on July 6, 1988 11 of the 12 then-existing FICBs merged with the Federal Land Banks (FLBs) in their respective districts to form Farm Credit Banks (FCBs).
They were created under the Farm Credit Act of 1933
. The last standalone BC in the FCS, the St. Paul Bank for Cooperatives, merged into CoBank
on July 1, 1999.
They were created under the Farm Credit Act of 1933
. All present-day PCAs are now subsidiaries of ACAs.
FLBAs either merged with Production Credit Associations (PCAs) to form Agricultural Credit Associations (ACAs) or became direct-lender Federal Land Credit Associations (FLCAs) when Farm Credit Banks (FCBs) transferred their authority to make long-term mortgage loans to their affiliated FLBAs.
Cooperative
A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit...
s and related service organizations that lends to agricultural producers, rural homeowners, farm-related businesses, and agricultural, aquatic, and public utility cooperatives in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Federal oversight by the Farm Credit Administration
Farm Credit Administration
The Farm Credit Administration is an independent agency of the Executive Branch of the United States Government. It regulates and examines the banks, associations, and related entities of the Farm Credit System, a network of borrower-owned financial institutions that provide credit to farmers,...
(FCA) is designed to provide for the safety and soundness of FCS institutions.
Authorization
Congress established FCS as a government sponsored enterprise when it enacted the Federal Farm Loan ActFederal Farm Loan Act
The Federal Farm Loan Act of 1916 was a United States federal law aimed at increasing credit to rural, family farmers. It did so by creating a federal farm loan board, twelve regional farm loan banks and tens of farm loan associations...
in 1916. Current authority is in the Farm Credit Act of 1971
Farm Credit Act of 1971
The Farm Credit Act of 1971 recodified all previous acts governing the Farm Credit System , a cooperatively owned government-sponsored enterprise that provides credit primarily to farmers and ranchers.- Background :...
(P.L. 92-181, as amended; 12 U.S.C. 1200 et seq.).
Mission
Its mission is to provide a permanent, reliable source of credit to American farmers, ranchers, producers or harvesters of aquatic products, their cooperatives, and farm-related businesses. It does so by making appropriately structured loans to qualified individuals and businesses at competitive rates and providing financial services and advice to those persons and businesses.Consistent with this of serving rural America, it also make loans for the purchase of rural homes, to finance rural communication, energy and water infrastructures, to support agricultural exports, and to finance other eligible entities.
Farm Credit Banks
The Farm Credit Banks (FCBs) provide loan funds to 80 Agricultural Credit AssociationAgricultural Credit Association
In the United States, the Agricultural Credit Association is an institution of the Farm Credit System that has direct lending authority to make short-, intermediate-, and long-term loans to agricultural producers, rural homeowners and some farm-related businesses.Example: AgStar Financial Services...
s (ACAs) that in turn provide short-, intermediate-, and long-term loans, and 9 Federal Land Bank Associations (FLCAs) that in turn provide long-term loans, to farmers, ranchers, producers and harvesters of aquatic products, rural residents for housing, and certain farm-related businesses. As government-sponsored enterprise
Government-sponsored enterprise
A government-sponsored enterprise is a financial services corporation created by the United States Congress. Their function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent...
s, their combined debt stood at US$ 61.9 billion as of July 1997.
There exist 4 Farm Credit Banks (FCBs):
- AgFirstAgFirstAgFirst Farm Credit Bank, headquartered in Columbia, South Carolina, provides funding and financial services to 20 Agricultural Credit Associations in 15 eastern states and Puerto Rico...
- AgriBankAgriBankAgriBank, FCB, is the largest of five banks within the National Farm Credit System. It oversees agricultural lending in a district that stretches from Ohio to Wyoming and Minnesota to Arkansas. From its headquarters in downtown St. Paul, Minnesota, AgriBank serves as a wholesale lender and...
- Farm Credit Bank of TexasFarm Credit Bank of TexasFarm Credit Bank of Texas, located in Austin, Texas, is a wholesale financing institution that is part of the cooperatively owned nationwide Farm Credit System...
- U.S. AgBankU.S. AgBankU.S. AgBank, Farm Credit Bank based in Wichita, Kansas, is a financial institution, part of the Farm Credit System lending to Farm Credit Services organizations serving Arizona, California, Colorado, Hawaii, eastern Idaho, Kansas, Nevada, New Mexico, Oklahoma, Utah, and western Wyoming.Like other...
FCBs were created on July 6, 1988, in 11 of the 12 then-existing FCS districts when the Federal Land Bank and Federal Intermediate Credit Bank in each district merged. The mergers were required by the Agricultural Credit Act of 1987.
Agricultural Credit Banks
There exists an Agricultural Credit Bank (ACB), CoBankCoBank
CoBank, ACB, a part of the United States Farm Credit System, is an agricultural credit bank serving cooperatives in the agricultural sector. It lends money to farm credit associations, agricultural businesses, and rural utilities, who collectively own CoBank. It also owns 100% of Farm Credit...
, which has the authority of an FCB and provides loan funds to 4 ACAs, as well as the authority of a Bank for Cooperatives (BC) that provides loans to of all kinds to agricultural, aquatic, and public utility cooperatives.
Agricultural Credit Associations
An Agricultural Credit AssociationAgricultural Credit Association
In the United States, the Agricultural Credit Association is an institution of the Farm Credit System that has direct lending authority to make short-, intermediate-, and long-term loans to agricultural producers, rural homeowners and some farm-related businesses.Example: AgStar Financial Services...
(ACA) obtains funds from a Farm Credit Bank (FCB) or an Agricultural Credit Bank (ACB) to provide short-, intermediate-, and long-term credit to farmers, ranchers, producers and harvesters of aquatic products, and to rural residents for housing. An ACA also makes loans to these borrowers for basic processing and marketing activities, and to farm-related businesses.
The ACA is the result of the merger of a Federal Land Bank Association (FLBA) or a Federal Land Credit Association (FLCA) and a Production Credit Association (PCA) and has the combined authority of the two institutions. All ACAs operate with a parent-subsidiary structure, with the ACA as the parent and a wholly owned PCA and FLCA as subsidiaries.
Federal Land Credit Association
A Federal Land Credit Association (FLCA) obtains funds from a Farm Credit Bank (FCB) or an Agricultural Credit Bank (ACB) to make and service long-term mortgage loans to farmers and ranchers, and to rural residents for housing. An FLCA also makes loans to these borrowers for basic processing and marketing activities, and to farm-related businesses. Most present-day FLCAs are now subsidiaries of ACAs; only nine FLCAs operate independently.Funding Corporation
The Federal Farm Credit Banks Funding CorporationFederal Farm Credit Banks Funding Corporation
The Federal Farm Credit Banks Funding Corporation is an entity within the Farm Credit System that manages and coordinates the sale of system-wide bonds and notes in the national financial markets. Since the FCS, by law, is not permitted to accept customer deposits, these bonds and notes are the...
(FFCBFC) markets the securities — chiefly bonds and discount notes — that the banks sell in the Nation’s capital markets to raise loan funds. This is how FCS institutions obtain the majority of their loan funds.
Farmer Mac
The Federal Agricultural Mortgage Corporation (FSMC, Farmer Mac) is a government-sponsored enterpriseGovernment-sponsored enterprise
A government-sponsored enterprise is a financial services corporation created by the United States Congress. Their function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent...
(GSE) that provides a secondary market
Secondary market
The page applies to the finanical term; For the merchandising concept, see Aftermarket .The secondary market, also called aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold....
in agricultural loans such as mortgages
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
for agricultural real estate and rural housing. The company purchases loans from agricultural lenders, and sells instruments such as mortgage-backed securities
Mortgage-backed security
A mortgage-backed security is an asset-backed security that represents a claim on the cash flows from mortgage loans through a process known as securitization.-Securitization:...
(MBSs) backed by those loans.
Historical entities
There are several entities which have been authorized by law but which have been subsumed by other entities, which usually retain their authority.Federal Land Banks
The Federal Land Banks (FLBs) provided long-term mortgage credit to farmers and ranchers, and later to rural homebuyers.They were created by the Federal Farm Loan Act
Federal Farm Loan Act
The Federal Farm Loan Act of 1916 was a United States federal law aimed at increasing credit to rural, family farmers. It did so by creating a federal farm loan board, twelve regional farm loan banks and tens of farm loan associations...
of 1916. On May 20, 1988, the FLB of Jackson was placed in receivership and liquidated. As a result of the Agricultural Credit Act of 1987
Agricultural Credit Act of 1987
The Agricultural Credit Act of 1987 was enacted in response to the severe financial crisis of the early- to mid-1980s, which affected both farmers and their lending institutions...
, on July 6, 1988 the 11 remaining FLBs merged with the Federal Intermediate Credit Banks (FICBs) in their respective districts to form Farm Credit Banks (FCBs).
Federal Intermediate Credit Banks
The Federal Intermediate Credit Banks (FICBs) discounted farmers’ short- and intermediate-term notes made by commercial banks, livestock loan companies, thrift institutions, and Production Credit Associations.They were created under the Agricultural Credits Act of 1923 . As a result of the Agricultural Credit Act of 1987
Agricultural Credit Act of 1987
The Agricultural Credit Act of 1987 was enacted in response to the severe financial crisis of the early- to mid-1980s, which affected both farmers and their lending institutions...
, on July 6, 1988 11 of the 12 then-existing FICBs merged with the Federal Land Banks (FLBs) in their respective districts to form Farm Credit Banks (FCBs).
Bank for Cooperatives
A Bank for Cooperatives (BC) provides lending and other financial services to farmer-owned cooperatives, rural utilities (electric and telephone), and rural sewer and water systems. A BC is also authorized to finance U.S. agricultural exports and provide international banking services for farmer-owned cooperatives.They were created under the Farm Credit Act of 1933
Farm Credit Act of 1933
The Farm Credit Act of 1933 established the Farm Credit System as a group of cooperative lending institutions to provide short-, intermediate-, and long-term loans for agricultural purposes...
. The last standalone BC in the FCS, the St. Paul Bank for Cooperatives, merged into CoBank
CoBank
CoBank, ACB, a part of the United States Farm Credit System, is an agricultural credit bank serving cooperatives in the agricultural sector. It lends money to farm credit associations, agricultural businesses, and rural utilities, who collectively own CoBank. It also owns 100% of Farm Credit...
on July 1, 1999.
Production Credit Association
A Production Credit Association (PCA) delivered short- and intermediate-term loans to farmers and ranchers, and to rural residents for housing. A PCA also made loans to these borrowers for basic processing and marketing activities, and to farm-related businesses. A PCA obtained funds from an FCS bank to lend to its members. PCAs own their loan assets.They were created under the Farm Credit Act of 1933
Farm Credit Act of 1933
The Farm Credit Act of 1933 established the Farm Credit System as a group of cooperative lending institutions to provide short-, intermediate-, and long-term loans for agricultural purposes...
. All present-day PCAs are now subsidiaries of ACAs.
Federal Land Bank Associations
The Federal Land Bank Associations (FLBAs) were lending agents for Federal Land Banks (FLBs), the Farm Credit Banks (FCBs) and the Agricultural Credit Bank (ACB). FLBAs originated and serviced long-term mortgage loans to farmers and ranchers, and to rural residents for housing. FLBAs did not own the loan assets but originated loans on behalf of the FLBs/FCBs/ACB with which they were affiliated.FLBAs either merged with Production Credit Associations (PCAs) to form Agricultural Credit Associations (ACAs) or became direct-lender Federal Land Credit Associations (FLCAs) when Farm Credit Banks (FCBs) transferred their authority to make long-term mortgage loans to their affiliated FLBAs.
Financial Assistance Corporation
The FCS Financial Assistance Corporation (FAC) issued uncollateralized bonds, notes, debentures, and similar obligations, guaranteed as to the timely payment of principal and interest by the Secretary of the Treasury and backed by the full faith and credit of the United States, to provide funds to financially stressed FCS institutions. All bonds have been called or have matured as of June 2005. The Financial Assistance Corporation's charter was canceled by the FCA Board as of December 31, 2006.External links
- Federal Farm Credit Banks Funding Corporation - detailed information on the System's financial performance.
- MidAtlantic Farm Credit website
- AgFirst Farm Credit Bank website
- AgriBank website
- Farm Credit Bank of Texas website
- CoBank ACB website
- Farm Credit Administration
- History of Farm Credit System
- American AgCredit website
- Farm Credit News - Information about the Farm Credit System
- RSS Feed for Farm Credit System Insurance Corporation Meeting Notices and Rule Changes from The Federal Register