Farm Credit Administration

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Farm Credit Administration

The Farm Credit Administration (FCA) is an independent agency of the Executive Branch of the federal government. It supervises and coordinates the Farm Credit System, which is a centralized banking system designed to serve U.S. agricultural interests by granting short- and long-term credit through regional banks and local associations. Although initially capitalized by the federal government, the banks and associations that make up the Farm Credit System are now financed entirely through stock that is owned by members, borrowers, or the associations. The FCA ensures the safe operation of these lending institutions and protects the interests of their borrowers.

The Farm Credit System was established in 1916 in response to the unique credit needs of farmers. Federal land banks were established to provide adequate and dependable credit to farmers, ranchers, producers or harvesters of aquatic products, providers of farm services, rural homeowners, and agricultural associations. During the 1930s, the Depression and falling farm prices increased debt delinquencies and led to a serious decline in farm values. Many loan companies and credit institutions failed. In 1933, President franklin d. roosevelt directed Congress to create the FCA to oversee the entities that grant credit to farmers and ranchers. All government farm credit programs, including the land banks and intermediate credit banks, were unified under the new agency, which was established by the Farm Credit Act of 1933 (U.S. Pub. Law 73-76, 48 Stat. 257).

The modern FCA derives its authority from the Farm Credit Act of 1971 (12 U.S.C.A. § 2241 et seq.), which superseded all prior authorizing legislation. The FCA examines the lending institutions that constitute the Farm Credit System to certify that they are sound. It also ensures compliance with the regulations under which the Farm Credit institutions operate. To that end, it is authorized to issue cease-and-desist orders, levy civil monetary penalties, remove officers and directors, and impose financial and operating reporting requirements. It may directly intervene in the management of an institution whose practices violate the Farm Credit Act or its regulations. It also may step in to correct an unsafe practice or to assume formal conservatorship over an institution.

The FCA is managed by the Farm Credit Administration Board, whose three full-time members are appointed to six-year terms by the President of the United States, with the advice and consent of the Senate. The board meets monthly to set policy objectives and to approve the rules and regulations that govern the FCA's responsibilities.

The FCA also manages the Federal Agricultural Mortgage Corporation, known as Farmer Mac. According the FCA web site, Farmer Mac provides a secondary market for agricultural real estate and rural housing mortgages. It guarantees prompt payment of principal and interest on Securities representing interests in, or obligations backed by, mortgage loans secured by first liens on agricultural real estate or rural housing. It also guarantees securities backed by the guaranteed portions of farm ownership and operating loans, rural business and community development loans, and certain other loans guaranteed by the u.s. department of agriculture.

As of January 1, 2003, according to the FCA web site, the Farm Credit System was composed of Five Farm Credit Banks that provide loan funds to 81 Agricultural Credit Associations (ACAs), and 13 Federal Land Credit Associations (FLCAs). ACAs make short-, intermediate-, and long-term loans, and FLCAs make long-term loans. The Farm Credit System also had one Agricultural Credit Bank (ACB), which has the authority of an FCB and provides loan funds to five ACAs. In addition, the ACB makes loans of all kinds to agricultural, aquatic, and public utility cooperatives and is authorized to finance U.S. agricultural exports and provide international banking services for farmer-owned cooperatives.

The Farm Credit Administration web site offers extensive information about its roles and duties at www.fca.gov.

Cross-references

Agricultural Law.

References in periodicals archive ?
From 2009 to 2010, agricultural banks and the Farm Credit System saw their ROE rise about one percentage point.
CRS Report RS21278, Farm Credit System, by Jim Monke.
Citing the deepening agricultural crisis, the Farm Credit System announced the new bank would serve as "the central policy-making institution for the nationwide cooperative lending system.
The Farm Credit System is capitalized in two ways: the banks sell bonds on Wall Street at comparatively low interest rates, which enables them, theoretically, to loan money to farmers at reduced rates; and the borrowers purchase stock in their associations by leaving as much as 10 percent of their loans on deposit in return for shares.
With nearly USD100 in total assets, AgriBank is a bank within the national Farm Credit System and is owned by 17 affiliated Farm Credit Associations.
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is the national trade association of the Farm Credit System and represents the System's legislative and regulatory interests.
For the first time in decades, Farm Credit System (FCS), the nation's single largest lender to agricultural producers and the ag industry has organized and launched a national Communications initiative.
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On March 10, 2016, the FCA board of directors voted to approve changes to modify certain regulatory capital requirements for Farm Credit System banks, including CoBank.

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