The Farm Credit Network - Lending Support for Rural America
By Charlie Middleton via Farm Credit Website
The Farm Credit Network - Lending Support for Rural America. Farm Credit is a nationwide network of borrower-owned lending institutions that provide farm loans, rural loans and other ag loans across the U.S.
The Farm Credit System is a nationwide network of borrower-owned lending institutions and specialized service organizations. Farm Credit provides more than $199 billion in loans, leases, and related services to farmers, ranchers, rural homeowners, aquatic producers, timber harvesters, agribusinesses, and agricultural and rural utility cooperatives.
Congress established the System in 1916 to provide a reliable source of credit for the nation's farmers and ranchers. Today, the System provides more than one-third of the credit needed by those who live and work in rural America.
Farmers, ranchers, agribusiness, rural homeowners and rural utilities depend on the Farm Credit System’s funding and services to produce the high quality food and agricultural products enjoyed in the United States and around the globe.
The Farm Credit mission is to provide a reliable source of credit for American agriculture by making loans to qualified borrowers at competitive rates and providing insurance and related services.
Nearing our 100th anniversary, we have:
- Assets in excess of $260 billion
- Nearly 500,000 member-borrowers
- Approximately 13,000 employees
- Coverage in every county in all 50 states plus Washington DC and Puerto Rico
History of Farm Credit
The commission's report documented a lack of adequate agricultural credit, where a farmer could readily secure loans on fair terms. The report led to various presidential and congressional studies, which included extensive analysis of other nations' rural credit systems.
The credit delivery method established by the 1916 Federal Farm Loan Act was based largely on Germany's Landschafts, which had operated since 1769 and appeared to be the most successful of the various European cooperative ag-credit systems.
During the pivotal congressional debate over an American agricultural credit system, nearly 100 different bills were introduced, which focused on three major approaches:
- Small, independent land banks, with federal charters but private capital. Proponents of this concept favored the non-government funding, but critics feared its built-in motive for high profits would not assure low rates to farmers.
- Twelve federal land banks owned by their farmer-borrowers, partly capitalized by the government and financed through the private purchase of tax-exempt bonds. Advocates maintained this cooperative structure would guarantee low rates, but critics disliked the government sponsorship and expense involved.
- Direct government loans to farmers, favored by the nation's farm organizations but opposed by most politicians.
Congressional proponents of these three approaches battled to a stalemate in 1914, which led to a Joint Committee on Rural Credits in 1915, which in turn drafted the final compromise adopted in 1916.
Lawmakers chose a cooperative credit structure based on 12 Federal Land Banks (FLBs), using $125 million in government seed money but financed by private capital from investors. One sidelight of the Farm Credit legislation is that it helped lawmakers prepare for more sweeping financial legislation. The chairman of the Joint Committee on Rural Credits was Rep. Carter Glass of Virginia, who teamed up with a colleague on the House Banking Committee, Rep. H.B. Steagall of Alabama, to write the Glass-Steagall Act of 1933 the basic legal structure for most of the nation's commercial banks.The Farm Credit Archive provides an online in-depth history of Farm Credit’s legacy of service and achievement. Read more.