Farm Credit Administration

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Farm Credit Administration

(FCA), an independent agency of the executive branch of the federal government that supervises and regulates the Farm Credit System (FCS) for American agriculture. The Farm Credit Act of 1971, which superseded all previous legislation, authorizes the FCS to provide long-term and short-term credit to farmers and their cooperatives. Long-term mortgage loans help farmers acquire property or refinance existing debts; short-term loans are needed to finance crop and livestock production and marketing. In addition, the FCS makes emergency crop and feed loans to farmers who cannot obtain funds from other sources, and also provides loans to agriculture-related businesses and for rural infrastructure. Legislation in 1985 separated the FCA from the FCS and made the FCA a regulatory body with respect to the FCS.

Credit used by farmers and cooperatives is provided in the FCS through a network of farm credit banks, federal land bank associations, production credit associations, and banks for cooperatives. The farm credit banks make loans to agricultural cooperatives for periods ranging from six months to three years. The loans are secured by warehouse receipts for crops or by lienslien,
claim or charge held by one party, on property owned by a second party, as security for payment of some debt, obligation, or duty owed by that second party. A lien may arise by agreement between the parties or by operation of law from the relation of the parties or the
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 on livestock. The land banks function as credit wholesalers, raising funds in the investment markets through the sale of bonds and lending the money to farmers at low interest rates. Production credit associations finance short-term credit associations, and banks for cooperatives finance cooperative marketing. Other components of the FCS include the Agricultural Credit Bank, agricultural credit associations, and federal land credit associations.

History

The origins of FCA and FCS date to 1916, when the Federal Farm Loan Bureau, the Federal Farm Loan Board, and Federal Land Banks were established in response to farmer requests for liberal credit facilities and low interest rates. A system for mortgage credit was created; 12 regional farm land banks were set up, with most of the original capital supplied by the government. It was intended that the farmer-borrowers should ultimately own the banks. An act of 1923 further extended federal aid to farmers, establishing 12 intermediate credit banks (one in the district of each land bank), with capital supplied by the government.

Six years later the whole structure of the land banks was severely hit by the Great DepressionGreat Depression,
in U.S. history, the severe economic crisis generally considered to have been precipitated by the U.S. stock-market crash of 1929. Although it shared the basic characteristics of other such crises (see depression), the Great Depression was unprecedented in its
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, with falling prices of farm products, increased debt delinquencies, and decline in the value of farms. In 1932 the government invested $125 million in the bonds of the land banks to bolster them and thus again became the majority stockholder. All then existing federal agricultural-credit organizations were unified into one agency, the FCA, by executive order in 1933. Congress authorized that agency to extend the system of farm-mortgage credit. Funds were made available for loans on easy terms for first or second mortgages—the so-called land bank commissioner loans—to debtors whose collateral was so low in value or so encumbered by debt as to make refinancing by the land banks unfeasible. The FCA was also authorized to establish 12 production credit corporations and banks for cooperatives. The result was a centralized source of farm credit.

A part of the Dept. of Agriculture after 1939, the FCA again became an independent agency in 1953. During the farm crisis of the 1980s, the Farm Credit Amendments Act (1985) gave the FCA more regulatory authority over the farm credit system and established a full-time FCA board of three persons, who are appointed for six-year terms. The Agricultural Credit Act (1987) provided federal assistance in response to a financial crisis affecting farmers and the FCS, and established the Farm Credit System Insurance Corporation, the Federal Agricultural Mortgage Corporation (Farmer Mac), and other institutions and requirements to strengthen the FCS.

References in periodicals archive ?
Farmer Mac's charter (Title VIII of the Farm Credit Act of 1971, as amended) provides that the Corporation's Class A Voting Common Stock may be held only by banks, insurance companies and other financial institutions or entities that are not Farm Credit System Institutions, and that only Farm Credit System Institutions may hold the Corporation's Class B Voting Stock.
Myers (NY) deserve great credit for the Farm Credit Act of 1933, rescuing American agriculture from an incredibly desperate banking situation and putting FC on the road to full cooperative ownership that has so greatly benefited agriculture ever since.
The FCA should take the additional step of sending a clear message to FCS lenders that it will not consider any 'investment' programs that go beyond the eligible loan purposes espoused in the Farm Credit Act that reflect the farm-related mission of this tax-advantaged government-sponsored enterprise.
The Farm Credit Act "must be brought into the 21st Century," Pellett said.
Programs like the MPF can, and will, be rationalized in terms of additional liquidity provided to primary mortgage lenders in exactly the same way that deregulation of covenants on the Federal Land Banks of the FCS were rationalized after the 1971 Farm Credit Act.
ii) The Federal Agricultural Mortgage Corporation or any entity chartered and operating under the Farm Credit Act of 1971 (12 U.