The FCS, America’s least known government-sponsored-enterprise, has an excessively complex and increasingly obsolete organizational structure. … Simplifying the structure of the FCS would improve its operating efficiency, which presumably would benefit its member/borrowers, while strengthening the FCA’s safety-and-soundness regulation of the FCS.
Browsing: Farm Credit System
In a white paper circulated recently on Capitol Hill, industry veteran Bert Ely called for an overhaul of the Farm Credit System.
As bankers know all too well, farmers and ranchers are suffering from a sustained period of low commodity prices, rising input costs, heavy rains and flooding, and more recently, trade issues that are harming agricultural exports. Not surprising, those factors have hurt farm income, which peaked in 2013. As in past cycles, sustained declines in farm income lead to increased cash-flow problems for farmers and ranchers, which in turn lead to rising credit-quality problems for ag lenders. Even though the FCS focuses on lending to financially stronger farmers, a key question is how well the FCS is acknowledging growing credit-quality problems in its loan portfolio and/or shedding weaker credits by calling loans and not renewing lines of credit.
A recent Farm Credit System loan for $2 million to finance a new Exxon gas station and convenience store in Sheridan, Wy., is almost certainly another example of an FCS lending abuse. This gas station is located at an Interstate highway interchange in a city with a population of about 18,000. While some farmers and ranchers may patronize the gas station and store, they are more likely gas up at a nearby farm co-op store.
Dallas Tonsager, chairman and CEO of the Farm Credit Administration died of lymphoma on May 21; he was 64. Tonsager was appointed to the FCA board by President Barack Obama on March 13, 2015, and designated by President Obama as chairman and CEO on November 22, 2016. Tonsager grew up on a dairy farm near Oldham, S.D., and later graduated from South Dakota State University with a Bachelor of Science degree in agriculture. Apart from serving on the FCA board, Tonsager’s public service included serving as the USDA’s undersecretary for rural development, a director of the Commodity Credit Corporation and USDA’s state director for rural development in South Dakota.
In a comment letter to the Farm Credit Administration today, the American Bankers Association called on the agency to make changes to how it reports data on young, beginning ad small farmers.
The American Bankers Association today wrote to House lawmakers in support of H.R. 1872, the Enhancing Credit Opportunities in Rural America Act.
Rep. Steve Watkins (R-Kan.) today introduced the Enhancing Credit Opportunities for Rural America Act (H.R. 1872), which would end taxation of interest earned from agricultural real estate loans.
Farm Credit Watch: In Reporting Record Income for 2018, the FCS May Be Underestimating Future Loan Losses
In its recently issued Annual Information Statement for 2018, the FCS reported after-tax profits for 2018 of $5.33 billion and $272 billion of loans outstanding at Dec. 31, 2018, up 5.1 percent from year-end 2017.
In a statement for the record before today’s House Agriculture Committee hearing on the rural economy, ABA called on lawmakers to ensure farmers’ ongoing access to adequate credit by updating the U.S. Department of Agriculture’s guaranteed farm loan programs.