Farm Credit System

The system made up of cooperatively owned financial institutions in districts covering the United States and Puerto Rico that finance farm and farm related mortgages and operating loans. Institutions within each district specialize in farmland loans and operating credit, or lending to farmer-owned supply, marketing, and processing cooperatives. FCS institutions rely on the bond market as a source of funds. The FCS may also finance the processing and marketing activities of these borrowers, certain farm-related businesses, and agricultural, aquatic, and public utility cooperatives. It is chartered under authorities in the Farm Credit Act of 1971, as amended, but does not receive any direct government funding. The System provides about one-fourth of the total credit used by U.S. farmers, ranchers, and cooperatives. Historically, the FCS consisted of a Federal Land Bank (FLB), a Federal Intermediate Credit Bank (FICB) and a Bank for Cooperatives (BC) in each of the 12 districts across the nation. Within each district, Federal Land Bank Associations (FLBA) and Production Credit Associations (PCA) served as local lenders for the FCS providing farm real estate and operating credit, respectively. A severe financial crisis led to the enactment of the Agricultural Credit Act of 1987, which provided federal financial assistance to weak institutions in the FCS, but required the FCS to streamline its operations as a condition for assistance. As a result, each district was required to merge its FLB and FICB to form a Farm Credit Bank (FCB). For FLBAs and PCAs that share a similar geographical territory, stockholders were given the option of merging institutions to form an Agricultural Credit Association (ACA). The Central Bank for Cooperatives and 10 of the 12 BCs also agreed to a merger forming a National Bank for Cooperatives (CoBank).

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