WASHINGTON, D.C. — A review of the billion-dollar Farm Credit System (FCS) is under review in preparation of upcoming farm bill.

 

The FCS review is part of a series of meetings regarding the 2018 farm bill. The U.S. House Agriculture Committee has listened to panelists review the diversity of the funding, the security of the program and how it is used in rural America.

 

The FCS was formed in 1916 to provide a reliable line of credit to American farmers. It is a national program to provide loans to producers for rural housing, agricultural processing, farm-related businesses, agricultural and aquatic cooperatives, rural utilities and foreign and domestic companies involved in international agricultural trade.

 

“These loans improve the quality of life in our rural communities, providing clean drinking water, broadband for our schools and reliable energy for rural families and businesses,” said James Dodson, chair of the Farm Credit Bank of Texas board of directors.

 

“Farm Credit is financially sound and poses no threat to the federal treasury. We do not use federally appropriated funds. We are not guaranteed by the federal government. We are privately owned by our customers.”

 

He said the FCS has learned that agriculture has good and bad seasons, and it prepares for bad seasons during the good. “We expected this cycle would come and we built financial strength to meet it and fulfill the mission this committee has given us. We will do our part to help our customers through this difficult time.”

 

Dodson’s family has relied on loans from the FCS several times. In the 1950s, several years of drought caused his father to get a loan.

 

The local banks wouldn’t provide the loans because of the risk agriculture posed at the time. The FCS gave his father enough to seed and harvest a crop, saving the farm.

 

In the 1970s, when Dodson decided to start farming himself, he received an FCS loan to get started. He said his story is similar to the stories told by thousands of farmers across the country.

 

The FCS focuses loan programs to assist young and beginning farmers, he said, even during tough economic times. “We love working with young producers, helping them succeed,” said Doug Stark, president and chief executive officer of Farm Credit Services of America in Omaha, Neb.

 

He noted the FCS understands that beginning farmers may not have the equity needed to start a farm and keep it operational during tough times. Instead, the FCS looks at the applicant’s credit history, the repayment plan they have ready and connects them with a mentor – a program that has been found beneficial.

 

Stark said some of these loans have been made with little to no equity. Ranking Committee Member Rep. Collin Peterson (D-Minn.) said the FCS has benefited rural America by working with commercial banks to fund projects. He knows of two small hospitals in his district that were financed with a combination of funds.

 

‘Without the ability to work with commercial banks, the hospitals would never have opened. Dallas Tonsager, chair and CEO of the Farm Credit Administration, an independent federal agency that regulates the FCS, said it reviews the projects approved by the FCS for joint funding. In the last few years, there have been only six instances when they had to divest from a loan because it was outside the

mission of the FCS.

  

The FCS has about $250 billion in loans at this time. Tonsager said the current economic climate is being watched closely.