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Capital Farm Credit Showcases Farm Credit Merger Problem

The Farm Credit System (FCS) is supposed to serve the entire country through its local associations, which are supposed to make sure that farmers, ranchers and producers have access to credit from a local source. That local source – the association – can best serve the needs of its clients because it’s close by; it understands the local economic pressures, the community and can keep an eye on things.

But what happens if the associations aren’t local to their clients?

Bad news. Last week, a rancher in Montana with a 16-year relationship with Capital Farm Credit in Texas was found to have committed wire fraud by fabricating the number of cattle he owned across his multiple operations in Oklahoma, Texas, Wyoming and Montana.

“Starting in 2015, Hartley began to inflate the amount of cattle he was running on those properties,” Drover’s Magazine reports. “Auditors from Capital Farm Credit attempted to schedule an inspection of Hartley’s cattle in July 2017. A month later the vice president of lending for Capital Farm Credit flew to the Wyoming ranch to inspect the cattle.”

It’s difficult for any credit institution to make sure the farmers and ranchers they serve are giving the right information. But it’s even harder to verify that information if the institution’s employees have to fly over a few states to get to the client.

Why is Capital Farm Credit setting itself up for failure? Capital Farm Credit serves all of Texas, and it was providing credit for the rancher’s ranch in Wyoming. Why wasn’t the ranch in Wyoming using credit from Farm Credit Services of America or Western AgCredit, both of which have branches in Wyoming? Wouldn’t it make more sense for a Wyoming ranch to have a Wyoming source of credit so that the lender can check in on the operation more easily? Why was Capital Farm Credit, under the jurisdiction of the Farm Credit Bank of Texas, making loans for operations outside of its jurisdiction?

To make matters worse, this is the second instance of “irregularities” from a Farm Credit institution in Texas. Lone Star ACA is still working through its “appraisal and accounting irregularities” once it discovered them more than a year ago.

The likelihood of missing irregularities is greater when the Farm Credit institution providing the credit isn’t local. And that’s the result of dozens of mergers between FCS associations since the 1980s. Since then, Farm Credit’s 900 associations have shrunk to only 80. Those associations, like Farm Credit Services of America, are gargantuan: Farm Credit Services of America has more than $28 billion in total assets.

While the associations get larger and larger, less and less attention is paid to local farmers, ranchers and producers that need guidance, and more importantly, credit. That’s especially the case with young, beginning and small farmers who often don’t get the attention they need from Farm Credit, even though it’s legally required to help them.

Congress can address this issue head-on: one, it can launch an investigation into the Farm Credit Bank of Texas to determine why it has failed in its oversight of its associations; and two, it can work on legislation to prevent further mergers between Farm Credit institutions so that they can actually serve their local farmers, ranchers and producers.

Farm Credit: Don’t Leave Young, Beginning and Small Farmers Behind

The Farm Credit System (FCS), as a government-sponsored enterprise (GSE) tasked with providing reliable access to credit for all American farmers, ranchers and producers, has special mandates. Arguably the most important mandate for the FCS is to provide reliable access to credit for young, beginning and small (YBS) farmers, ranchers and producers. The law is abundantly clear on this“Each Federal land bank association and production credit association shall prepare a program for furnishing sound and constructive credit and related services to young, beginning, and small farmers and ranchers.” Continue Reading

Lone Star ACA, a Farm Credit System (FCS) Association in Texas, Is In a Whole Heap of Trouble.

Last year it issued a Notification of Non-Reliance on Previously Issued Financial Statements, which is as bad as it sounds. Financial statements from 2016 and the first quarter of 2017 were to be disregarded and no longer relied upon due to, in Lone Star’s words, “appraisal and accounting irregularities.” Continue Reading

Thank You Senate For Passing a Farm Bill!

Every five years, Congress revisits the federal government’s agricultural policy. The House has passed its version of the Farm Bill already, and Reform Farm Credit is proud to congratulate the Senate on passing its own version as well!

The Senate deserves huge credit for this Farm Bill because it holds the Farm Credit System (FCS) accountable and makes it more secure and reliable. Continue Reading

The Farm Credit Blues?

Farm Credit’s sure isn’t singin’ the Blues with all the money they’re making on questionable home loans. But they might be singing Folk.

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Thank You House for Farm Bill Passage!

The Farm Bill, which updates government agriculture policy every five years, has passed the House of Representatives. The Senate will soon begin to deliberate on its own version of the Farm Bill.

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Senate Commits to Improving Farm Credit in Farm Bill

The Farm Bill is a large piece of legislation that, every five years, updates the federal government’s agricultural policy. And this year, the House and the Senate are working on their own versions of the Farm Bill, keeping good policy, getting rid of bad policy, and making improvements along the way.

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Farm Credit is Out of Bound and Out of Date

The Farm Credit System (FCS) is renowned for its mission creep and lending outside the bounds of the law. One only needs to look at its loans to huge telecoms, technology real estate investment trusts (REITs) and customers looking to buy luxury houses. It’s pretty clear that Farm Credit is way out of bounds.

But is it also out of date too? Continue Reading

Is Farm Credit Out of Touch?

Compeer Financial – if you heard that name, would you think of a local Farm Credit association helping local young, beginning and small farmers and ranchers?

It may come as a surprise, but Compeer Financial is a Farm Credit System (FCS) association. And this $20 billion behemoth is posting record profits. Continue Reading

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