FARM CREDIT

FACTS

Reform Farm Credit’s mission is to make sure that America’s oldest government-sponsored enterprise (GSE) stays true to its mission to support American agriculture. Unless there is proper oversight and reform of Farm Credit, taxpayers will be on the hook for a bailout, farmers’ access to credit will be greatly reduced, and American agriculture will suffer. We can’t let that happen.

US TAXPAYERS AT RISK THROUGH FEDERAL BAILOUT

In 1987, the Farm Credit System was bailed out by US taxpayers to the tune of $4 billion. At the time, the FCS was worth $40 billion. Today, the Farm Credit System is worth $382 billion; if FCS needed another bailout, it would cost taxpayers $38.2 billion – a 955% increase from 1987.

1987 $4 BILLION US TAXPAYER BAILOUT
$4B
FCS WORTH $40 BILLION+ IN 1987
$40 Billion+
POTENTIAL $38.2 BILLION BAILOUT
$38.2 Billion
FCS WORTH $382 BILLION TODAY
$382 Billion
  • Fitch Ratings, one of the three major credit ratings agencies, gave Farm Credit a negative outlook, but still a AAA rating due to its status as a government-sponsored entity (GSE), benefitting from implicit government support.

  • Following an investigatory hearing by the House Committee on Agriculture, the Farm Credit System’s regulator, the Farm Credit Administration, revealed that the Farm Credit System was “vulnerable to a market crisis.”

  • On September 24, 2013, the US Treasury approved an additional $10 billion line of credit for the Farm Credit System – with no questions asked. In October 2014, the System asked for even wider loan-making authority.

Voices For Reform

“They came to my office to talk to me and I brought up some of the loans that were very questionable loans, I got the feeling that they were very embarrassed by the issues that I brought up with them.”

US Senator Chuck Grassley (R-IA)

"The Farm Credit System was founded a century ago as a government-sponsored enterprise to provide credit for farmers – but it has strayed from its central mission and instead is pocketing big profits."

US SENATOR ELIZABETH WARREN (D-MA)

“Providing loans to large corporations, to non-farm enterprises and to wealthy individuals and families for a variety of non-farm investments goes well beyond what the Farm Credit System was set up to do.”

Ralph Nader, political activist and consumer advocate

REGULATORY AND TAX ADVANTAGES CREATE AN UNEVEN PLAYING FIELD

If the Farm Credit System were a bank, it would be the 10th largest in the country – and nobody seems to notice. Its tax advantages, unparalleled access to taxpayer-backed credit, consolidation, and lack of regulation imperils taxpayers.

  • The FCS made $6 billion in profits in 2020 but paid only $172 million in federal, state and local taxes. That’s an effective tax rate of only 2.8 percent. 

  • Like Fannie Mae and Freddie Mac, the Farm Credit System is a government-sponsored enterprise (GSE) which benefits from the implicit backing of the U.S. Government and taxpayers

  • Since 1987, the number of Farm Credit associations serving rural America has dropped from roughly 400 to 67.

  • The Farm Credit Administration (FCA), the FCS’s regulator, has not had a full governing Board since May 2019.

2020 FCS LOANS TO YOUNG BEGINNING AND SMALL FARMERS

For 50 years, Farm Credit has had to furnish sound and constructive credit for young, beginning and small farmers, ranchers and producers. But in that time, Farm Credit has not done enough to help these groups which form the bedrock of American agriculture. 

1 in 5 dollars
In 2020, fewer than 1 in 5 dollars loaned by Farm Credit went to a small farmer.

2020 Dollars Loaned to Farmers

SHARE OF DOLLARS LOANED BY FCS IN 2020
TO SMALL FARMERS (18.8%)

0%
% LOANED TO SMALL FARMERS

SHARE OF DOLLARS LOANED BY FCS IN 2020
NOT TO SMALL FARMERS (81.2%)

0%
% LOANED NOT TO SMALL FARMERS

SHARE OF DOLLARS LOANED BY FCS IN 2020 TO SMALL FARMERS (18.8%)

SHARE OF DOLLARS LOANED BY FCS IN 2020 NOT TO SMALL FARMERS (81.2%)

  • TO SMALL FARMERS 18.8%
  • NOT TO SMALL FARMERS 81.2%

GROWING LOANS FOR BIG BUSINESS AND LUXURY HOUSING, SHRINKING LOANS FOR YOUNG, BEGINNING AND SMALL FARMERS

Farm Credit System loans, far from their mission to support small local farmers, are being used to finance the purchase of luxury properties and huge multinationals like Verizon, AT&T, Rayonier Inc., Cyrus One Inc. and more.

  • Farm Credit proudly advertises that it extends loans for “that second home on the beach or that mountain retreat you’ve always wanted,” such as a $25 million property on only 2 acres in Pebble Beach, California.
  • A Farm Credit Bank issued a $725 million loan to telecom giant Verizon to finance its purchase of a European cellular company.
  • The same Farm Credit Bank issued a $1.55 billion loan to an investor-owned company specializing in “server farmers” – data storage centers.
  • Only a few years later, Farm Credit extended financing to an energy company supplying power for a Facebook data center.
  • Since 2016, the total number of FCS loans to young, beginning and small farmers (YBS) has decreased while total assets held by Farm Credit has increased. Why is Farm Credit growing while ignoring the farmers it was created to serve?