Rural America’s customer-owned partner, the Farm Credit System, celebrated its 90th anniversary of service on July 17, the date when President Woodrow Wilson signed the Federal Farm Loan Act in 1916.
Today, with more than $108 billion in loans financing agriculture and its related cooperatives, rural homebuyers, small community water and waste disposal systems, rural electric and telephone systems and the export of U.S. farm commodities, the Farm Credit System is the oldest and largest financial cooperative in the nation.
“For 90 years, the Farm Credit System has served agriculture and rural America as a dedicated, reliable, competitive, and customer-owned source of credit and related services. We look forward to a bright future for U.S. agriculture and America’s rural communities,” said Wayne Lambertson, a Maryland farmer who currently serves as chairman of the Farm Credit Council, the system’s trade association.
The legislation President Wilson signed into law in 1916 created a system of 12 regional Farm Loan Banks that would grant loans to farm cooperative associations, allowing farmers to borrow from their local institution, using their land and improvements as collateral.
President Wilson said on signing the Federal Farm Loan Act: “The farmers, it seems to me, have occupied hitherto a singular position of disadvantage. While they sustained our life, they did not, in the same degree with some others, share in the benefits of that life. Therefore, this bill … puts them upon an equality with all others who have genuine assets and makes the great credit of the country available to them.”
Today, the Farm Credit System is a network of 101 borrower-owned lending institutions and related service organizations serving U.S. agriculture and rural America. These institutions specialize in providing credit and related services to farmers, ranchers, and producers or harvesters of aquatic products. In addition, the Farm Credit System provides financing for the processing and marketing activities of these borrowers as well as to rural homeowners, certain farm-related businesses, and agricultural, aquatic, and public utility cooperatives.
Unlike commercial banks, Farm Credit institutions do not take deposits. The system raises its funds through the sale of bonds in the nation’s securities markets bringing money from the national and international money markets to rural America.
As the system’s customer-owners repay their loans, the bonds are retired and Farm Credit investors are repaid. The system’s lending institutions are subject to full examination and regulation by an independent federal agency, the Farm Credit Administration.