Pub. 11 2016-2017 Issue 4

www.nebankers.org 20 Extraordinary Service for Extraordinary Members. F ARM CREDIT SYSTEM INSTITUTIONS DOMINATE THE ranking of the nation’s largest ag lenders. This grow- ing domination reflects the dramatic growth in the FCS’ share of total farm debt as reported in the last Farm Credit Watch. Visit http://bit.ly/AgLendingList for an integrated listing of the nation’s 100 largest commercial bank ag lenders and the 78 Farm Credit System (FCS) banks and associations, as of June 30, 2016. Of the 20 largest ag lenders, 16 are FCS institutions and only four are commercial banks: Wells Fargo, Rabobank, Bank of theWest, and Bank of America. Of the 100 largest ag lenders, 58 are FCS institutions and 42 are commercial banks. At the bottom of the list, only seven FCS direct-lending associations have a lesser amount of ag loans on their books than the 100th largest commercial bank ag lender. Given the pace at which FCS associations are merging, smaller FCS associations will continue to disappear into larger associations. The forthcomingmerger of AgStar, 1st FarmCredit, and Badgerland (reported in the last FarmCredit Watch) is just the latest example of consolidation within the FCS. Based on June 30, 2016, data, the merged association, to be called Compeer Financial, will be the third-largest FCS association and the third-largest ag lender in the United States. The right column in the linked table—farm loan concentra- tion—highlights a very unhealthy trend in U.S. ag lending: a larger and larger portion of ag loans are held on the books of FCS institutions that by virtue of their congressional charter are highly concentrated in ag lending. If American agricul- ture was to again experience financial distress comparable to what it experienced in the 1980s, that distress could easily be reflected in the finances of the FCS. The preventative for avoiding a repeat of the 1980s is not to broaden the lending powers of FCS institutions but instead to level the competi- tive playing field between commercial banks and the FCS, which not only will lead to a shift of ag lending to commercial banks, but also will give rural banks an opportunity to grow their loan portfolios. Bert Ely’s FARM CREDIT WATCH ® Shedding Light on the Farm Credit System, America’s Least Known GSE © 2016 Bert Ely FCS Lenders Dominate Ranking of Largest Ag Lenders