Pub. 12 2017-2018 Issue 2

July/August 2017 23 Extraordinary Service for Extraordinary Members. ■ Bert Ely — continued on page 24 lending. That is, a loan to a farmer or rancher who is 35 years old or younger, who has been farming or ranching 10 years or less, and who is a small farmer or rancher (gross annual agricultural sales of less than $250,000) is counted three times—once as a young farmer (Y), again as a beginning farmer (B), and yet again as a small farmer (S). Worse, YBS data is based on individual loans rather than the overall borrower relationship. That is, a 33-year-old farmer (Y) who has been farming for eight years (B), who has gross annual agricultural sales of $230,000 (S), and who has three outstanding FCS loans—say a real estate loan, an equipment loan, and an operating loan—will get counted nine times in the FCA’s YBS data. Since 2015, the FCS has published aggregated loan data by borrower; in fact, good lending practice requires such an aggregation so that a lender can monitor its total credit exposure to a borrower. At the end of 2016, the FCA had 552,638 borrowers who had a total of 1,062,364 loans and loan commitments outstanding. That equates to an average of 1.92 loans per borrower; many so-called YBS borrowers probably have two or more loans outstanding. As further evidence of the multiple counting of YBS loans, as reported in the FCS’ Annual Information Statement, the sum of FCS loans and commitments outstanding at the end of 2016 to small farmers and ranchers (505,175) plus loans and com- mitments to young farmers and ranchers (193,601) plus loans and commitments to beginning farmers and ranchers (281,812) equals 980,588 loans and commitments, almost as many as the total number of loans and commitments (1,062,364) the FCS reportedly had outstanding at the end of 2016. The FCAwouldmuchmore accurately present YBS data by reporting the number of YBS borrowers and the amount lent to those borrowers in one of seven categories: Small, beginning, young, small and beginning, small and young, young and beginning, and finally small, beginning, and young. A much better sense of how little the FCS lends to smaller borrowers is evident from the table on page 54 of the FCS Annual Information Statement for 2016 at goo. gl/GA4R8R . This table provides a distribution of the number of FCS borrowers by the size range of the amount borrowed. It also shows the total amount lent by the FCS in each size range. For example, at the end of 2016, 425,256 borrowers in the $1 to $249,999 size range had borrowed a total of $32.925 billion from the FCS, for an average loan size of $77,424. Presumably, many of these loans financed rural homes, farm equipment, or perhaps some very small, part-time farming operations. At the other end of the scale, at the end of 2016, the FCS had lent at least $5million to each of 4,684 borrowers, for a total of $117.2 billion, 47 percent of the total amount of outstanding FCS loans at the end of 2016, for an average borrowing of $25 million. It is unlikely that any of these borrowers were classified as YBS borrowers.