Pub. 14 2019-2020 Issue 3

WWW.NEBANKERS.ORG 20 Shedding Light on the Farm Credit System, America’s Least Known GSE BERT ELY’S FARM CREDIT WATCH® © 2019 Bert Ely Restructuring the FarmCredit System Why Now and How to Do It T HE FARM CREDIT SYS tem (FCS), America’s least known government- sponsored-enterprise, has an excessively complex and increasingly obsolete organiza- tional structure. I wrote a White Paper for the ABA in August that explains why this structure needs to be simplified and how that can be accomplished. The FCS dates to 1916, when Congress established the Fed- eral Land Bank System, which consisted of 12 regional Federal Land Banks (FLBs) to provide real estate financing to farmers and ranchers. FLB loans were originated by local Federal Land Banks Associations (FLBAs), which were lending coopera- tives owned by their borrowers. The Farm Credit Act of 1933 authorized the creation of Pro- duction Credit Associations, or PCAs, tomake short-term loans to farmers and ranchers, as well as 12 regional cooperative banks and a Central Bank for Coopera- tives to lend to agricultural and rural utility cooperatives. The assigned territories for the PCAs often coincided with FLBA ter- ritories. The FLBA/PCA overlap led to the creation of local Agri- cultural Credit Associations