Pub. 9 2014-2015 Issue 3

September | October 2014 27 Extraordinary Service for Extraordinary Members. to small farmers is suspect, too. At the end of 2012, the FCS had 36,270 loans and loan commitments outstanding to “small” farmers that exceeded $250,000 each. These loans and commitments totaled $18.885 billion, or an average of $521,000 per loan and commitment— more than twice the maximum annual agricultural sales of a “small” farmer. It is quite likely that many of these “small” farmers with large FCS loans are owners of country estates with minimal if any farm sales, weekend farmers with sub- stantial non-farm income such as doc- tors and lawyers, or hunting and fishing clubs that financed their property with an FCS loan. As one FCS association president told me years ago, if the land has the “potential” to be farmed, the FCS can finance it. In her June 25 testimony to a House Agriculture subcommittee, FCA Chair- man Jill Long Thompson claimed that the FCS “continued to show gains in loan dollars outstanding and loan numbers outstanding to YBS producers,” yet she provided no insight into who these borrowers really are, such as doctors, lawyers, and hedge-fundmanagers. She then stated that “despite these gains, YBS results as a percentage of the [FCS’] total farm loans have either declined or remained flat over the past few years. These results likely reflect the shrink- ing pool of YBS farmers in the United States.” While the Ag Census reported that the number of farms with annual sales of less than $250,000 shrank 6.7 percent from 2007 to 2012, to 1.854 million farms, it is clear from the YBS data that few of those farmers borrow from the FCS, or at least they are not identified as such. As FarmCreditWatch (FCW) readers know so well, most of the FCS’ outstanding loan balance, as well as its loan growth in recent years, has come from large agricultural enterprises as well as non-farm businesses. FCS Consumer Lending Exploding An analysis of the FCS’ YBS data pub- lished in the FCS Annual Information Statement shows an interesting trend in recent years. The number of loans under $50,000 to borrowers other than small farmers have exploded in recent years, rising from140,667 at the end of 2007 to 156,893 at the end of 2010, to 187,832 at the end of 2012, and 215,634 at the end of 2013. The average size of these loans grew from $16,514 in 2007 to $22,501 last year while the aggregate amount of these loans more than doubled, rising from $2.32 billion at the end of 2007 to $5.89 billion at the end of last year. These loans do not represent a signifi- cant amount of total FCS lending—less than 3 percent at the end of last year— but this lending category is growing faster than total FCS lending, and may be quite profitable. Similar growth in loans to non-small-farmers was seen for loans in the $50,000 to $100,000 size range. These loans rose in number from62,115, for $3.67 billion, at the end of 2007 to 72,646, for $5.41 billion, at the end of 2013. The average loan size grew from $59,020 to $74,457. Some of these loans may be to farm- ers not classified as YBS borrowers, but given the high level of farm income in The EFT You can TRUST NetWorks is the Electronic Funds Transfer (EFT) service provider that Nebraskans have used and learned to trust like family for over 30 years. Our highly experienced staff is extremely knowledgeable and resourceful when it comes to assisting your institution. Give us a call to learn more about our services, you’ll have the opportunity to talk to someone who truly cares about and understands your EFT service needs. www.netseft.com Toll Free 800-735-6833 Local 402-434-8202  Bert Ely — continued on page 28