overview
While loans for the purchase of farm real estate and production
expenses are provided by a wide array of merchants, farm implement
dealers, and individuals, most agricultural credit is provided by
four major groups of institutional lenders: commercial banks, the
Farm Credit System, USDA's Farm Service Agency, and life insurance
companies. Two additional financial institutions support agricultural
credit markets by providing funds to eligible lenders for agricultural
and rural loans: Farmer Mac (the Federal Agricultural Mortgage Corporation)
and the Federal Home Loan Bank System. Many of these financial service
providers, and the markets they operate within, are in the midst
of significant restructuring. Current trends and concerns over what
future policy decisions will mean for financial institutions and
markets have raised questions about the cost and availability of
financial capital for agriculture and rural America.
ERS research focuses on the major financial institutions and Federal
programs active in rural America, the performance of rural financial
markets, and the costs and benefits of proposals to change the regulation
or authority of various financial institutions active in rural areas.
The cost and availability of agricultural credit are our main concerns,
but research on financing for rural housing, small business, and
communities is also pursued.
More overview...
contents
features
Demand
for Farm Credit Expands, But Farm Lenders Remain CautiousThe
four major categories of institutional lenders serving the farm sector,
commercial banks, the Farm Credit System (FCS), the Farm Service Agency
(FSA), and life insurance companies, provide credit, and keep a cautious
eye on farm debt trends, interest rates, and farm debt repayment capacity.
All are showing low levels of delinquencies and loan problems. The
stability of their farm loan portfolios is benefiting from large government
payments, sizable amounts of off-farm income, and an enhanced crop
and revenue insurance program. Total farm business debt at $201.9
billion, increased 5.1 percent in 2002. The expected 3.9 percent increase
in 2003 will be the eleventh consecutive annual increase. Despite
price and weather problems facing some commodities, the supply of
farm credit remains adequate and lenders appear confident about most
of their farm customers. (04/03)
Local Bank Office Ownership, Deposit
Control, Market Structure, and Economic GrowthRestructuring
of the banking system has heightened interest in its economic consequences
both for the economy as a whole and for those most likely to bear
adverse consequences: small businesses, small banks, and rural areas.
Focusing on the association between local economic performance and
changes in local bank market structure, ERS research suggests that
mergers or acquisitions of local banks by nonlocal banks need not
impair local economic growth. With the possible exception of farm-dependent
areas, mergers may even have beneficial effects in rural markets.
recommended readings
Farmer Bankruptcies and Farm Exits
in the United States, 1899-2002This report presents an
overview of the role that bankruptcy has played in the overall decline
in farm numbers over the last 70 years. It finds that not all bankruptcies
result in farm exits, and most farm exits involve other factors.
(March 2004)
Agricultural
Income and Finance
Provides an annual update of farm lender financial conditions and
policy developments.
Issues in Agricultural and Rural
Finance
Discusses a range of agricultural and rural credit policy issues,
including beginning farmer assistance, revolving loans fund options,
and secondary market operations.
Credit in Rural America
Provides an overview of the cost and availability of credit
to agriculture, rural nonfarm businesses, households, and communities.
See all recommended readings...
recent research developments
Rural
Banks and the Federal Home Loan Bank System
Increased competition within the financial services industry has
raised concerns about the ability of small banks to adequately fund
local rural development. To address these concerns, the Gramm-Leach-Bliley
Act of 1999 broadened small bank access to Federal Home Loan Bank
(FHLB) financing. Research indicates that dividend rates on FHLB
stock, risk management needs, profit pressure, and binding membership
requirements have been significant factors influencing a small commercial
bank's decisions to join and borrow from the Federal Home Loan Bank
System.
related briefing rooms
Bankruptcies
Farm financial management
Farm income and costs
Farm risk management
Farm structure
Federal taxes
related links
Regulators
Includes links to the Federal agencies regulating agricultural and
rural lenders.
Federal Direct and Guaranteed Loan
Program Agencies
Includes links to USDA and other farm and rural lending program
sites.
Policies
Links to discussion of Community Reinvestment Act regulations.
Locate a lender
Includes links for finding commercial and cooperative agricultural
and rural lenders, as well as USDA county offices.
See all related links...
for more information, contact:
Robert Collender, Daniel
Milkove, or Jerry Stam
web administration: webadmin@ers.usda.gov
page updated: April 27, 2004
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