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

• Commercial banks
• Farm Credit System
• Farm Service Agency
• Life insurance companies
• Farmer Mac
• Federal Home Loan Bank System
  

Local Bank Office Ownership, Deposit Control, Market Structure, and Economic Growth—Restructuring 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, 1899-2002—This 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