The Farm Credit System or Farm Credit is a federally contracted network of
institutions that are owned by borrowers. The Farm Credit System is made up of
cooperative banks, associations and related organizations. Seeing the need of
the agriculture sector, the Congress established this system and it is subject
to the Farm Credit Act of 1971.
The system specializes in providing financing and related services to
borrowers in the rural areas. Farm credit is available in all the 50 states in
the US and it also helps borrowers in Puerto Rico.
The United States is currently served by four farm credit banks, each of
which has its own specific authorities in its special area within the country,
and one Agricultural Credit Bank which has the authority to lend money across
the country. The farm credit bank and the Agricultural Credit Bank provide
funding to Agricultural Credit Associations and / or Federal Lank Credit
Associations. All the banks and associations depend on each other for
functioning and operating though they are not owned by the same institution.
The banks are the main source of funding and raise money through bonds and
public notes. The Congress has instituted the Farm Credit Administration which
is the watchdog administration and oversees the working of the banks and its
associated institutes.
The main borrowers are ranchers, producers, rural home owners, agricultural
cooperatives and farming businesses. There are over 500,000 borrowers across the
United States and Puerto Rico and it is believed that they owe the Farm Credit
System a total of $86 billion.
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