Farm Credit System – Definition

Cite this article as:"Farm Credit System – Definition," in The Business Professor, updated January 11, 2020, last accessed October 20, 2020,


Farm Credit System (FCS) Definition

The Farm Credit System (FCS) is a lending network targeted at farmers, ranchers, aquatic producers, and the agricultural community in general.

This credit system is specifically designed for farmers, ranchers, aquatic producers, rural homeowners, fishermen, and other agricultural businesses and individuals in the rural communities. FCS comprises cooperative banks and specialized associations that provide lending services for agricultural communities.

There are 73 independent financial institutions in FCS, these institutions are customer-owned and each institution is governed by a customer chosen Board of Directors.

FCS is a lending network that offers services to farmers, greenhouse Persia, ranchers, agribusiness and other related businesses in the United States.

There are different loans offered by FCS, each loan is determined by its purpose. FCS offers loans to individuals and businesses in the agricultural community for the following reasons;

  • Purchase of land for farms
  • Loan for agricultural operations
  • Loans for agricultural processing and marketing
  • Purchase of equipment, facilities and other items needed for the agricultural business.

FCS has a goal to keep the agricultural businesses in rural communities thriving in the global market by providing lending services needed for optimum growth. In addition to lending services, the farm credit system held farmers, ranchers and others access resources and information they require to be at the top of their game.

Federal Farm Credit System (FFCS) Definition

The Federal Farm Credit System is a group of banks or other specialty financial organizations that finance US farming and ranching activities. The FFCS is comprised of:

  • 3 Farm Credit Banks (FCBs),
  • 72 Agricultural Credit Associations(ACAs),
  • A Federal Land Credit Association (FLCA), and
  • an Agricultural Credit Bank (CoBank).

The CoBank is a capital lender to the ACAs, the FLCA, and. can provide loans to Agricultural Credit Associations, the Federal Land Credit Association, agricultural cooperatives, rural utilities and aquatic cooperatives. It also helps to finance imports and exports of U.S. agricultural products and provides international banking services for farmer-owned cooperatives.

A Little More on What is the Federal Farm Credit System (FFCS)

The Federal Farm Credit System evolved from the creation of Federal Land Banks and National Farm Loan Associations, as part of the Federal Farm Loan Act of 1916. In 1923, the Agricultural Credits Act established twelve Federal Intermediate Credit Banks to provide farmers with short-term loans through cooperatives. In 1968, once all loans made through these cooperatives were repaid, the cooperative organizations were wholly owned or controlled by the cooperative members.

The Federal Farm Credit System suffered financial through the 1970s and 80s because of rising costs and competition. In 1985, Congress passed the Farm Credit Amendment Act and amended it further with the 1987 Agricultural Credit Act, which increased regulation and extended additional credit to the organization. It also created the Federal Agricultural Mortgage Corporation (Farmer Mac).

References for “Federal Farm Credit System (FFCS) › Investing › Commodities…/federal-farm-credit-system-ffcs-9……/federal-farm-credit-system-ffcs-9…

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