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FCS Overstates Loans to Young, Beginning, Small Farmers

Posted on 8/28/2014

The Farm Credit System and its regulator are inflating the numbers of loans it makes to young, beginning and small farmers -- and thus overstating the extent to which the FCS meets its statutory mandate -- Bert Ely reported yesterday in ABA's Farm Credit Watch e-bulletin.

Because of the tax advantages they enjoy, FCS lenders are required to have a YBS program that serves farmers 35 or younger, farmers with less than 10 years of experience and farmers with annual gross agricultural sales under $250,000. But YBS loans are "double- and triple-counted," Ely explained. YBS loans are also counted even if the farmer no longer meets the criteria; for example, "a 15-year mortgage extended to a 34-year old farmer will get counted as a loan to a young farmer until that farmer turns 49," he noted.

With less than 120,000 farmers age 34 or younger, the FCS reports more than 170,000 loans to young farmers - suggesting "that every ‘young' farmer in America has at least one FCS loan or, alternatively, some young farmers have several FCS loans while other young farmers have none," Ely noted. "The [Farm Credit Administration] could easily eliminate this gross exaggeration of the FCS's YBS lending but so far it has refused to do so."

To read Farm Credit Watch visit:

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