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Farm Credit

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The Early Years

Creation of the Farm Credit System coincided with World War I, a very prosperous time for American farmers with the demand for food in Europe. But prices collapsed after the war, and among the resulting economic problems were severe shortages of short-term credit for farmers.

Congress responded with the Agricultural Credits Act of 1923, adding 12 Federal Intermediate Credit Banks (FICBs) to the Farm Credit System. However, these were flawed by procedural and geographic problems, and a long, complicated loan approval process.

Things went from bad to worse with the stock market crash of 1929, touching off the Great Depression, throwing thousands of farmers into foreclosure and virtually shutting down the System's ability to finance agriculture.

Three major agricultural laws followed that would lead to a sweeping reorganization of the Farm Credit System:

Agricultural Marketing Act of 1929: enacted to help stabilize farm prices and finance the development of agricultural cooperatives (which had been authorized by the Capper-Volstead Act of 1922).

Emergency Farm Mortgage Act: passed by Congress in 1933, the act recapitalized the land banks with $189 million and cut interest rates to deal with the Depression.

Farm Credit Act: passed by Congress in 1933, it revamped the FICBs and established a new production credit system for farmers and ranchers through local Production Credit Associations. The Act also created 13 Banks for Cooperatives.

President Franklin Roosevelt also issued an executive order in 1933 consolidating the supervision of all the federal agricultural credit agencies under the new Farm Credit Administration.

These various cooperatively owned financial entities, with the FCA as their regulator, formed the basis of the Farm Credit System as it exists today.

The Farm Credit Archive provides an online in-depth history of Farm Credit’s legacy of service and achievement. Read more.

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