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Vol. 17 No. 5
Far-Reaching Law Is Important Locally, Brown Explains
U.S. Farm Cred
A bill described is one of the
most important pieces of farm
credit legislation ever adopted in
this country has been passed by
the U.S. Congress ard signed by
the president.
Moves are presently underway
at the local and national levels to
adopt policies and procedures to
implement the bill within the next
few months.
Among the key provisions of
the new Farm Credit Act of 1971
are: allowing for the first time
for first mortgage loans on non
farm homes in rural areas;
greatly expanded amounts for
first mortgages on farm real
estate; major new provisions for
financing custom operators, and
more liberal rules for farm
cooperatives.
Carl Brown, manager of the
Production Credit Association
(PCA) and Federal Land Bank
Association (FLBA) offices
which serve Lancaster, Lebanon
and Dauphin Counties, gave an
explanation this week of the key
provisions of the new legislation.
PCA is involved with short
term production loans up to seven
years, while the FLBA is in
volved with long term farm
mortgage financing. Together
the FLBA and PCA serve 1,330
farmers in their three-county
area and have an outstanding
loan value of $33 million.
The key provisions of the new
U. S. credit law, according to
Brown, are;
Replacement of the 65 per
cent loan limitation for first
mortgages on farms and farm
Farm Credit Use to Grow
Expansion of individual farm
operations, plus improvements in
managerial efficiency, will
cha cterize the successful
farmer in the 1970’s and 1980’s, as
was true in the previous decade.
It is almost certain that far
mers will have larger credit
liabilities in land, equipment and
livestock.
Credit agencies will need to
Farm Calendar
Saturday, December 25
Merry Christmas!
Wednesday, December 29
10 a.m. Northeastern Poultry
Producers Council semi
annual board of directors
meeting, Statler Hilton Hotel,
New York City.
Thursday, December 30
12 noon Harvestore banquet,
Plain and Fancy Restaurant,
Bird-m-Hand
12-30 p.m. Lancaster County 4-
H Tobacco and Corn Exhibit
and Roundup, Farm and
Home Center
Saturday, January 1,1972
Happy New Year!
Mcrnj Christinas
land. The new maximum loan
limit is 85 per cent of the farm’s
value. The previous limit was
considered a restriction on ex
pansion by established farmers
and a barrier for young farmers
seeking to buy farms and farm
land.
The new 85 per cent maximum
also will enable farmers to
acquire their farms for a much
lower down payment. Farmers
generally could previously still
get up to 85 per cent financing,
What Is the Farm Credit System?
What is the Farm Credit
System. Carl Brown, local Farm
Credit office manager, this week
issued the following explanation.
This System is nationwide
network of farmer-owned credit
associations that specialize in
helping farmers and their
cooperatives meet their own
credit needs.
It was established by the
Congress with Federal “seed
moneys” which have all been
repaid.
The banks and associations of
the System are supervised by the
Farm Credit Administration, an
independent Federal agency,
because they hold Federal
charters and to assure that
farmers’ interests and the public
interest are served.
Loan funds are obtained
primarily through the sale of
bonds and debentures to private
investors in the nation’s money
markets.
increase their competencies in
assisting a farmer’s managerial
and repayment ability if they are
to furnish the necessary capital.
They will also need to know which
production practices will pay the
greatest dividends and whether
the farm operator is capable of
using such practices.
In addition, it is imperative
that they gain more knowledge of
basic business organization to
help insure profitability.
Farmers will need to present
detailed plans showing the
resources to be used, the value of
current assets, and cash flow
statements showing, month by
month, the yearly income and
expenditures. Without this in
formation, credit agencies will be
reluctant to loan funds necessary
for expansion.
The Pennsylvania Agricultural
Records Program, administered
by the Cooperative -Extension
Service and Young Farmer
advisors, is a valuable tool area
farmers can use as an aid in
improving business practices
By Jay W. Irwin,
Lancaster County
Associate Ag Agent
Lancaster Farming, Friday, December 24,1971
but usually had to get both a first
and second mortgage to do it,
resulting in much higher monthly
payments, according to Brown.
He said the new provision
would enable one long-term loan
resulting in a much lower
payment and much less financial
burden for the man acquiring a
farm
—A second key provision of the
new law is that the U.S. Farm
Credit system will combine its
funding. Previously, three dif-
No Federal funds are loaned.
Essentially, the System func
tions at no cost to the taxpayer. It
is not a Federal system. Rather,
it is a cooperative,.farmer-owned
credit orgamzation regulated by
a Government agency as other
financial institutions are
regulated—to assure that they
are f inanciaUy sound and serve in
the best interest of the general
public.
The System has three basic
parts: the 12 Federal land banks
which make long-term loans
secured by first mortgages on
farm real estate through some
600 Federal land bank
associations; the 12 Federal
intermediate credit banks which
discount notes and make direct
loans to nearly 450 local
production credit associations
and other financing institutions;
and 13 banks for cooperatives
which provide a complete credit
service to farmers’ supply,
marketing and farm business
service cooperatives.
Local Federal land bank
associations are owned by about
405.000 farmers, the production
credit legislation ever adopted in
525.000 farmers and the banks for
cooperatives by nearly 3,900
farmer cooperatives These are
farmer-stockholders who par
ticipate actively in the affairs of
their credit associations
In 1970, for example, 32.9 per
cent of all PCA borrowers at
tended their association annual
meetings. There is good reason
for their concern for their credit
system They currently have
over $1 billion invested in it
In This Issue
Classified Ads 21,22,23
Editor’s Desk 12,13,14
Editorial Page 10
Grange Backs PMMB 6
Market Reports 2,3,4
NFO Convention 11
Sale Register 19
Women’s News 15,16,17,18
Many officials believe the
Farm Credit Act of 1971 may be
one of the most significant pieces
of national legislation for rural
America in many years. While
the new law isn’t as important for
the financially diversified
Southeastern Pennsylvania as it
is in many credit-starved rural
areas, it’s still highly significant
here, as our page one story ex
plains
t Act Adopted
ferent institutions sought money
on the national market. These
were the Federal Land Banks,
Federal Intermediate Credit
Banks and Banks for
Cooperatives Now, only a
maximum of one joint debenture
issue will be made each month.
Instead of the 33 seperate
issues made in 1970, there would
be a maximum of 12 issues per
year under the new system. This
is expected to reduce costs of
raising new money and possibly
result in better interest rates to
farmers
A third key provision of the
new law is that loans can be made
for non-farm housing in open
country areas to help provide
new housing in rural areas. The
intent to help provide new
housing m rural areas The intent
is to help fight substandard
In explaining the impact of th new national Farm Credit
Act of 1971, recently signed into law and to be implemented
early next year, Carl Brown, local Farm Credit manager,
points to a map of the local area. Brown said key provisions
of the important new credit legislation include: increased
first mortgage loan limits; new provision for home mor
tgages for non*farmers building in rural areas; new
provision for loans to full-time custom operators; more
liberal policies for cooperatives.
$2.00 Per Year
housing m rural areas, where
two-thirds of the nation’s sub
standard housing exists Because
the attempt will be made to solve
the rural housing problem
through greater availability of
credit, it is believed that the new
bill can make a major con
tribution without cost to the
taxpayer
Brown explained that FLBA
and PCA presently cannot make
loans on housing in rural areas
except to farm members Under
the new law, the insitiutions could
loan a maximum of 15 per cent of
their total funds for building of
homes in rural areas and the
loans would not be limited to
farmers.
Brown explained that there is
still some administrative
decisions needed to determine