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Farm Credit's activities and outlook.

by the Agri Marketing Editors

AM: What is the Farm Credit Council and what are its activities?

KA: The Farm Credit Council (FCC) is the national trade association for Farm Credit (FC), ensuring that FC institutions have an advocate for their interests before Congress and the many agencies of the Federal government. It also develops FC positions with respect to federal legislation, administers a national contributions program and provides national communications and public relations for the Farm Credit System. The FCC also provides training, leadership development, insurance and other services through its subsidiary, FCC Services, Inc.

AM: How have the past few years been for FC?

KA: FC has experienced steady growth over the past three years. At year-end 2014, FC's combined net income was $4.724 billion, as compared with $4.640 billion at year-end 2013 and $4.118 billion at year-end 2012. Loan volume has also increased, from $191.904 billion in 2012, to $201.060 billion in 2013, to $217.054 billion in 2014.

The increase between year-end 2013 and year-end 2014 was 8.0%, primarily due to increases in real estate mortgage, production and intermediate-term and agribusiness loans. Real estate mortgage loans increased primarily due to continued demand for cropland. Production and intermediate-term loans increased due to loan growth driven by borrower tax planning strategies and a greater utilization of operating lines. The increase in agribusiness loans was primarily due to increased lending to food and agribusiness companies and an increase in advances on existing loans to processing and marketing agribusiness companies.

AM: What are FC's new products/services?

KA: Overall, Farm Credit continues to deliver on our mission of providing consistent access to capital to agriculture and rural communities. Our products remain the same: short-, intermediate- and long-term loans, leases and business services.

Individual lending institutions within FC periodically introduce new services based on the needs of their marketplace. For example, Farm Credit East offers benchmarking information for several of their major industry sectors, including greenhouses, dairies, orchards and vegetables. Several FC organizations have created Knowledge Centers to provide valuable industry-related information to customers and other interested parties.

AM: How does FC interact with agri-marketers?

KA: FC provides operating capital to thousands of agricultural producers that they then use to purchase inputs and equipment from agri-marketers, so our financing contributes to many agri-marketers' success.

We're also proud to count many agri-marketers among our customer-owners, providing funds they need to maintain and grow their businesses. For example, Jerry and Dana Miller who own and operate an agronomy company in North Dakota, and the Horton family, which raises seed and also created a mobile seed cleaning business for local growers.

At another level, multiple System institutions often partner together to deliver credit programs for things like large-scale seed and crop input companies that they then provide to their end customers.

AM: How have FC's activities changed over the past five years?

KA: We continue to see agricultural operations evolve to meet market demands, whether it be in the type of product they produce or how they approach the marketplace itself. While grain, dairy and livestock represent the bulk of our farmer customers, we've seen an increase in the number of individuals that are adapting to the new demands for local food and niche products like grass-fed beef and organic foods. We also are seeing increased demand for FC to support the local infrastructure on which agriculture and rural communities rely, like broadband, clean energy and safe, reliable water systems.

AM: What is your outlook for the ag economy over the next three years?

KA: USDA is predicting a change in the recent trend lines for the farm economy, with softening commodity prices and a drop in farm income. With the carryover in supplies of many commodities on the increase, prices are expected to stay lower than they have in recent years. As a result of this cyclical tightening of the ag economy, we anticipate an increased demand for risk management services.

The U.S. ag economy will also continue to be impacted by global pressures. For example, China is a large importer of ag commodities. But its economy is slowing down, which is likely to impact the growth in demand for U.S.-grown food products. Brazil is a growing powerhouse in corn and soy production, driving prices down and representing competition for U.S. growers of those crops.

AM: How about the rural communities?

KA: We're very positive about rural economies and committed to continuing to support them. Not only does FC finance rural infrastructure customers, such as electric distribution cooperatives, broadband providers and water companies, but several FC institutions are working directly with USDA in advancing efforts to support rural economies

In 2014, eight FC organizations invested $150 million in a Rural Business Infrastructure Company (RBIC), to propel the growth of small businesses across rural America. FC organizations are also participating in the U.S. Rural Infrastructure Opportunity Fund, a USDA-sponsored program that in July announced its first round of investments in 11 community facilities projects, including medical and day care facilities.

AM: What is your outlook for the FC over the next five years?

KA: FC will remain the leading provider of credit to agriculture in the U.S. and will be a close partner with all players working to make the rural economy as successful as it can be. FC's cooperative structure ensures that it remains focused on meeting the needs of its customer-owners. Its financial strength makes it well positioned to meet credit needs that may arise from increasingly more volatile agricultural economic conditions.

AM: Anything else you think agri-marketers should know about FC?

KA: FC's supports rural communities and agriculture with reliable and consistent credit and financial services today and tomorrow. This mission keeps us focused on supporting the diversity of farmers and ranchers who raise our nation's food, fuel and fiber--young and old, small and large, established or just starting out.

Our financial support for the past 100 years will continue long into the future as we strive to strengthen the future of agriculture and the rural communities many call home.

We share this mission with agri-marketers, who also provide important products and services to help agriculture thrive, at the same time that we are proud to call many of these important businesses our customer-owners.

Editor's note: To get a handle on Farm Credit's current activities and how the system views the future, we invited the Farm Credit Council's President/CEO Ken Auer to share his thoughts. Auer is a 31-year veteran of Farm Credit.
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Publication:Agri Marketing
Article Type:Interview
Date:Oct 1, 2015
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