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TeachMeFinance.com - explain Farm Credit System (FCS) Farm Credit System (FCS) The term 'Farm Credit System (FCS) ' as it applies to the area of agriculture can be defined as 'A network of cooperatively owned lending institutions and related service organizations serving all 50 states and the Commonwealth of Puerto Rico. The FCS specializes in providing farm real estate and rural homeowner loans, operating credit, and related services to farmers, ranchers, and producers or harvesters of aquatic products. The FCS may also finance the processing and marketing activities of these borrowers, certain farm-related businesses, and agricultural, aquatic, and public utility cooperatives. It is chartered under authorities in the Farm Credit Act of 1971, as amended, but does not receive any direct government funding. The System provides about one-fourth of the total credit used by U.S. farmers, ranchers, and cooperatives. Historically, the FCS consisted of a Federal Land Bank (FLB), a Federal Intermediate Credit Bank (FICB) and a Bank for Cooperatives (BC) in each of the 12 districts across the nation. Within each district, Federal Land Bank Associations (FLBA) and Production Credit Associations (PCA) served as local lenders for the FCS providing farm real estate and operating credit, respectively. A severe financial crisis led to the enactment of the Agricultural Credit Act of 1987, which provided federal financial assistance to weak institutions in the FCS, but required the FCS to streamline its operations as a condition for assistance. As a result, each district was required to merge its FLB and FICB to form a Farm Credit Bank (FCB). For FLBAs and PCAs that share a similar geographical territory, stockholders were given the option of merging institutions to form an Agricultural Credit Association (ACA). The Central Bank for Cooperatives and 10 of the 12 BCs also agreed to a merger forming a National Bank for Cooperatives (CoBank)'. Previous 5 Terms: Farm and risk management (FARRM) accounts Farm bill Farm Credit Act of 1971 Farm Credit Administration (FCA) Farm Credit Banks Next 5 Terms: Farm Credit System Assistance Board Farm Credit System Insurance Corporation (FCSIC) Farm equity Farm income Farm income and balance sheet About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005-2011 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional medical, legal or financial advice. Information presented at TeachMeFinance.com is provided on an "AS-IS" basis. Please read the disclaimer for details.