Posted November 26, 2013
The Farm Credit Administration (FCA) recently dropped a proposed rule that would have authorized companies within the Farm Credit System network of lenders to make investments in rural hospitals, retirement homes, and similar facilities, according to a Capital Press article available here.
The Farm Credit System (FCS) is a network of federally-chartered, privately-owned banks and associations that provide short-term and long-term loans to eligible agricultural producers and their cooperatives.
Some argue that because FCS has lower tax rates and lending costs than commercial banks, it should not be allowed to compete beyond its traditional mission. Supporters, however, argue that rural investments are “critical to agriculture, since farmers need access to hospitals, schools and other facilities in rural areas where they live.”
While Farm Credit has dropped the proposal and will end its pilot programs, rural investment loans may be allowed on a case-by-case basis. Lenders will be able to ask the FCA’s permission to invest in rural facilities, but the agency will not create a standardized process for those investments.
Part of the FCA’s decision, according to Gary Van Meter director of the agency’s regulatory policy efforts, resulted from a small amount of investment in the pilot programs which were launched almost a decade ago.
For more information on agricultural finance and credit, please visit the National Agricultural Law Center here.
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