Farm Credit System

A large, complex government-sponsored enterprise

Congress created the Farm Credit System in 1916 to serve the needs of small family farmers and ranchers. With help from its benefactors in Congress and its regulator, the Farm Credit Administration, the FCS has grown dramatically.

The FCS is organized as a cooperative and has a nationwide presence, operating approximately 82 institutions with thousands of retail offices. Many of these institutions are multibillion-dollar companies in their own right. The FCS is a large, complex Government-Sponsored Enterprise that competes directly with banks for farm, ranch, home mortgage, agribusiness, consumer, energy and cooperative loans. 

The Farm Credit System has had significant earnings, but paid very little taxes. For example, in 2011, its assets were $230 billion and it had earnings of more than $3.9 billion, but it only paid an effective tax rate of 6.4 percent. In contrast, in 2011, the banking industry paid an effective income tax rate of 29.6 percent.

Prior to the 1987 Farm Credit Act, the Farm Credit Administration acted as the lobbyist, regulator and general trade association of the FCS. Despite being separated, the FCS and the FCA continue to enjoy a cozy relationship to this day.

What's the Issue?

  • It is unfair for the FCS to continue to enjoy tax advantages and GSE status with its huge asset base of $230 billion and annual earnings of nearly $4 billion. The FCS is fully able to stand on its own without the assistance of the federal government and is capable of paying its full share of taxes.
  • The FCS has gone way beyond its original mission of serving farmers and is pushing into other ventures.