Farm Credit System

(noun)

A federally chartered network of cooperatives and related service organizations that lends to agricultural producers, rural homeowners, farm-related businesses, and agricultural, aquatic, and public utility cooperatives in the United States.

Related Terms

Examples of Farm Credit System in the following topics:

  • The Granger Movement

    • Grange agents bought everything from farm machinery to women's dresses, and purchased hundreds of grain elevators, cotton and tobacco warehouses, and even steamboat lines.
    • They purchased patents so that the Grange might manufacture its own farm machinery.
    • With Southern Masons as guides, he toured the war-torn countryside in the South and was appalled by the outdated farming practices.
    • The birth of the Cooperative Extension Service, Rural Free Delivery, and the Farm Credit System were largely due to Grange lobbying.
    • Small, ceremonial farm tools are often displayed at Grange meetings.

  • Agriculture, Tenancy, and the Environment

    • The landowner provided land, housing, tools, and seed (and perhaps a mule), and a local merchant provided food and supplies on credit.
    • The system started with blacks when large plantations were subdivided.
    • Other solutions included the crop-lien system (in which the farmer was extended credit for seed and other supplies by the merchant), the rent-labor system (in which former slaves rented land but kept the entire crop), and the wage system (in which the worker earned a fixed wage, but kept none of his crop).
    • This system was distinct from the sharecropper.
    • The landowner would extend to the farmer shelter, food, and necessary items on credit to be repaid out of the tenant's share of the crop.

  • The National Credit Union Administration (NCUA)

    • The National Credit Union Administration (NCUA) is the United States independent federal agency that supervises and charters federal credit unions.
    • The chartering of credit unions in all states is due to the signing of the Federal Credit Union Act by President Franklin D.
    • The federal law sought to make credit available and promote thrift through a national system of nonprofit, cooperative credit unions.
    • At first, the newly created Bureau of Federal Credit Unions was housed at the Farm Credit Administration.
    • As the insurer and regulator of federally chartered credit unions, the NCUA oversees credit union safety and soundness, much like the FDIC.

  • Early Farm Policy

    • When independence from England came in 1783, America's Founding Fathers needed to develop a new system of land distribution.
    • Most of the farm workers were slaves.
    • The evolving system of waterways and railroads provided a way to ship farm goods long distances.
    • These groups targeted railroads, merchants, and banks -- railroads for high shipping rates, merchants for what farmers considered unscrupulous profits taken as "middlemen," and banks for tight credit practices.
    • City dwellers and eastern business interests viewed the farmers' demands with distrust, fearing that calls for cheap money and easy credit would lead to ruinous inflation.

  • Early New England Society

    • Early New England Puritan society was characterized by yeoman farming communities and a growing merchant class.
    • Some farmers obtained land grants to create farms in undeveloped areas.
    • The gold coins and credit slips were sent to England where they were exchanged for manufactures, which were then shipped back to the colonies and sold, along with the sugar and rum, to farmers.
    • This system of exchange became known as the "Triangular Trade."
    • Most importantly, colonial legislatures set up a legal system that proved conducive to business enterprise by resolving disputes, enforcing contracts, and protecting property rights.

  • What's Next?

    • The agency pressed auto-makers and electric utilities to reduce small particles of soot that their operations spewed into the air, and it worked to control water-polluting storm and farm-fertilizer runoffs.
    • It developed a system of air-pollution credits, for example, which allowed companies to sell the credits among themselves.
    • Companies able to meet pollution requirements least expensively could sell credits to other companies.

  • Credit Unions

    • The primary difference between a credit union and a bank from an operational perspective is best described via the decision-making system.
    • Credit unions usually offer better rates on deposits and lower costs for loans
    • Credit unions offer access to borrowing options not always available at traditional banks
    • Credit unions increase competition (big banks tend to be oligopolies, while credit unions are intrinsically smaller in scale, thus high in quantity)
    • Credit unions are smaller, and therefore more likely to go out of business

  • Credit Ratings

    • Credit ratings are determined by credit ratings agencies.
    • Income is not considered by the major credit bureaus when calculating a credit score.
    • It is used by many mortgage lenders that use a risk-based system to determine the possibility that the borrower may default on financial obligations to the mortgage lender.
    • The credit bureaus all have their own credit scores: Equifax's ScorePower, Experian's PLUS score, and TransUnion's credit score, and each also sells the VantageScore credit score.
    • This table shows each agency and their respective rating systems.

  • Debits and Credits

    • Credit and debit are the two fundamental aspects of every financial transaction in the double-entry bookkeeping system.
    • Debits and credits are at the heart of the double-entry bookkeeping system that has been the foundation stone on which the financial world's accounting system has been built for well over 500 years.
    • In a closed financial system, money cannot just materialize.
    • Everything on the left side (debit side) increases with a debit and has a normal debit balance; everything on the right side (credit side) increases with a credit and has a normal credit balance.
    • The answer is one that is fundamental to the accounting system.

  • Government During the War

    • Following the secession of the Southern states, the absence of Southern Democrats in Congress allowed the Republican Congress in Washington to enact legislation that reshaped the nation's financial, tax, land, and higher-education systems.
    • Prior to secession, the South had resisted policies that would hurt the plantation economy, including tariffs to promote industry and land grants for family farms.
    • The latter established a system of national banks in 1863, and promoted development of a national currency backed by bank holdings of U.S.
    • Railroads were also encouraged to sell tracts for family farms at low prices with extended credit.
    • The 1862 Homestead Act opened up public-domain lands for family farms at no cost.