Farm Credit System Essay Example | Topics and Well Written Essays - 750 words

Farm Credit System - Essay Example To present day, this system has continually serve the farmers and also prolonged its dominancy source in terms of long term farm debt. Statistics indicate that this dominant force has grown continually from 20 percent of real estate farm debt to 40 percent from a presided long period of time thus from 1960- 2006 (Bitter and Gordon 45). It is important to have knowledge of its consumer base which includes farmers, various producers of aquatic products, ranchers, select rural communications and energy companies, agricultural cooperatives, rural homeowners including other eligible entities as a whole. History The farm credit system can basically be described as a nationwide network of various cooperative banks including other associations that are capable of providing credit to farmers. They are also capable of attending agricultural concerns including various related business. It was created in 1916 by the United States parliament and the federal government supported it by funding it. This ensured that the American agriculture had at least a dependable source of revenue or credit. At the moment, it is now independent and self funding since it is owned by member borrower. The farm credit system has undergone several rounds changes in its structure that has dated back since its inception in Roosevelt era of administration. Trough creation of federal land banks in an estimated area of about 12 regions in the United States, the federal farm loan act developed a credit delivery system to the large agricultural sector. A kind of a fund chain was developed where the land banks provided funds to the regional banks including associations. The regional banks were then supposed to support farmers by providing them with long term mortgage thus financing them in their various projects. The farm credit act of 1933 born during the great depression period was imposed to booster agricultural production. This was by simply funneling short term credits thus by the 12 production cre dit associations incorporated by 13 bank capable of supporting agricultural cooperatives (Bitter and Gordon 48). The emergency farm mortgage act was mobilized to refund the FLBs to stand as a help package for farmers who were facing foreclosures including debt complications. In 1987, every credit agency existing was transformed to a farm credit administration. Economic Impact The farm credit system provides loans for a variety of purposes. This includes funding agricultural processing including other market activities, farm related businesses, rural housing initiatives, rural utilities including both foreign and domestic companies that are involved in the agricultural trade. It also provides access to various critically required rural areas where national including regional banks control. It has also abandoned it intended mission as it consolidates into one of the largest headquartered scores. This is through distancing itself from farmers including the ranchers they are supposed to primarily serve. In fact, the traditional notion of a cooperative which is member ran for the purpose of benefiting members gives away to one administration. This is through hired managers intends on structuring GSE empires as long as FCS associations continues to grow (Zachman 32). This empire building has led to the abandonment of the intended mission by the farm credit system instead led to a different direction of focusing on large borrowers. This is at the expense of serving YBS farmers thus termed as the little guy of the American culture. The farm system associations now consolidate a huge association which is directly more to their marketing efforts. This is intended towards making bigger and more profitable loans on large scale