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.
