Presentation on agricultural credit

Made by ;Gagan Khurana Chavi Kukreja Dhruv Chadha Dhanshree Khupkar

What does agricultural credit mean to you?

Any of several credit vehicles used to finance agricultural transactions, including loans, notes, bills of exchange and banker's acceptances. These types of financing are adapted to the specific financial needs of farmers, which are determined by planting, harvesting and marketing cycles. Short-term credit finances operating expenses, intermediate-term credit is used for farm machinery, and long-term credit is used for realestate financing.

Agricultural credit institutions

There are two types of agricultural credit institutions: federal commercial

Federal institutions
These federal institutions were created to provide credit opportunities to communities in which financial services otherwise were neither available nor affordable. The federal government has also created organizations to encourage activities that are in the national interest. Most of these services are targeted at rural and agricultural communities. For example, the federal government is deeply involved in the financial structure of the agricultural industry because of the former's interest in protecting the nation's ability to produce food.

Commercial institution
Many commercial organizations provide agricultural credit with the support of federal institutions. Commercial lenders may extend credit to an agricultural endeavour that is secured or guaranteed by the federal agency involved. The type of financing may be short-, medium- or long-term, depending upon the terms of the agency's support and the needs of the borrower.

Types of agricultural credit

Various institutions
Federal Land Bank (FLB)
The Federal Farm Loan Act of 1916 provided for the establishment of 12 FLBs to provide longterm mortgage credit to farmers and ranchers, and later to rural homebuyers. On May 20, 1988, the FLB of Jackson was placed in receivership and liquidated. On July 6, 1988, the 11 remaining FLBs merged with the Federal Intermediate Credit Banks in their respective districts to form Farm Credit Banks.

Agricultural Credit Association (ACA)

An ACA is the result of the merger of a Federal Land Bank Association or a Federal Land Credit Association and a Production Credit Association and has the combined authority of the two institutions. An ACA obtains funds from a Farm Credit Bank or an Agricultural Credit Bank to provide short-, intermediate-, and longterm credit to farmers, ranchers, producers and harvesters of aquatic products, and to rural residents for housing.

Farm Credit Bank (FCB)

FCBs were created on July 6, 1988, in 11 of the 12 existing FCS districts when the Federal Land Bank and Federal Intermediate Credit Bank in each district merged. The mergers were required by the Agricultural Credit Act of 1987. FCBs provide services and funds to local associations that, in turn, lend those funds to farmers, ranchers, producers and harvesters of aquatic products, rural residents for housing, and certain farm-related businesses.

Bank for Cooperatives (BC)

BC provides lending and other financial services to farmer-owned cooperatives, rural utilities (electric and telephone), and rural sewer and water systems. BC is also authorized to finance U.S. agricultural exports and provide international banking services for farmer-owned cooperatives.

Agricultural Credit Bank (ACB)

An ACB is the result of the merger of a Farm Credit Bank and a Bank for Cooperatives and has the combined authorities of those two institutions. Using its authorities as an FCB, an ACB provides services and funds to local associations that, in turn, lend those funds to farmers, ranchers, producers and harvesters of aquatic products, rural residents for housing, and farm-related businesses. Using its authorities as a Bank for Cooperatives, an ACB provides lending and other financial services to farmer-owned cooperatives, rural utilities (electric and telephone), and rural sewer and water systems.

Federal Intermediate Credit Bank (FICB)

The Agricultural Credits Act of 1923 provided for the creation of 12 FICBs to discount farmers short- and intermediate-term notes made by commercial banks, livestock loan companies, thrift institutions, and, beginning in 1933, Production Credit Associations. On July 6, 1988, 11 of the 12 then-existing FICBs merged with the Federal Land Banks in their respective districts to form Farm Credit Banks.