the farm credit system · fca regulations define eligible investments: ratings, maturities, percent...

The Farm Credit SystemREGINA GILLSVP INVESTOR RELATIONSFEDERAL FARM CREDIT BANKS FUNDING CORPORATION

JULY 2020

7/1/20

Part of the Farm Credit System 2

OVERVIEW OF THE SYSTEM

Created by an Act of Congress (1916)

Government Sponsored Enterprise (GSE) created to support rural communities and agriculture with reliable, consistent credit and financial services

Network of cooperatives owned by its borrowers (farmers, ranchers, agricultural cooperatives and rural customers)

Regulated and examined by the Farm Credit Administration (FCA), an independent agency in the Executive Branch of the US Government

Federal Farm Credit Banks Consolidated Systemwide Debt Securities are issued to fund the System’s loan portfolio, investments and operations

The Farm Credit System funds approximately 41% of all US farm business debt. (February 2020,

USDA ERS)

Farm Credit supports rural communities and agriculturewith reliable, consistent credit and financial services today and tomorrow.


STRUCTURE/OWNERSHIP

Part of the Farm Credit System

GROSS LOANS

A variety of loan types are available to qualified borrowers

Underwriting standards are based on credit, collateral AND repayment capacity/cash flow

4

($ billions)

12/31/2016 12/31/2017 12/31/2018 12/31/2019 3/31/2020

115.5 120.6 126.3 132.2 134.0

50.3 51.753.4

56.1 53.7

39.642.2

46.150.1 54.427.4

28.029.2

29.7 31.9

11.511.8

11.812.2 12.1

5.55.6

6.66.7

6.5

Agricultural ExportFinance

Rural residential realestate and other loans

Rural Infrastructure

Agribusiness loans

Production &intermediate-term loans

Generally ag loans -collateralized by land

$292.6

249.8259.9

273.4($ billions)287.0


2016 2017 2018 2019 3/31/20

0.08 0.05 0.08 0.07 0.07

1.59 1.66 1.88 1.91 1.91

0.34 0.29 0.27 0.30 0.31

0.03 0.02 0.04 0.07 0.16

2.04 2.02 2.28 2.35 2.45

Nonperforming Assets

Accruing - 90 Days orMore Past Due

Restructured Loans

Nonaccrual Loans

Other Property Owned

NONPERFORMING ASSETS

Nonperforming assets represented 0.84% of the System’s loans and OPO at 3/31/20, as compared with 0.82% at 12/31/19.

Nonaccrual loans represented 0.65% of the System’s loans at 3/31/20, as compared with 0.67% at 12/31/19.

Credit risk of certain loans is reduced by off-farm income sources and crop insurance.

55.2% of nonaccruals were current as to principal and interest payment at 3/31/20, as compared with 60.1% at 12/31/19.

5

Nonaccrual Loans (as a % of Total Loans)

0.82% 0.78% 0.83% 0.82% 0.84%

Nonperforming Assets as a Percentage of Loans & OPO

0.65%

At 3/31/2020

0%

1%

2%

3%

4%

5%

($ billions)


FARM CREDIT SYSTEM LIQUIDITY

System Banks are authorized to hold highly rated investments in an amount not to exceed 35% of the Bank’s average loans outstanding for the quarter.

Investments are generally classified as available-for-sale and carried at fair value.

FCA regulations define eligible investments: ratings, maturities, percent of portfolio.

Ineligible investments must be reported to the FCA within 15 calendar days.

As of 3/31/20, FCS liquidity position = 197 days

($ millions)Due in 1 year

or lessDue after 1 year

- 5 yearsDue after 5

years - 10 yearsDue after 10

yearsTotal

Weighted Avg. Yield

Commercial paper, CDs, bankers’ acceptances, and other securities 7,506 344 199 - 8,049 1.88%

US Treasury securities 6,013 9,217 2,815 - 18,045 1.77%

US agency securities 75 1,464 1,239 262 3,040 2.22%

Mortgage-backed securities* 25 2,256 5,579 19,274 27,134 2.15%

Asset-backed securities 109 2,050 461 1,428 4,048 2.50%

Total fair value $13,728 $15,331 $10,293 $20,964 $60,316 2.03%

Total amortized cost 13,696 $14,967 $9,878 $20,642 $59,183

*Agency collateralized ($25,819), Agency whole-loan pass through ($1,185), Private

label-FHA/VA ($130)

FCS Investments Available-For-Sale(Fair Value at 3/31/20 by contractual maturity)


NET INCOME

Net Interest Spread* increased to 2.16% at 3/31/20 from 2.00% at 3/31/19.

Net Interest Margin** increased to 2.47% at 3/31/20 from 2.40% at 3/31/19.

*Net Interest Spread = average rate on total earning assets – average rate on interest bearing liabilities

**Net Interest Margin = net interest income / average earnings assets

2016 2017 2018 2019 1Q 2020

$4.848 $5.189 $5.332 $5.446

$1.432

For the Year Ended

($ billions)


2016 2017 2018 2019 1Q 20

$52.31 $55.38 $58.44 $61.73 $63.35

System Capital (at period end)

($ billions)

8

SYSTEM CAPITAL

Note: Systemwide Debt Securities are the general unsecured joint and several obligations of the Banks and are not the direct obligations of the Associations. The System combined capital reflects Association capital which may not be available to support principal or interest payments on Systemwide Debt Securities.

Regulatory Capital Requirements(at March 31, 2020)

Capital-to-asset Ratio 16.4% 16.8% 16.7% 16.9% 16.4%

CET 1 Capital Tier 1 Capital Total Capital Tier 1 Leverage Permanent Capital

Minimum Requirement 4.5% 6.0% 8.0% 4.0% 7.0%

Minimum Requirement w/ Conservation Buffer

7.0% 8.5% 10.5% 5.0% --

Banks 9.3% - 17.3% 14.2% - 18.0% 15.2% - 18.1% 5.5% - 7.2% 14.3% - 18.0%

Associations 12.2% - 37.0% 12.2% - 37.0% 12.6% - 38.2% 10.7% - 34.9% 13.3% - 37.4%


INSURANCE CORPORATION & FUND

Farm Credit System Insurance Corporation

– Created in 1988 through an amendment to the Farm Credit Act

– Primary responsibility is managing the Farm Credit Insurance Fund

– Secured a $10B liquidity line to be used in exigent market circumstances that threaten our ability to pay maturing obligations.

Farm Credit Insurance Fund

– Primarily to insure the timely payment of principal and interest on Systemwide Debt Securities (provides additional protection for investors)

– Funded by premiums assessed on System Banks, which may be passed on to the Associations

– Insurance Fund target is 2% of aggregate outstanding insured debt (primarily Systemwide Debt Securities outstanding)

– Insurance Fund invested only in U.S. Government guaranteed securities

– Assets of $5.2 billion in the Insurance Fund (at 3/31/20)

– Insurance Fund has never been used for the payment of principal or interest on Systemwide Debt Securities.


TOTAL CAPITAL AND ALLOWANCE FOR LOAN LOSSES

Measure of risk bearing capacity

Total risk funds as a percentage of loans = 22.3% (as of 3/31/20)

(additional paid-in-capital + allowance + Insurance Fund + surplus + preferred stock + capital stock + participation certificates)

Surplus continues to grow due to net income earned and retained

Total Risk Funds as a Percentage of Loans

21.5% 21.9% 22.0% 22.1% 22.3%

($ billions)

2016 2017 2018 2019 1Q 20

4.8 4.9 5.1 5.1 5.1

41.6 41.944.7 47.7

49.3

4.5 4.8

5.0

5.2 5.2

1.5 1.61.7

1.8 1.9

1.4 3.7

3.7

3.73.753.8

56.960.2

63.565.2

Additional paid-in-capital

Allowance for LoanLosses

Restricted Capital-Insurance Fund

Surplus

Preferred Stock, CapitalStock and ParticipationCertificates


THIRD PARTY CAPITAL OUTSTANDING (as of 3/31/2020)

Issue Date Amount Dividend Rate and Security Type

Preferred Stock

AgFirst June 2007 49.25 3M LIBOR plus 1.13% non‐cumulative perpetual, payable quarterly Redeemable on 6/15/12, and each five year anniversary thereafter

AgriBank Oct. 2013 250 6.875% non-cumulative perpetual, payable quarterly. Beginning 01/01/24, dividends will accrue at an annual rate of 3M LIBOR + 4.225%

Redeemable on 01/01/24, and any dividend payment date thereafter

CoBank April 2016 375 6.25% non‐cumulative perpetual, payable semi-annually. Beginning 10/1/26, dividends will accrue quarterly at the annual rate of 3M LIBOR +4.660%

Redeemable on 10/1/26 and any dividend payment date thereafter

Nov. 2014 300 6.20% non‐cumulative perpetual, payable quarterly. Beginning 1/1/25, dividends will accrue at the annual rate 3M LIBOR + 3.744%


April 2013 200 6.125% non‐cumulative perpetual, payable quarterly Redeemable on 7/1/18 and any dividend payment date thereafter

Oct. 2012 400 6.25% non‐cumulative perpetual, payable quarterly. Beginning 10/1/22, dividends will accrue at an annual rate of 3M LIBOR +4.557%


Jan. 2012 225 3M LIBOR plus 1.18% non‐cumulative perpetual, payable quarterly Redeemable on 7/10/12, and each five year anniversary thereafter

Texas June 2018 100 6.20% non-cumulative perpetual payable quarterly. Beginning 6/15/28, dividends will accrue at annual rate of 3M LIBOR plus 3.223%


July 2013 300 6.75% non-cumulative perpetual payable quarterly. Beginning 9/15/23, dividends will accrue at annual rate of 3M LIBOR plus 4.01%


Aug. 2010 300 10.0% non‐cumulative subordinated, perpetual payable semi‐annually Redeemable after the dividend payment date in 6/20/20

CompeerFinancial

May 2013 100 6.75% non-cumulative perpetual payable quarterly. Beginning 8/15/23, dividends will accrue at an annual rate of 3M LIBOR plus 4.58%


AgTexasFarm Credit Services

March 2017 20 5.00% cumulative perpetual payable semi-annually Redeemable on March 24, 2022 and thereafter

11


FARM CREDIT RATINGS

12

Fitch Moody's S&P

Farm Credit System

Long-term AAA Aaa AA+

Short-term F1+ P-1 A-1+

Outlook Stable Stable Stable

BCA (baseline credit assessment) a1

SACP (stand-alone credit profile) aa

AgFirst

Issuer ratings - LT AA- Aa3

Noncumulative preferred BBB+ Baa1

Agribank

Issuer ratings - LT AA- Aa3 AA-

Noncumulative preferred BBB+ Baa1 BBB+

CoBank

Issuer ratings - LT AA- AA-

Noncumulative preferred BBB+ BBB+

Farm Credit Bank of Texas

Issuer ratings - LT AA- Aa3

Noncumulative preferred BBB+ Baa1


GEOGRAPHIC DIVERSIFICATION

STATE %

California 11.36

Texas 6.95

Iowa 5.35

Illinois 5.02

Minnesota 4.47

Nebraska 3.76

Ohio 3.66

Kansas 3.10

Indiana 3.00

Wisconsin 2.92

Missouri 2.74

Michigan 2.70

South Dakota 2.52

North Carolina 2.50

New York 2.34

Georgia 2.34

Washington 2.30

Source: Farm Credit System Annual Information Statement - 2019

Farm Credit System Loan Portfolio(percent of total loan volume at 12/31/19)

STATE %

Florida 2.16

North Dakota 2.13

Colorado 1.93

Tennessee 1.73

Virginia 1.73

Arkansas 1.69

Kentucky 1.63

Idaho 1.56

Oregon 1.31

Pennsylvania 1.28

Alabama 1.27

Oklahoma 1.24

Mississippi 1.11

Louisiana 1.00

All other states 11.20

Total 100.00

Farm Credit System lends in all 50 states, the Commonwealth of Puerto Rico and U.S. territories

Loan portfolio has broad geographic diversification

Highest concentration is 11%

Geographic diversification minimizes overall effects of local agricultural events


AGRICULTURAL DIVERSIFICATION

Broad diversification within the Farm Credit System loan portfolio

Highest concentration is 16%

Diversification minimizes concentration risk

Farm Credit System Loan Portfolio(at 12/31/19)

Source: Based on loans described in the Farm Credit System Annual Information Statement – 2019

Cash grains (includes corn, wheat and soybeans)

16%

Other livestock 1%

Cattle 9%

General farms, primarily crop

3%

Rural power 7%

Other 3%

Food products (includes meat, dairy and bakery products)

7%Cotton

1%Dairy farms 7%

Rural water/waste water

1%

Forestry 6%

Field crops (includes sugar beets, potatoes and vegetables)

6%

Tree fruits, nuts and grapes

6%

Farm supplies and marketing 5%

Biofuels, primarily ethanol 1%

Agricultural services and fish 3%

Poultry and eggs 3%

Rural home loans, farm landlords and part-time farms

6%

Rural communication 3%

Hogs 2%

Agricultural export finance

2%

General farms, primarily livestock

2%

Horticulture 1%


LOANS BY DOLLAR SIZE

Farm Credit System lends to qualified borrowers of all sizes

87% borrowers between $1,000 and $499,000

Range

($ thousands)

Amount Outstanding

($ millions)

% of Portfolio # of Borrowers % of Portfolio

(# of borrowers)

$1 -- $249 31,426 11 430,067 75

$250 -- $499 23,510 8 67,364 12

$500 -- $999 25,782 9 36,944 6

$1,000 -- $4,999 60,677 21 31,103 5

$5,000 -- $24,999 44,297 15 4,527 1

$25,000 -- $99,999 39,320 14 830 <1

$100,000 -- $249,999 33,165 12 214 <1

Over $250,000 28,787 10 71 <1

TOTAL 286,964 100 571,120 100

Source: Based on loans described in the Farm Credit System Annual Information Statement – 2019

(at 12/31/19)

Farm Credit System Loan Portfolio


DEBT SECURITIES OVERVIEW

Issued by the 4 System Banks on a joint and several basis

Aaa/P-1 rating by Moody’s, AAA/F1+ by Fitch and AA+/A-1+ rating by S&P on Systemwide Debt Securities

Interest is generally exempt from state, local and municipal income taxes

20% BIS (Bank for International Settlements) risk-weighting (Basel II, June 2006; Basel III, July 2013)

Name diversification in fixed income portfolios

Supported by Selling Group of 30 investment firms

A broad range of investors purchase Systemwide Debt Securities


FARM CREDIT DEBT (as of 6/30/20)

Bloomberg FFCB<go>

Discount Notes

Floating Rate Callables Bullets Designated Bonds

Maturity 1 – 365 days 1 – 30 years

Issued Daily Daily and/or as needed Periodically

Settlement Cash/regular 5 – 7 business days

Typical Maturity Range

O/N – 30 days 1 – 3 years 1 – 5 years 2 – 10 years

Indices/Call Feature

N/A

LIBOR, SOFR, Prime, T-Bills,

Fed Funds(monthly, quarterly,

daily)

American,Bermudan, European

(3mo or longer lockouts)

N/A Fixed

Avg. Issuance size (YTD)

N/A $398.9 MM $204.4 MM $155.4 MM $1.1 B

Outstanding $29.1 B $120.6 B $73.1 B $84.8 B $2.1 B

YTD Issuance $104.1 B (total)

$35.5 B $69.5 B $16.0 B $2.1 B$59.0 B (o/n)

Distribution Method

10 Member Core Group

30 Member Selling Group (Auction/Negotiated) Syndicate


DISCOUNT NOTES (as of 6/30/20)

Maturity Range Outstanding YTD Issuance WAM YTD Issuance

1 to 365 days $29.1 B $45.1 B (excludes o/n maturities) $59.0 B (o/n maturities)

60.33 days (includes o/n)

Generally issued daily

– Sizes and maturities posted to the window at 4pm ET – Priced next morning – Investor orders receive priority – Remaining DNs are allocated on a first come first served basis

Reverse inquiries considered

Distributed through 10 member core group, available to entire selling group with re-allowance

Discount Notes Issuance

Maturity(days)

2020 YTD (%) 2019 (%)

O/N-30 62 (57 o/n) 76 (70 o/n)

31-60 12 12

> 60 25 13

Please note columns above may total over 100% due to rounding.

Reported Orders*(July 1, 2019 – June 30, 2020)

Investment Managers

69%State & Local

Govt.3%

Other22%

Insurance Companies

2%

Corporations4%

*Excludes overnights.


FLOATING RATE BONDS (as of 6/30/20)

Typical Maturity Outstanding YTD Issuance Indices (YTD Issuance)

1 to 3 years $120.6 B $35.5 B 1ML 3ML SOFR PRIME Fed Funds T-Bills

17% 4% 62% 7% 5% 5%

Issuance practices are responsive to market conditions

1 to 2 year Floating Rate Bonds are typically auctioned

2+ years Floating Rate Bonds are typically posted

Recent Issuance (June)

Structure Trade Date Size ($ MM) IndexCoupon(Spread)

2-year 6/1/2020 300 Prime -297

3-year 6/3/2020 600 SOFR 32

1.25-year 6/8/2020 50 3M LIBOR -8

1.6-year 6/8/2020 200 T-Bill 10

1.7-year 6/10/2020 325 Fed Funds 20

2-year 6/16/2020 900 SOFR 20

1-year 6/18/2020 300 1M LIBOR 0.5

1-year 6/26/2020 275 SOFR 11

Issuance(July 1, 2019 – June 30, 2020)

Years

$millions

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0 1 1 2 2 3 3 4

FRNs Fed Funds

1M LIBOR

3M LIBOR

Prime

3M TBill

SOFR


FIXED RATE CALLABLE BONDS (as of 6/30/20)

Typical Maturity Outstanding YTD IssuanceAverage Issuance Size

(YTD)Possible Call Feature

1 to 5 years $73.1 B $69.5 B $204.4 MM American, Bermudan, European

Offerings vary in size and maturity

Auctioned as needed

Reopen outstanding issues when possible

Predominantly American calls Recent Issuance (June)

Structure Trade Date Size ($ MM) Coupon (%)

2Y NC 3M 6/2/2020 530 0.270

6Y NC 3M 6/8/2020 330 1.040

5.5Y NC 6M 6/9/2020 110 0.940

10Y NC 5Y 6/15/2020 75 1.150

1Y NC 3M 6/16/2020 625 0.210

1.5Y NC 6M 6/16/2020 515 0.230

3.75Y NC 3M 6/18/2020 450 0.590

20Y NC 1Y 6/24/2020 100 2.020

Years

$ millions


0

200

400

600

800

1000

1200

0 5 10 15 20 25 30

Callables


FIXED RATE NON-CALLABLE BONDS (as of 6/30/20)

Typical Maturity Outstanding YTD Issuance Average Issuance Size (YTD)

1 to 5 years$84.8 B $16.0 B $155.4 MM

Offerings vary in size and maturity

Auctioned as needed

Reopen outstanding issues based on funding needs

May be swapped back to floating

$ millions

Recent Issuance (June)

Structure Trade Date Size ($ MM) Coupon (%)

3-year 6/2/2020 300 0.300

4-year 6/2/2020 120 0.375

12-year 6/9/2020 95 1.420

15-year 6/9/2020 15 1.680

2-year 6/12/2020 505 0.260

1-year 6/16/2020 400 0.180

7-year 6/18/2020 75 0.760

1.75-year 6/25/2020 185 0.250

Years


0

100

200

300

400

500

600

700

800

900

0 5 10 15 20 25 30 35

Bullets


DESIGNATED BONDS (as of 6/30/20)

Reported Orders5/6/20 – 5/6/22

3133ELYR9

Possible Maturities Structure Outstanding YTD Issuance Minimum Sizes

2 to 10 years Non-Callable $2.1 B $2.1 B $1.0 B

Issued as needed

Fixed rate offerings may be swapped

Syndicated offerings (2 to 3 lead managers), bonds may be made available to the entire selling group

Recent Issues

Coupon Issue Date Size ($ B) Maturity Date

0.250 % 5/6/2020 1.0 5/6/2022

0.375 % 4/8/2020 1.1 4/8/2022Investment Managers

59%

Federal, State & Local Gov'ts

38%

Charity / Fraternal / Endowments

2%

Other1%


SYSTEMWIDE DEBT SECURITIES OUTSTANDING

($ billions)

Please note columns may not sum to total due to rounding *Includes Linked Deposits and Retail Bonds

12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 6/30/20

31.3 29.6 25.6 22.8 19.1 29.1

5.0 4.51.0 2.1

58.8 59.7 72.2 79.0 77.973.1

60.4 68.0 67.1 71.1 79.184.8

86.395.8

99.2108.6 117.2

120.6

0.4

0.30.2 0.3 0.3 0.2

$242.2

$257.9 $265.4 $281.8 $293.6 $309.9 Other*

Floating-Rate Bonds

Fixed-Rate Non CallableBondsFixed-Rate Callable Bonds

Designated Bonds

Discount Notes


APPENDIX – U.S. AGRICULTURE

American agriculture and its related industries provide 11 percent of U.S. employment

Majority of U.S. farms are operated by families –individuals, family partnerships or family corporation

95% of the world’s consumers live outside of the United States

The global population is expected to increase to 9.7 billion by 2050 (www.un.org)

Approximately 20% of total volume of U.S. agricultural production is exported*

U.S. exports account for more than 30% of gross agricultural cash income

24

7.4%

15.4%

14.0%

9.0%9.3%

44.9%

2019 U.S. ag exports total $136 billion

China

Canada

Mexico

Japan

EU

Other

Export destinations Major Ag Commodities

ChinaSoybeans, Cotton, Coarse Grain**, Pork, Dairy, Wheat, Hay

CanadaPrepared Food, Fresh Vegetables, Fresh Fruit, Snack Foods, Non-Alcoholic Beverages, Beef & Beef Products, Pork & Pork Products

MexicoCorn, Soybeans, Pork & Pork Products, Dairy Products,Beef & Beef Products, Poultry Meat, Wheat

Japan Corn, Pork & Pork Products, Beef and Beef Products, Soybeans, Wheat

EU Tree Nuts, Soybeans, Wine & Beer, Prepared Foods

Source: www.ers.usda.gov

*US exports 70% of cotton, 70% of tree nuts, 50% of wheat, 50% of rice, 50% of soybeans

**excludes corn



The COVID-19 outbreak has resulted in an unusually high level of uncertainly in world economies and the supply and demand for agricultural products

USDA forecast for 2020 ag trade balance remains positive

Slowing global GDP growth may temper demand

25

Source: USDA Outlook for U.S. Agricultural Trade 5/25/20

0

20

40

60

80

100

120

140

160

$ Billionsper fiscal year

Agricultural Trade Balance

Trade Balance

Exports

Imports

137

130

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2013 2014 2015 2016 2017 2018 2019 2020F

$ B

illio

ns

Top U.S. agricultural export destinations$U.S. value by fiscal year

China

Canada

Mexico

Japan

European Union-28



26

Production and Demand

Source: USDA OCE 04/09/2020

Dollars per bushel 2016/17 2017/18 2018/2019 2019/2020F 2020F/2021F

Wheat $3.89 $4.72 $5.16 $4.55 $4.90

Corn $3.36 $3.36 $3.61 $3.85 $3.60

Soybeans $9.47 $9.33 $8.48 $8.75 $8.80

Dollars per cwt. 2016 2017 2018 2019F 2020F

Cattle $120.86 $121.52 $117.12 $116.78 $117.00

Hogs $46.16 $50.48 $45.93 $47.95 $49.00

Broilers $84.30 $93.50 $97.80 $88.60 $87.0

Milk $16.30 $17.65 $16.27 $18.60 $18.85

0%

5%

10%

15%

20%

25%

30%

35%

0

500

1,000

1,500

2,000

2,500

3,000

1991 1996 2001 2006 2011 2016

Million MTsGrain Production and Use

World Production

US Production

US Stock-to-Use

World Stock-to-use

2019F

The COVID-19 pandemic has led to price volatility in some commodities.

Global grain supplies remain at record levels and share of stocks to use is historically high.


2020 Forecasts

27


After peaking in 2012, Net Cash Income dipped but recovered in subsequent years. It is now forecast to decrease in 2020 due to lower sales.

Debt-to-Asset ratio has increased since 2012, but is expected to increase slightly in 2020 above the 30-year average.

Working capital, accumulated in high income years, now being drawn on to pay normal business expenses.

Source: USDA U.S. Farm Income Data 02/05/2020

0%

5%

10%

15%

20%

25%Debt-to-Asset Ratio

10 Year Average

30 Year Average

0%

10%

20%

30%

40%

50%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F

Working Capital to Gross Revenues Ratio

0

20

40

60

80

100

120

140 Emergency Payments

Commodity/Conservation programs

Net Cash Income

Net Cash Income less government payments

$ Billion Net Cash Income



28

Source: USDA Land Values, 2019 Summary, August 2019

Average U.S. Cropland Value per Acre

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

$2,640 $2,700 $2,980 $3,350 $3,810 $4,090 $4,100 $4,040 $4,030 $4,050 $4,100

Cropland values vary widely across the U.S.

Farm Credit generally uses benchmarking to evaluate loans (not sale price)

1.2% YoY increase in average cropland value (2019 vs. 2018)


Lawmakers continue to demonstrate support for U.S. farmers, ranchers and agribusinesses

– The 2018 Farm Bill enhanced crop insurance coverage and maintained disaster relief and farm support programs

– The Market Facilitation Program (MFP) payments helped mitigate the adverse effects of trade restrictions

– The $19 billion Coronavirus Food Assistance Program (CFAP) to support farmers and ranchers during the COVID-19 pandemic

APPENDIX - SUPPORT FOR AGRICULTURE IN CHALLENGING TIMES

Program Date Amount Details

2018 Farm Bill Dec. 2018 • $78bn crop insurance• $61bn farm commodity programs

• Maintains a strong crop insurance program with improvements to Price Loss Coverage and Agricultural Risk Coverage options

• Improves the safety net for dairy producers

Market Facilitation Program (MFP)

Jul. 2018 • $10.6bn in direct payments to farmers• $1.2bn Food Purchase and Distribution

Program• $200m Ag. Trade Promotion Program

MFPs consisted of: • Direct payments • The Food Purchase and Distribution Program

purchased unexpected surplus of affected commodities

• The Agricultural Trade Promotion Program sought to identify and access new markets for US agricultural products

May 2019 • $14.5bn in direct payments to farmers• $1.4bn Food Purchase and Distribution

Program• $100m Ag. Trade Promotion Program

CARES Act Mar. 2020 • $14bn USDA funding (not available until July)

• $619bn SBA Paycheck Protection Program offers relief to small businesses, including farm operations

• Replenishment of the USDA’s Commodity Credit Corporation (CCC) funds through which MFP payments were made in 2018 and 2019

• Farm Credit institutions have been approved to lend under the Payment Protection Program

• For the first time, the SBA is accepting Economic Injury Disaster Loan (EIDL) applications to provide relief to U.S. agricultural businesses

Coronavirus Food Assistance Program (CFAP)

April 2020 • $16bn in direct payments to farmers• $3bn Food Purchase and Distribution

Program

• Direct payments targeting dairy and livestock producers, fruit and vegetable growers, and fresh food markets

29


DISCLAIMER

This overview is provided for general information purposes only. It is not an offer to sell or a solicitation of an offer to buy any Systemwide Debt Securities. Debt Securities are offered only in jurisdictions where permissible by offering documents available through our Selling Group. Systemwide Debt Securities may not be eligible for sale in certain jurisdictions or to certain persons and may not be suitable for all types of investors. All statements made in this overview are qualified in their entirety by the information in the most recent Federal Farm Credit Banks Consolidated Systemwide Bonds and Discount Notes Offering Circular, including the financial and other Systemwide information incorporated therein, and other offering documents. Copies of offering documents can be obtained, if permitted by applicable law through Selling Group members or through the Funding Corporation’s website at www.farmcreditfunding.com.

Any forward-looking statements in this presentation are based on current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from expectations due to a number of risks and uncertainties. More information about these risks and uncertainties is contained in the System’s most recent Annual and Quarterly Information Statements. The System undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

http://www.farmcreditfunding.com/pdfs/offcirc/BondAndDNOfferingCircular2010.pdf


NATIONAL MESSAGING CAMPAIGN

The “One Mission. Many Voices.” national messaging campaign brings FarmCredit’s mission to life through the many voices of its customers, directors,employees, and others. Please visit www.farmcreditvoices.com to learn more.

the farm credit system · fca regulations define eligible investments: ratings, maturities, percent...

Documents