Legal Definitions - federal farm credit bank

A federal farm credit bank is a specialized financial institution, established and regulated by the U.S. government, designed to provide loans and financial services exclusively to farmers, ranchers, and businesses that support the agricultural industry. These banks are part of a nationwide system, ensuring that the agricultural sector has reliable access to credit for various needs, from purchasing land and equipment to funding operational expenses for farm-related enterprises.

Here are some examples to illustrate how a federal farm credit bank operates:

• Example 1: Funding a Farm Expansion

  A multi-generational family farm specializing in organic vegetable production decides to expand its operations by acquiring an additional 50 acres of farmland. To finance this significant purchase, they apply for a long-term mortgage loan from a federal farm credit bank. The bank assesses their business plan and agricultural history, providing the necessary capital tailored to the unique needs of farming land acquisition.

  This example demonstrates the bank's role in providing direct credit to a farm-related enterprise (the family farm) for a core agricultural purpose (land expansion).

• Example 2: Supporting an Agricultural Cooperative

  A regional cooperative, owned by local fruit growers, needs to invest in new cold storage facilities to extend the shelf life of their produce and improve distribution efficiency. They secure a substantial loan from a federal farm credit bank to cover the construction and equipment costs. This investment allows the cooperative to better serve its member farms and enhance the overall agricultural economy in the area.

  Here, the bank provides financing to a business that directly supports multiple farming operations (the cooperative), illustrating its mandate to fund enterprises "related" to farming.

• Example 3: Financing an Agribusiness Service Provider

  A company that specializes in manufacturing and installing advanced irrigation systems for vineyards and large-scale crop farms experiences a surge in demand. To meet this demand and purchase raw materials, they seek a revolving line of credit. A federal farm credit bank approves their application, recognizing the company's crucial role in providing essential infrastructure and services to agricultural producers.

  This scenario highlights the bank's support for businesses that provide vital services and technology to the agricultural sector, showcasing its broad definition of "farm-related enterprises."