Farm Credit System Agricultural Export and Risk Management Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Farm Credit System Agricultural 
Export and Risk Management Act''.

SEC. 2. PARTICIPATION DEFINED.

    Section 3.1(11)(B) of the Farm Credit Act of 1971 (12 U.S.C. 
2122(11)(B)) is amended by adding at the end the following new clause:
    ``(iv) As used in this subparagraph, the term `participate' or 
`participation' refers to multilender transactions, including 
syndications, assignments, loan participations, subparticipations, or 
other forms of the purchase, sale, or transfer of interests in loans, 
other extensions of credit, or other technical and financial 
assistance.''.

SEC. 3. AGRICULTURAL EXPORT FINANCING.

    Section 3.7(b) of the Farm Credit Act of 1971 (12 U.S.C. 2128(b)) 
is amended--
        (A) in paragraph (1)--
            (i) by striking ``assistance to (A)'' and inserting 
        ``assistance to'';
            (ii) by striking ``the export or'' and inserting ``the''; 
        and
            (iii) by striking ``and (B)'' and all that follows through 
        ``subparagraph (A): Provided, That a'' and inserting ``if 
        the''; and
        (B) by striking paragraph (2) and inserting the following new 
    paragraph:
    ``(2)(A) A bank for cooperatives may make or participate in loans 
and commitments to, and extend other technical and financial assistance 
to--
        ``(i) any domestic or foreign party for the export, including 
    (where applicable) the cost of freight, of agricultural commodities 
    or products thereof, farm supplies, or aquatic products from the 
    United States under policies and procedures established by the bank 
    to ensure that the commodities, products, or supplies are 
    originally sourced, where reasonably available, from one or more 
    eligible cooperative associations described in section 3.8(a) on a 
    priority basis, except that if the total amount of the balances 
    outstanding on loans made by a bank under this clause that--
            ``(I) are made to finance the export of commodities, 
        products, or supplies that are not originally sourced from a 
        cooperative, and
            ``(II) are not guaranteed or insured, in an amount equal to 
        at least 95 percent of the amount loaned, by a department, 
        agency, bureau, board, commission, or establishment of the 
        United States or a corporation wholly-owned directly or 
        indirectly by the United States,
    exceeds an amount that is equal to 50 percent of the bank's 
    capital, then a sufficient interest in the loans shall be sold by 
    the bank for cooperatives to commercial banks and other non-System 
    lenders to reduce the total amount of such outstanding balances to 
    an amount not greater than an amount equal to 50 percent of the 
    bank's capital; and
        ``(ii) except as provided in subparagraph (B), any domestic or 
    foreign party in which an eligible cooperative association 
    described in section 3.8(a) (including, for the purpose of 
    facilitating its domestic business operations only, a cooperative 
    or other entity described in section 3.8(b)(1)(A)) has an ownership 
    interest, for the purpose of facilitating the domestic or foreign 
    business operations of the association, except that if the 
    ownership interest by an eligible cooperative association, or 
    associations, is less than 50 percent, the financing shall be 
    limited to the percentage held in the party by the association or 
    associations.
    ``(B) A bank for cooperatives shall not use the authority provided 
in subparagraph (A)(ii) to provide financial assistance to a party for 
the purpose of financing the relocation of a plant or facility from the 
United States to another country.''.

SEC. 4. CONFORMING AMENDMENT.

    Section 3.8(b)(1) of the Farm Credit Act of 1971 (12 U.S.C. 
2129(b)(1)) is amended--
        (A) by striking subparagraph (B);
        (B) by redesignating subparagraphs (C), (D), and (E) as 
    subparagraphs (B), (C), and (D), respectively; and
        (C) by aligning the margin of subparagraph (D) (as so 
    redesignated) so as to align with the margin of subparagraph (C) 
    (as so redesignated).
SEC. 5. LOAN PARTICIPATION AUTHORITY FOR FARM CREDIT BANKS AND DIRECT 
LENDER ASSOCIATIONS.
    In General.--Title IV of the Farm Credit Act of 1971 (12 U.S.C. 
2151 et seq.) is amended by inserting after section 4.18 (12 U.S.C. 
2206) the following new section:

``SEC. 4.18A. AUTHORITY OF FARM CREDIT BANKS AND DIRECT LENDER 
              ASSOCIATIONS TO PARTICIPATE IN LOANS TO SIMILAR ENTITIES 
              FOR RISK MANAGEMENT PURPOSES.

    ``(a) Definitions.--As used in this section:
        ``(1) Participate and participation.--The terms `participate' 
    and `participation' shall have the meaning provided in section 
    3.1(11)(B)(iv).
        ``(2) Similar entity.--The term `similar entity' means a person 
    that--
            ``(A) is not eligible for a loan from the Farm Credit Bank 
        or association; and
            ``(B) has operations that are functionally similar to a 
        person that is eligible for a loan from the Farm Credit Bank or 
        association in that the person derives a majority of the income 
        of the person from, or has a majority of the assets of the 
        person invested in, the conduct of activities that are 
        functionally similar to the activities that are conducted by an 
        eligible person.
    ``(b) Loan Participation Authority--Notwithstanding any other 
provision of this Act, any Farm Credit Bank or direct lender 
association chartered under this Act may participate in any loan of a 
type otherwise authorized under title I or II made to a similar entity 
by any person in the business of extending credit, except that a Farm 
Credit Bank or direct lender association may not participate in a loan 
under this section if--
        ``(1) the participation would cause the total amount of all 
    participations by the Farm Credit Bank or association under this 
    section involving a single credit risk to exceed 10 percent (or the 
    applicable higher lending limit authorized under regulations issued 
    by the Farm Credit Administration if the stockholders of the 
    respective Farm Credit Bank or association so approve) of the total 
    capital of the Farm Credit Bank or association;
        ``(2) the participation by the Farm Credit Bank or association 
    would equal or exceed 50 percent of the principal of the loan or, 
    when taken together with participations in the loan by other Farm 
    Credit System institutions, would cause the cumulative amount of 
    the participations by all Farm Credit System institutions in the 
    loan to equal or exceed 50 percent of the principal of the loan;
        ``(3) the participation would cause the cumulative amount of 
    participations that the Farm Credit Bank or association has 
    outstanding under this section to exceed 15 percent of the total 
    assets of the Farm Credit Bank or association; or
        ``(4) the loan is of the type authorized under section 1.11(b) 
    or 2.4(a)(2).
    ``(c) Prior Approval Required.--
        ``(1) In general.--With respect to a similar entity that is 
    eligible to borrow from a bank for cooperatives under title III, 
    the authority of a Farm Credit Bank or association to participate 
    in a loan to the entity under this section shall be subject to the 
    prior approval of the bank for cooperatives having, at the time the 
    loan is made, the greatest loan volume in the State in which the 
    headquarters office of the similar entity is located.
        ``(2) Terms and conditions.--Approval under paragraph (1) may 
    be granted on an annual basis and under such terms and conditions 
    as may be agreed on between the Farm Credit Bank or association, as 
    the case may be, and the bank for cooperatives granting the 
    approval.
        ``(3) Approval by supervising farm credit bank.--An association 
    may not participate in a loan to a similar entity under this 
    section without the approval of the supervising Farm Credit Bank of 
    the association.''.

SEC. 6. CONFORMING AMENDMENTS.

    Section 3.1(11)(B)(i)(I)(bb) of the Farm Credit Act of 1971 (12 
U.S.C. 2122(11)(B)(i)(I)(bb)) is amended--
        (A) by striking ``the other banks for cooperatives under this 
    subparagraph'' and inserting ``other Farm Credit System 
    institutions''; and
        (B) by striking ``all banks for cooperatives'' and inserting 
    ``all Farm Credit System institutions''.







                               Speaker of the House of Representatives.







                            Vice President of the United States and    
                                               President of the Senate.

Summary: Farm Credit System Agricultural Export and Risk Management Act - Amends the Farm Credit Act of 1971 to permit banks for cooperatives to participate in agricultural export financing arrangements with domestic or foreign businesses. Prohibits the financing of a US facility's foreign relocation. Authorizes a Farm Credit Bank or direct lender association to participate in loans to similar but non-Farm Credit System entities for risk management purposes. Requires supervising Farm Credit Bank approval.