§ 614.4165 Young, beginning, and small farmers and ranchers. ( a ) Definitions. ( 1 ) For purposes of this subpart, the term “credit” includes: ( i ) Loans made to farmers, ranchers, and producers or harvesters of aquatic products under title I or II of the Act; and
( ii ) Interests in participations made to farmers, ranchers, and producers or harvesters of aquatic products under title I or II of the Act.
( 2 ) For purposes of this subpart, the term “services” includes: ( i ) Leases made to farmers, ranchers, and producers or harvesters of aquatic products under title I or II of the Act; and
( ii ) Related services to farmers, ranchers, and producers or harvesters of aquatic products under title I or II of the Act.
( b ) Farm Credit banks oversight. ( 1 ) Each Farm Credit Bank and Agricultural Credit Bank must adopt written policies that direct: ( i ) The board of each affiliated direct lender association to establish a program to provide sound and constructive credit and related services to young, beginning, and small farmers, ranchers, and producers or harvesters of aquatic products (YBS farmers and ranchers or YBS);
( ii ) Each affiliated direct lender association to include in its YBS program provisions ensuring coordination with other System institutions in the territory and other governmental and private sources of credit; and
( iii ) The bank to provide the FCA a complete and accurate annual report summarizing the YBS program operations and achievements of its affiliated direct lender associations.
( 2 ) Annually, the YBS program of each direct lender association must be reviewed and approved by its funding bank, provided review and approval shall solely be to determine whether the YBS program contains all required components as set forth in paragraph (d) of this section. Any conclusion by the bank that a YBS program is incomplete must be communicated in writing to the direct lender association and to the FCA within 30 days.
( 3 ) Each Farm Credit Bank and Agricultural Credit Bank must implement internal controls for requirements in paragraphs (b)(1)(iii) and (b)(2) of this section.
( c ) Direct lender association YBS plan. ( 1 ) YBS program components outlined in paragraph (d) of this section must be included in each direct lender association's operational and strategic business plan for at least the succeeding 3 years (as set forth in § 618.8440 of this chapter).
( 2 ) The YBS portion of the operational and strategic business plan must: ( i ) Analyze the direct lender association's performance in the previous year toward achieving the components in paragraph (d) of this section;
( ii ) Discuss variances and reasons for the results; and
( iii ) Identify how the qualitive factors and quantitative goals in paragraph (d) of this section assist and expand access to credit and education for YBS farmers and ranchers.
( d ) Direct lender association YBS programs. The board of directors of each direct lender association must establish a program to provide sound and constructive credit and services to YBS farmers and ranchers in its territory. Each YBS program must operate in a safe and sound manner and within the direct lender association's risk-bearing capacity, while meeting the unique needs of YBS farmers and ranchers. Such a program must include the following minimum components: ( 1 ) Qualitative factors— ( i ) Corporate governance. ( A ) A mission statement describing program objectives and specific means for achieving such objectives.
( B ) Internal controls that establish clear lines of responsibility for YBS strategic plan development and the corresponding YBS program implementation, tracking YBS program performance, and YBS quarterly reporting to the direct lender association's board of directors.
( ii ) Credit and related services. ( A ) Efforts to offer credit and related services, either directly or in coordination with others, that are responsive to the needs of the YBS farmers and ranchers in the territory. Examples include customized loan underwriting standards, loan guarantee programs, fee waivers, or other credit enhancements commensurate with the credit risk approved by the board of directors.
( B ) Coordination with other System institutions in the territory and other governmental and private sources who offer credit and services to YBS farmers and ranchers.
( iii ) Marketing, outreach, and education. Implementation of effective outreach programs to attract and retain YBS farmers and ranchers, which may include the use of advertising campaigns, educational programs, and advisory committees comprised of YBS farmers and ranchers and/or a YBS mentoring program to better serve and understand the needs of this lending segment.
( 2 ) Quantitative goals— ( i ) Annual quantitative goals. Annual quantitative goals for credit to YBS farmers and ranchers based on an understanding of reliable demographic data for the lending territory. Direct lender associations must identify the sources of data used to establish the goals. Such goals must include at least one of the following: ( A ) Loan volume and loan number goals for YBS farmers and ranchers in the territory;
( B ) Percentage goals representative of the demographics for YBS farmers and ranchers in the territory;
( C ) Percentage goals for loans made to new borrowers qualifying as YBS farmers and ranchers in the territory; or
( D ) Goals for capital committed to loans made YBS farmers and ranchers in the territory.
( ii ) Board of directors approval and review. Goals must be approved by the direct lender association's board of directors and reviewed quarterly with adjustments made as needed.
[88 FR 89285, Dec. 27, 2023]