Oral Statement by the Honorable Dallas P. Tonsager

Board Chairman and Chief Executive Officer

Farm Credit Administration

Before the House Appropriations Subcommittee on Agriculture, Rural 

Development, Food and Drug Administration, and Related Agencies

April 2, 2019

Chairman Bishop, Ranking Member Fortenberry, and Members of the Subcommittee, I am 

Dallas Tonsager, board chairman and CEO of the Farm Credit Administration. On behalf of 

my colleagues on the FCA board, Jeffery Hall of Kentucky and Glen Smith of Iowa, and all 

the dedicated men and women of the agency, I am pleased to provide this testimony.

I would like to thank the subcommittee members and staff for their assistance during the 

most recent budget process. The resources provided will be critical for recruiting and 

training highly qualified staff to maintain the safety and soundness of the Farm Credit 

System and the Federal Agricultural Mortgage Corporation.

Role of FCA and the FCS

FCA is an independent federal agency that regulates and examines the banks, associations, 

and related entities of the Farm Credit System and Farmer Mac. 

Our responsibility is to ensure that the System and Farmer Mac meet their congressional 

missions — for the System to provide a dependable source of competitive credit for 

agriculture and rural America and for Farmer Mac to provide a secondary market for ag real 

estate loans, rural housing loans, and rural cooperative credit.

For more than 100 years, the System has helped our nation’s agricultural producers provide 

the most abundant, affordable, and safest food supply in the world. The System includes 4 

banks and 69 associations. The banks provide loan funds to the associations, which in turn 

lend to farmers and ranchers, farm-related businesses, and other eligible borrowers. Of the 

four banks, only CoBank has retail lending authority with express authority to lend to 

agricultural cooperatives and to support rural infrastructure like water, power, and 

communications.

The System obtains loan funds by selling securities on the national and international money 

markets. These securities are not guaranteed by the federal government. Investor demand 

for all System debt products remains positive, allowing the System to continue to issue debt 

on a wide maturity spectrum at competitive rates. 

Condition of the farm economy and Farm Credit System

U.S. farmers are facing challenging economic conditions. After several years of robust 

times, many farmers and ranchers are facing declining financial conditions amid large 

commodity supplies and weak prices for crops and livestock products. Higher operating 

costs for labor, farm inputs, and other expenses are putting stress on farm cash flows and 
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liquidity levels. At current price levels, many farmers will be under financial pressure in 

2019, despite USDA’s projected increase in U.S. net cash farm income. 

For example, profitability for corn and soybean enterprises remains well below levels

reported earlier in the decade. Adjusting production costs to meet expected commodity 

prices will challenge many producers.

Despite these headwinds in the overall farm economy, I am pleased to report that the 

System’s banks and associations, as well as Farmer Mac, are fundamentally safe and sound.

And they maintain a strong position to carry out their mission. 

While overall portfolio credit quality has declined compared to a year ago, credit quality in 

the System’s loan portfolio remains strong. Nonperforming assets totaled $2.3 billion at the 

end of 2018. While elevated from $2 billion at the end of 2017, the System’s loan portfolio 

continues to perform well.

Other factors supporting the overall strength of the System are stable earnings, a strong

capital base, and reliable access to debt markets. For calendar year 2018, the System 

reported $5.3 billion in combined net income, and the System’s total capital equaled $58.4 

billion, up from $55.4 billion a year before.

Finally, the System’s loan portfolio continued to grow in 2018. The System currently 

supplies around 41 percent of our nation’s farm credit. At year-end 2018, gross loans 

totaled $271.9 billion, up 5.1 percent from 2017.

I would also note that Farmer Mac’s business volume grew by $717 million to $19.7 billion 

during 2018, and overall credit quality remained stable, with substandard assets and 90-day 

delinquencies remaining below historical averages.

I ask that my written statement be submitted for the record.

Thank you. I look forward to your questions.