Farm Credit Administration

Fiscal Year 2023 Proposed Budget

and Performance Plan
 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

i 

Table of Contents

Part I Fiscal Year 2023 Proposed Budget................................................................................ 1

Fiscal Year 2023 Budget Overview................................................................................................. 3

Budget Trends................................................................................................................................. 9

Assessments...................................................................................................................................13

Part II Farm Credit Administration....................................................................................... 17

Profile of the Farm Credit Administration ....................................................................................19

FCA Internal Operations............................................................................................................... 22

Ensuring Safety and Soundness ....................................................................................................31

Developing Regulations and Policies............................................................................................ 38

Part III Farm Credit System.................................................................................................. 43

Profile of the Farm Credit System .................................................................................................45

Financial Condition and Performance.......................................................................................... 49

Young, Beginning, and Small Farmers and Ranchers ...................................................................61

Market Share of Farm Debt.......................................................................................................... 64

Part IV Performance Budget FY 2023 .................................................................................. 65

Performance Budget Overview ......................................................................................................67

Our Strategic Plan Framework ..................................................................................................... 70

Performance Measurement and Reporting .................................................................................. 78
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

ii

List of Tables 

Table 1. Farm Credit Administration FY 2023 proposed budget................................................... 3

Table 2. Information resource management plan initiatives ......................................................... 6

Table 3. FCA budgets, FYs 2021 – 2023........................................................................................10

Table 4. FCA actions and resulting impact.................................................................................... 11

Table 5. Budgeted sources of FCA revenue and funding, FYs 2021 – 2023..................................12

Table 6. FCS assessments, FYs 2013 – 2022.................................................................................13

Table 7. FCA funding, obligations, and assessment carryover, FYs 2020 and 2021 (in millions) 14

Table 8. FCA’s net cost to System borrowers, FYs 2012 – 2021.................................................... 15

Table 9. Farmer Mac assessments, FYs 2013 – 2022.................................................................... 15

Table 10. Full-time-equivalent staffing levels, FYs 2013 – 2023 ................................................. 23

Table 11. FCA retirement eligibility, FYs 2021 – 2026 ................................................................. 24

Table 12. FYs 2021 and 2022 locality rates....................................................................................27

Table 13. Shared services, FY 2022 .............................................................................................. 28

Table 14. Competitive consulting service contracts of more than $25,000, FY 2021 .................. 28

Table 15. Competitive consulting service contracts of more than $25,000, FY 2022.................. 29

Table data for figure 2....................................................................................................................35

Table 16. Net income (dollars in millions).................................................................................... 50

Table 17. Interest margin in annualized percentages ....................................................................51

Table 18. Profitability across System districts for the first nine months of year...........................51

Table 19. Gross loan growth by district and Systemwide (dollars in millions).............................52

Table data for figure 4....................................................................................................................53

Table 20. FCS investments (dollars in millions) ...........................................................................55

Table 21. FCS loan quality..............................................................................................................56

Table 22. Systemwide debt (dollars in millions) ...........................................................................57

Table 23. FCS capital composition (dollars in millions) .............................................................. 58

Table 24. Regulatory capital ratios of FCS banks ..........................................................................59

Table 25: YBS loans made during 2020 ....................................................................................... 62

Table 26: YBS loans outstanding (as of December 31, 2020) ...................................................... 63

Table 27. FCA performance budget, FYs 2021 – 2023..................................................................67

Table 28. FY 2023 proposed budget and full-time equivalents for program activities................ 69
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

iii

Table 29. FY 2023 strategic goals and strategic objectives ........................................................... 71

Table 30. Strategic Goal — Ensure a sound financial system that provides a sustainable source of

credit for agriculture and rural America........................................................................................72

Table 31. Strategic Goal — Foster the long-term viability of the U.S. agricultural economy while 

supporting young, beginning, and small (YBS) farmers, ranchers, and aquatic producers .........75

Table 32. Budgets to achieve policy and regulation program........................................................76

Table 33. Budgets to achieve safety and soundness program .......................................................76

List of Figures

Figure 1. FCA organizational chart as of March 2022 .................................................................. 22

Figure 2. Farm Credit System Financial Institution Rating System (FIRS) composite ratings... 34

Figure 3. The chartered territories of Farm Credit System banks as of January 1, 2022 ............ 46

Figure 4. Year-over-year percent change in System assets, September 2011 – 2021....................53
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

iv

List of Acronyms and Abbreviations

ACA ...........................................agricultural credit association 

CAMELS ...................................capital, assets, management, earnings, liquidity, and sensitivity 

Farm Credit Act.........................Farm Credit Act of 1971, as amended 

Farmer Mac...............................Federal Agricultural Mortgage Corporation 

FCA............................................Farm Credit Administration 

FCS or System...........................Farm Credit System 

FCSIC........................................Farm Credit System Insurance Corporation 

FIRREA.....................................Financial Institutions Reform, Recovery, and Enforcement Act

FIRS ..........................................Financial Institution Rating System 

FLCA .........................................Federal Land Credit Association 

FTE............................................full-time equivalent 

FTP............................................full-time permanent 

FY..............................................fiscal year

Funding Corporation ................Federal Farm Credit Banks Funding Corporation 

GSE ...........................................government-sponsored enterprise 

IT...............................................information technology 

NCB...........................................National Consumer Cooperative Bank 

OSMO........................................Office of Secondary Market Oversight 

PCA ...........................................production credit association 

RBC ...........................................risk-based capital 

USDA ........................................U.S. Department of Agriculture 

YBS............................................young, beginning, and small (farmers and ranchers)
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

v 

Preface 

The Farm Credit Administration is an independent agency in the executive branch of the U.S. 

government. We are responsible for regulating and supervising the Farm Credit System (its 

banks, associations, and related entities) and the Federal Agricultural Mortgage Corporation 

(Farmer Mac).1

Created by an executive order of the president in 1933, FCA now derives its powers and 

authorities primarily from the Farm Credit Act of 1971, as amended (12 U.S.C. 2001 – 2279cc). 

We issue regulations to implement the act, and we examine System institutions for compliance 

with the act and regulations, and with safe and sound banking practices. Our mission is to 

ensure that System institutions and Farmer Mac are safe, sound, and dependable sources of 

credit and related services for all creditworthy and eligible persons in agriculture and rural 

America.

This document presents and justifies our proposed budget for fiscal year 2023 (Part I). It 

discusses our functions and program activities (Part II) and presents an overview of the 

financial condition of the FCS and Farmer Mac (Part III). Also included is the fiscal year 2023 

performance budget, which ties proposed expenditures to the goals and objectives in our 

strategic plan (Part IV).

1 Although Farmer Mac is an FCS institution under the Farm Credit Act (12 U.S.C. 2279aa-1(a)(2)), we 

often discuss Farmer Mac separately from the other entities of the FCS because of the secondary market 

authorities unique to Farmer Mac. Therefore, when we refer to FCS or System institutions without 

specifically including Farmer Mac, Farmer Mac should be considered excluded in that context. Farmer 

Mac is not jointly and severally liable on debt issuances with other parts of the System. 

Part I 

Fiscal Year 2023

Proposed Budget

_________________________________________________________________

Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

3

Fiscal Year 2023 Budget Overview

Our FY 2023 proposed budget request, as shown in table 1, includes $88.5 million in 

assessments (current year and carryover funds) from FCS institutions, including Farmer Mac. 

Reimbursable funding from the U.S. Department of Agriculture, Farm Credit System Insurance 

Corporation, and the National Consumer Cooperative Bank adds $620,000 to this amount, 

bringing our total proposed FCA budget request to $89.12 million.

Table 1. Farm Credit Administration FY 2023 proposed budget

Description

Amount proposed

(in dollars)

Percentage of 

total budget

Full-time-permanent personnel (FTP) $51,770,136 58.1%

Other than FTP 664,768 0.7%

Other personnel compensation 449,035 0.5%

Total personnel compensation $52,883,939 59.3%

Personnel benefits 22,880,027 25.7%

Benefits former personnel 25,000 0.0%

Total compensation and benefits $75,788,966 85.0%

Travel and transportation of persons 3,428,854 3.8%

Transportation of things 117,916 0.1%

Rent, communications, and utilities 937,808 1.1%

Printing and reproduction 150,198 0.2%

Consulting and other services 6,292,899 7.1%

Supplies and materials 1,642,849 1.8%

Equipment 760,510 0.9%

Total budget $89,120,000 100.0%

The FY 2023 proposed budget of $89.12 million increased by $4.31 million over the FY 2022 

revised budget of $84.81 million.

We continue to leverage technology and emphasize savings and efficiencies in operations to 

keep our costs reasonable. As a result, we present a prudent, cost-effective budget.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

4

The budget provides resources for three general purposes: 

• To support the System’s mission as a dependable source of credit and related services for 

agriculture and rural America

• To develop regulations and policy positions that implement statutes

• To promote the safety and soundness of the FCS and Farmer Mac

The FY 2023 budget is necessary to maintain an effective examination program. A robust 

examination program will help us identify any emerging risks early so that we can better protect 

the safety and soundness of the Farm Credit System and Farmer Mac. The environment in 

which the FCS operates is dynamic and increasingly complex. 

The budget continues to implement the FCA board’s philosophy on risk-based examination. We 

have included sufficient resources to ensure that risks are properly identified, managed, and 

controlled. These resources will enable us to send our examiners to the institutions we regulate 

to perform on-site testing of the institutions’ credit reviews, internal audits, and internal 

controls. In addition, we will continue to invest in IT modeling applications to help us identify 

risk throughout the System. The budget also includes resources to hire contractors when we 

need technical specialists and technology upgrades. For more information about our risk-based 

examination and supervision, see page 32.

In the FY 2023 proposed budget, the full-time-equivalent (FTE) staffing level remains relatively 

flat compared to the FY 2022 budget. The FY 2023 budget anticipates increases in spending for 

salaries and benefits because of career-ladder promotions, benefit increases, career 

progressions, funded leave, relocations, travel, supplies, dedicated resources to address the risk 

posed by the ongoing COVID-19 pandemic and equipment life cycle replacements.

As an agency covered by the Financial Institutions Reform, Recovery, and Enforcement Act of 

1989 (FIRREA), we must also strive to achieve comparability in compensation and benefit 

programs with other agencies covered under the act. Therefore, the budget includes a significant 

investment in strategic and tactical human capital initiatives to continue the efforts begun in the 

previous year. 

In FY 2021, we applied evidence-based solutions to help us better address our organizational 

challenges. With approximately 33% of our workforce eligible to retire within the next five years, 

we continue investing in programs to sustain an engaged, results-oriented agency culture. These 

programs emphasize the importance of technical expertise, collaboration, and performance

excellence. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

5

Knowledge transfer is particularly important to us. We provide developmental opportunities for 

supervisors and managers to enhance their leadership skills. We are working to ensure we have 

the right people in the right places working on the right things in the right ways. We are 

enhancing our onboarding experience for new hires to deepen organizational commitment and 

foster a sense of belonging early in their careers. We are continuously updating our technical 

training to leverage technology and improve our processes. Our budget supports our continued 

investment in our employees and maintains compensation comparability with the other 

FIRREA agencies. 

We have emphasized acquiring resources to support data and analytics, and we have dedicated 

staff resources to improving the quality of the data we receive from institutions. We continue to 

focus on delivering analytical tools to improve the agency’s effectiveness and efficiency. 

We have also invested in graduate level education to ensure that our workforce is fully capable of 

using the analytical tools we have invested in. We expect this will yield multiple benefits: more 

effective examination processes, better informed regulatory activity, improved risk 

identification, and effective organization performance measures.

The FY 2023 budget is also necessary to meet our agency’s IT needs for cybersecurity 

enhancements, data efficiencies, application development, and infrastructure maintenance. As 

the complexity of our IT networks and the needs for servers and equipment increase, so does the 

need for funding to address these ever-changing complexities. Our budget also helps us to 

continue to respond to the volume of new or updated IT-related federal mandates. These 

mandates are multiyear efforts that require resources to ensure compliance. 

As part of our overall information resources management (IRM) program, we maintain a strong 

capital planning and investment control process. Our Office of Information Technology invites 

FCA operating units to submit proposals for information technology projects at any time. Our IT 

staff also holds partnership meetings throughout the year with staff from each operating unit to 

discuss the projects. These discussions define the priority, urgency, and scope of each project. 

The project review process considers cost, risk, anticipated return, and alignment with and 

impact on FCA’s agencywide IT systems.

The chief information officer may reprioritize IRM initiatives during the year to accommodate 

changing business needs. The IRM plan initiatives listed in table 2 are multiyear efforts that 

support our agency’s primary program areas. By focusing on those strategic outcomes, we can 

direct our resources to the areas that will result in the highest value outcomes.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

6

Table 2. Information resource management plan initiatives

Initiative Regulation 

and policy

Safety and 

soundness

Crosscutting 

initiatives*

Mission tools and approach X

Data management X

Development 

operations/process 

automation

X

Technology platforms X

Information security and 

compliance X

Office of Information 

Technology management X

Customer support X

FCA open data X

* Crosscutting initiatives support multiple aspects of our operations and provide support across programs.

Budget approach

We expect the FCS to continue to evolve in the coming years to meet the demands of an 

increasingly complex marketplace for agriculture and rural America. As FCS institutions grow 

and change, their operations become more complex. We expect mergers and consolidations to 

continue. Because of challenges in the global economy, we expect the System’s asset base to 

grow at only a moderate pace. Currently, the average asset base of System associations exceeds 

$1 billion.

Our budget strategy will enable us to leverage our most valuable investment — our people. It will 

enable us to continue to streamline and improve operations and to enhance staff expertise to 

meet challenges and opportunities that may arise. Our budget strategy will also support our IT 

needs, allowing us to acquire and maintain the infrastructure we need and to protect our data 

against the growing number of cyberthreats.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

7

FCA program areas

For purposes of our budget, the agency has two primary programs areas: policy and regulation 

and safety and soundness. All FCA office activities and related costs support these programs 

directly or indirectly. These primary program areas are crosscutting and support the goals in the 

agency strategic plan. While our agency strategic plan includes three stewardship objectives 

related to workforce, technology, and financial management, costs in support of these objectives

are intrinsic to the two primary program areas and are not specifically associated with budgeted 

dollars.

The policy and regulation program

The budget provides resources for administering the agency’s policy and regulation program. 

This program involves developing regulations and policy positions that implement applicable 

statutes, promote the safety and soundness of the FCS, and support the System's mission as a 

dependable source of credit and related services for agriculture and rural America.

In addition, the budget provides for ongoing activities such as evaluating and recommending 

regulatory and funding approvals, managing merger and chartering activities, and providing 

strategic and systemic policy research and analyses of risks and other issues facing the System. 

The budget also provides for support activities, including communication of the agency’s 

position on issues, and training and development for staff. In total, policy and regulation 

activities account for approximately $21.0 million, including 62.34 FTEs, in the proposed FY 

2023 budget (see table 28 on page 69).

The safety and soundness program

The budget provides resources for administering the agency’s safety and soundness program. 

The budget resources provided through this program also ensure that FCS institutions comply 

with applicable laws and regulations and are financially positioned to meet the needs of 

agriculture and rural America.

The budget continues to implement the FCA board’s philosophy of a risk-based approach to 

oversight and examination, which maximizes the effectiveness of examinations. Sufficient 

resources are included to ensure that the FCS properly identifies, manages, and controls risk. 

Examination resources are allocated to matters presenting the highest risk or potential risk to 

the System. Activities include developing risk topics, examining institutions on-site, and testing 

the institutions’ credit reviews, internal audits, and internal controls.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

8

A few FCS institutions require heightened supervision and enforcement actions to help them 

address weaknesses or risks we have identified. Currently, examiners are noting conditions that 

reflect the weaknesses in the agricultural economy and commodity markets. Examiners work 

with FCS institutions to ensure these and other risks are recognized and mitigated in a timely 

manner.

In total, safety and soundness activities account for $66.5 million, including 262.43 FTEs, in the 

proposed FY 2023 budget (see table 28 on page 69).

Office of Inspector General’s FY 2023 budget request

In accordance with section 6(g)(1) of the Inspector General Act of 1978, as amended (IG Act), 

FCA’s Office of Inspector General (OIG) has provided the agency with the following information:

• OIG’s total budget request: $2,078,119

• OIG’s training budget: $44,000

• OIG’s support for the Council of the Inspectors General on Integrity and Efficiency: 

$8,692

By including this information in our budget request to the president, the FCA board has fulfilled 

the requirement in section 6(g)(2) of the IG Act. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

9 

Budget Trends

Over the past three years our annual budget requests increased on average by 4.71%. The most 

recent increase is 5.1%. 

The FY 2023 increased budget will address the following goals:

• To cover salaries, benefits, and training associated with new hires 

• To provide career ladder promotions

• To provide funded leave

• To provide career progression

• To provide funds for relocation of hard to fill positions

• To provide pay increases, which helps us maintain comparability in employee 

compensation and benefits with other bank regulators, as required by the Financial 

Institution Reform, Recovery, and Enforcement Act of 1989 

• To provide dedicated resources to address the risk posed by the ongoing COVID-19

pandemic

• To support IT security enhancements, application development, data efficiencies, IT 

maintenance, and equipment life cycle replacement purchases

Overall costs have remained relatively stable over the past three years. However, costs for 

consulting and other services have fluctuated because of the dynamic nature of requirements for

IT security, data analytics, examiner training, and temporary gaps in staffing. See table 3 for 

information on FCA budget trends.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

10

Table 3. FCA budgets, FYs 2021 – 2023

FY 2021 revised 

budget

FY 2022 revised 

budget

FY 2023 proposed 

budget

Full-time permanent (FTP) $48,416,288 $50,531,517 $51,770,136

Other than FTP 525,453 662,442 664,768

Other personnel compensation 435,318 446,427 449,035

Total personnel compensation $49,377,059 $51,640,386 $52,883,939

Personnel benefits 20,757,557 21,967,711 22,880,027

Benefits for former personnel 0 12,500 25,000

Total compensation and benefits $70,134,616 $73,620,597 $75,788,966

Travel and transportation of persons 3,134,352 3,263,437 3,428,854

Transportation of things 52,669 72,170 117,916

Rent, communications, and utilities 946,046 982,552 937,808

Printing and reproduction 160,062 149,944 150,198

Consulting and other services 4,817,145 4,407,009 6,292,899

Supplies and materials 1,188,960 1,314,641 1,642,849

Equipment 436,150 999,650 760,510

Total budget $80,870,000 $84,810,000 $89,120,000

We continue our efforts to reduce costs, leverage technology, and increase efficiencies. In table 

4, we list some of the more notable ways we’ve improved operations and increased efficiency.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

11

Table 4. FCA actions and resulting impact

Action Resulting impact

Scrutinized distribution of IT devices and specialized 

software

Realized cost efficiencies by purchasing 

only items that meet agency business 

needs

Improved functionality of the Enterprise 

Documentation Guidance (EDGe) project Improved workflow and efficiencies

Piloted virtual desktop review of loans to enable exam 

teams to conduct loan reviews from agency offices

Reduced travel costs and improved 

efficiency

Increased reliance on FCS Loan Database to conduct 

analytics

Promoted safety and soundness and

strengthened operational effectiveness and 

efficiency

Ensured service-provider costs were well-managed Improved cost effectiveness

Expanded use of electronic communications (e.g., by 

posting more publications on the agency website, 

establishing secure connections with business 

partners and stakeholders, and expanding use of 

email)

Reduced printing costs and supported 

environmental sustainability initiatives

Implemented and improved audio- and 

videoconferencing, and standardized the equipment 

issued to staff

Helped control travel costs, supported our 

mobile workforce and telecommuting 

initiatives, and maintained continuity of 

operations

Allowed use of penalty fares on travel and continued 

educating travelling staff on the most cost-effective 

fares (e.g., capacity-controlled fares)

Helped control travel costs 

Reviewed monthly smartphone and wireless device 

usage

Reduced costs by ensuring devices are 

fully used

Expanded use of online research and electronic 

materials for training

Reduced printing costs and increased 

support of environmental sustainability 

initiatives

Continued collaboration and resource sharing across 

FCA offices Improved efficiencies

Sources of FCA revenue and funding

We maintain a revolving fund financed primarily from assessments to System institutions and 

Farmer Mac. We also earn interest from investments with the U.S. Department of the Treasury, 

and we perform reimbursable work for the National Consumer Cooperative Bank, the Farm 

Credit System Insurance Corporation, and the U.S. Department of Agriculture. Table 5 shows 

budgeted sources of revenue and funding for FYs 2021 to 2023. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

12

Table 5. Budgeted sources of FCA revenue and funding, FYs 2021 – 2023

Source

FY 2021

revised 

budget

FY 2022

revised 

budget

FY 2023

proposed 

budget

Assessments

Banks, associations, and related entities $76,800,000 $79,450,000 TBD

Federal Agricultural Mortgage Corporation 3,000,000 3,250,000 TBD

Carryover fundsa 600,000 1,500,000 TBD

Assessments available for obligation $80,400,000 $84,200,000 $88,500,000b

Reimbursementsc

National Consumer Cooperative Bank 0 8,529 8,550

Farm Credit System Insurance Corporation 350,627 394,981 392,413

U.S. Department of Agriculture 119,373 206,490 219,037

Total $80,870,000 $84,810,000 $89,120,000

Note: “TBD” stands for “to be determined.”

a. Carryover funds are amounts brought forward from prior years’ assessments that remain available for obligation. We will 

determine assessments and carryover amounts for FY 2023 in September of FY 2022. 

b. Each year Congress limits the amount of assessments that we may use to pay for administrative expenses. For FY 2023, we 

propose a limit of $88.5 million.

c. From a budget standpoint, reimbursements do not include indirect costs.

FCA reserve 

The institutions we oversee are involved in two volatile industries — agriculture and finance. 

Volatility can produce financial stress for institutions, creating a need for heightened oversight 

and supervision. To ensure that we have the resources to provide the necessary supervision and 

oversight during periods of financial stress, we established an agency reserve. Congress granted 

approval for the reserve under section 5.15(a)(1)(B) of the Farm Credit Act, and the FCA board 

established guidelines for it.

The reserve ensures that we can effectively and efficiently respond to safety and soundness 

issues arising within the System. It allows us to respond to these issues without increasing 

assessments at a time that may be financially difficult for System institutions. At the end of FY 

2021, the reserve totaled $14.8 million.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

13

Assessments 

FCA’s operating costs are financed by direct assessments collected from System institutions, 

including Farmer Mac. Table 6 shows assessments for FYs 2013 through 2022. Assessments in 

2013 and 2014 were particularly low because we used large amounts of carryover from prioryear assessments to help fund our operations. To fund the FY 2022 budget, we used $1.5 million 

of carryover and increased assessments by $3.8 million.

Table 6. FCS assessments, FYs 2013 – 2022

Fiscal year Assessment (in millions)

2013 $50.0

2014 $50.0

2015 $51.5a

2016 $58.3

2017 $66.8b

2018 $68.2b

2019 $72.7

2020 $73.0c

2021 $76.3d

2022 $82.7

a. The original assessment was $54.5 million and was reduced by $3.0 million during the year.

b. Because of the budget limitation in the continuing resolution, the assessment was reduced in the fourth quarter by $3.0 

million.

c. The original assessment was $76.0 million and was reduced by $3.0 million during the year primarily because of restricted 

business travel.

d. The original assessment was $79.8 million and was reduced by $3.5 million during the year primarily because of restricted 

business travel. 

In FY 2021, we assessed the System $76.3 million and ended the year with $1.1 million in 

reimbursable revenue and deobligations (see table 7). During the year, we had obligations of 

$76.9 million. The difference between our obligations and funding was $.5 million, which 

represents the increase to carryover.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

14

Table 7. FCA funding, obligations, and assessment carryover, FYs 2020 and 2021 (in 

millions)

FCS borrower costs 

FCS borrower costs are based on the relationship between the System’s total assessments and 

assets held (not including Farmer Mac). The FCS held $410.6 billion in total assets as of 

September 30, 2021, up from $384.9 billion a year earlier. 

As table 8 shows, FCS borrowers incurred a net cost of approximately 1.8 basis points, or 1.8 

cents for every $100 of assets held, to pay for FCA operations in FY 2021. Since FY 2012, the net 

cost to borrowers has averaged 1.9 basis points.

Borrower costs have declined over the years for the following reasons:

• System assets have grown.

• FCA has used carryover to offset additional costs. 

• FCA has taken various measures to reduce operating costs. (See table 4 for details.)

FY 2020 FY 2021

Current-year assessments $73.0 $76.3

Reimbursable revenue and deobligations $1.2 $1.1

Total funding $74.2 $77.4

Obligations $73.5 $76.9

Total funding minus obligations $0.7 $0.5

Assessment carryover from prior years $1.2 $1.9

Carryover from assessments at end of fiscal year $1.9 $2.4
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

15

Table 8. FCA’s net cost to System borrowers, FYs 2012 – 2021 

Fiscal year ended 

September 30 Basis points

2012 2.2

2013 1.9

2014 1.8

2015 1.7

2016 1.8

2017 2.0

2018 2.0

2019 2.0

2020 1.8

2021 1.8

Assessments for the Federal Agricultural Mortgage Corporation (Farmer Mac)

Farmer Mac’s assessment for FY 2022 is $3.25 million. The assessment for FY 2023 is not yet 

available because the Office of Secondary Market Oversight will not complete the FY 2023 

budget and estimation of examination, oversight, and regulatory costs pertaining to Farmer Mac 

until September 2022. 

Table 9 shows Farmer Mac assessments for fiscal years 2013 to 2022. These assessments include 

costs associated with increased examination and oversight activities. We have increased these 

activities because, like other federal financial regulators, we are placing additional emphasis on 

capital adequacy and stress testing.

Table 9. Farmer Mac assessments, FYs 2013 – 2022

Fiscal year Assessment (in millions)

2013 $2.38

2014 $2.38

2015 $2.40

2016 $2.45

2017 $2.50

2018 $2.50

2019 $2.75

2020 $2.90

2021 $3.00

2022 $3.25

Part II 

Farm Credit Administration

_________________________________________________________________

Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

19

Profile of the Farm Credit Administration

The Farm Credit Administration was created through an executive order of President Franklin 

D. Roosevelt and currently derives its powers and authorities primarily from the Farm Credit 

Act of 1971, as amended. As an independent agency within the executive branch of the federal 

government, we are responsible for regulating and supervising the Farm Credit System (FCS or 

System) banks, associations, and related entities, as well as the Federal Agricultural Mortgage 

Corporation (Farmer Mac).

The FCS is the oldest of the financial government-sponsored enterprises (GSEs). The Farm 

Credit Act states that the objective of the FCS is to improve the income and well-being of 

American farmers and ranchers by furnishing sound, adequate, and constructive credit and 

closely related services to them, their cooperatives, and selected farm-related businesses.

The System consists primarily of a nationwide network of borrower-owned, cooperative 

financial institutions that provide credit and related services to

• farmers and ranchers,

• producers and harvesters of aquatic products,

• farm-related businesses,

• rural homeowners,

• agricultural and aquatic cooperatives,

• agribusinesses, and

• rural utilities.

The FCS had $325.8 billion in outstanding loans to agriculture and rural America as of 

September 30, 2021.

Farmer Mac is a stockholder-owned, federally chartered instrumentality of the United States

and an institution of the FCS, and its authority is derived from Title VIII of the Farm Credit Act. 

Farmer Mac was established in 1988 to create a secondary market for agricultural real estate 

loans and rural housing mortgage loans. In 2008, Farmer Mac’s secondary market authorities 

were expanded to include rural utility loans. It provides secondary market services through a 

network of agricultural lenders and intermediaries, including commercial banks, FCS banks and 

associations, life insurance companies, mortgage companies, and rural utility cooperatives. As of 

September 30, 2021, Farmer Mac’s outstanding program activity totaled $23.1 billion.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

20

On a reimbursable basis, we perform examinations of certain entities that are not part of the 

Farm Credit System. FCA is required by the National Consumer Cooperative Bank Act of 1978, 

as amended, to examine and report on the condition of the National Consumer Cooperative 

Bank (NCB). Since the passage of this law, we have conducted safety and soundness 

examinations of NCB and issued reports of examination to NCB’s board of directors. NCB is a 

federally chartered, privately owned banking corporation. It is not a federal instrumentality, and 

it is not part of the FCS. In addition, we provide examination services on behalf of the Farm 

Credit System Insurance Corporation and the U.S. Department of Agriculture. 

The U.S. Senate Committee on Agriculture, Nutrition, and Forestry and the U.S. House of 

Representatives Committee on Agriculture oversee the FCS, Farmer Mac, and FCA. Our 

operations are funded through assessments paid by the System institutions and by our 

reimbursable activities; we do not receive a federal appropriation.

Mission statement

As stated in the FCA Strategic Plan for FYs 2022 – 2026, our mission is to ensure that System 

institutions and Farmer Mac are safe, sound, and dependable sources of credit and related 

services for all creditworthy and eligible persons in agriculture and rural America. To fulfill this 

mission, we issue regulations and conduct examinations of FCS institutions and Farmer Mac to 

evaluate and oversee the safety and soundness of their activities. 

Our examinations evaluate whether institutions are complying with laws and regulations and 

are operating in a safe and sound manner. They also evaluate compliance with the congressional 

mandate requiring System associations to have programs to make credit and services available 

to young, beginning, and small (YBS) farmers and ranchers. In addition, we research, develop, 

and adopt rules, regulations, and other guidelines that govern how institutions conduct their 

business and interact with customers.

If any System institution, including Farmer Mac, violates laws or regulations, or if we determine 

that its operations are unsafe or unsound, we may use our enforcement authority to ensure that 

the problem is corrected in a timely manner. We also ensure that the rights of certain borrowers 

are protected.2

Other statutory duties require us to issue and amend FCS institution charters, to report to 

Congress on the System’s and Farmer Mac’s financial condition and performance, and to 

approve the issuance of debt obligations by System banks. 

2 Provisions in the Farm Credit Act regarding borrower rights do not apply to loans to cooperatives.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

21

FCA board and governing philosophy

Our policy and regulations are established by a full-time, three-person board whose members 

are appointed by the president of the United States with the advice and consent of the Senate. 

They serve staggered six-year terms and may not be reappointed to succeed themselves after 

serving a full term or more than three years of a previous member’s unexpired term. A board 

member may serve after expiration of his or her term until a successor has been appointed and 

qualified. The president designates one member as chairman of the board; this member serves 

as chairman until the end of his or her term. The board chairman also serves as the agency’s 

chief executive officer.

The FCA board approves charters of FCS institutions, oversees the agency’s supervision and 

examination of those institutions, and issues enforcement actions. The governing philosophy of 

the FCA board is grounded in the Farm Credit Act. The board believes that the principles on 

which the System was founded are just as important today as they were in the early decades of 

the 20th century. 

FCA organizational structure

Figure 1 presents our organizational structure and shows how the offices provide strategic 

support to the FCA board and ensure that our mission and goals are performed effectively and 

efficiently. We have our headquarters in McLean, Virginia, with field offices in Bloomington, 

Minnesota; Dallas, Texas; Denver, Colorado; and Sacramento, California.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

22

Figure 1. FCA organizational chart as of March 2022

For an accessible version of this chart, go to http://www.fca.gov/about/fca-organizational-chart. 

FCA Internal Operations 

The last couple of years have been a time of profound uncertainty for our workforce. This 

situation called for us to develop fresh approaches for motivating and engaging staff. Ranked the 

fifth best place to work among small agencies in the federal government in 2020, we already 

have significant strengths on which to build, and we continue to promote and encourage 

practices that foster resiliency, creativity, innovation, and accountability.

Human capital management

The agency’s Strategic Plan reflects our commitment to maintaining a diverse and capable 

workforce. Strategic objectives address maintaining a skilled, motivated workforce; ensuring 

adequate succession planning and knowledge transfer; and promoting diversity, ethics, and 

engagement in our workforce. We periodically assess external and internal workforce trends and 

integrate best practices. We also monitor the System’s changing environment so that we can 

adjust staffing levels and maintain the necessary skill sets by hiring additional staff and by 

providing employee training and development. We review our workforce planning strategies 

annually. See table 10 for full-time-equivalent (FTE) staffing levels (rounded to the nearest 

whole number) from FYs 2013 through 2023. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

23

Table 10. Full-time-equivalent staffing levels, FYs 2013 – 2023

Fiscal year FTE staffing level

2013 273

2014 278

2015 277

2016 290

2017 296

2018 298

2019 308

2020 297

2021 314

2022 334 (authorized)

2023 333 (authorized)

Note: From FYs 2013 to 2023, the ratio of managers and supervisors to other personnel has ranged between one to five and 

one to six.

We annually review workforce demographic profiles to monitor changes, such as the age and 

grade of employees, and explore trends. From this analysis, we develop five-year projections to 

determine and mitigate the impact of employee retirements and separations. 

As of September 30, 2021, almost 23.1% of our personnel were eligible to retire; we expect that 

number to increase substantially in the next few years. By FY 2026, approximately 33% of our 

workforce will be eligible to retire. See table 11 for retirement eligibility projections.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

24

Table 11. FCA retirement eligibility, FYs 2021 – 2026 

Fiscal year

Number of staff first eligible 

during the fiscal year

Number of staff eligible at 

fiscal year end

Percentage of staff eligible 

to retire at fiscal year end

2021 16 77 23.1%

2022 4 81 24.3%

2023 11 92 27.6%

2024 9 101 30.3%

2025 6 107 32.1%

2026 3 110 33.0%

Note: This table assumes that staff eligible for retirement remain employed.

To promote a safe and healthy workforce during the pandemic, we quickly pivoted in March 

2020 to accomplish our mission using technology and telework protocols. We mandated 

telework for most of our workforce on March 16, 2020, and most employees are continuing to 

telework. 

With a score of 97.2, FCA earned the highest overall COVID-19 response score of any large, 

medium, or small agency on the 2020 Best Places to Work in the Federal Government rankings 

from the Partnership for Public Service and the Boston Consulting Group. FCA’s Emergency 

Response Team, composed of the FCA board and senior managers, meets regularly and 

continually monitors COVID-19 case trends, local school status, and government status at the 

federal, state, and local levels for its McLean, Virginia, headquarters and four field offices in 

various parts of the United States. 

In July 2021, we submitted our Return to Work Plan to the Office of Management and Budget 

(OMB), which outlines and describes the steps we are taking to promote a safe and healthy work 

environment. With input from subject-matter experts at the Office of Personnel Management, 

the General Services Administration, and the Safer Federal Workforce Task Force, OMB 

concluded that our plan is consistent with the intent of OMB Memorandum M-21-25. The fourphase plan includes continuing to enable staff to telework, conducting contactless temperature 

checks at all office locations, ensuring that employees abide by masking protocols consistent

with guidelines from the Centers for Disease Control and Prevention, and upgrading the air 

filtration system in our headquarters and four field offices. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

25

Training

FCA remains committed to developing and delivering world-class learning resources to ensure 

that our workforce can meet current and future performance needs. During FY 2021, the Office 

of Agency Services’ Learning and Organizational Change Team used several strategies to 

enhance technical capabilities, leadership competencies, and performance management while 

the agency operated in a geographically dispersed remote work environment. Examples of these 

strategies include the following: 

• Technical capabilities — Continued to partner with Virginia Tech’s Department of 

Agriculture and Applied Economics to develop and deliver for-credit, graduate level 

courses and professional development certificates with an emphasis in agricultural 

business, financial risk management, and data analytics 

• Leadership competencies — Continued to provide aspiring leaders the necessary skills 

and experiences to lead while responding to the challenges of the COVID-19 pandemic by 

- supporting participation in OPM’s Leadership Education and Development Institute, 

- acquiring additional licenses from our eLearning service provider to expand access to 

specialized leadership development courses, 

- coordinating participation of 34 FCA leaders and aspiring leaders in employeeengagement workshops tailored for our agency’s needs by the Partnership for Public 

Service, and

- collaborating with external service providers and internal stakeholders to develop

and deliver a three-day leadership development summit to ensure compliance with 5 

CFR 412.202

• Performance management — Coordinated and delivered three agencywide virtual 

learning sessions on effective performance management while operating in a hybrid 

telework environment

Our emphasis on training has contributed to our strong showing in the rankings of the Best 

Places to Work in the Federal Government. In 2020, we were ranked in the top 5 among small 

federal agencies. The rankings are based on the results of the annual Federal Employee 

Viewpoint Survey. According to the 2020 survey results, the agency had made significant strides 

in improving employees’ attitudes toward agency training and readiness: 

• 94% of employees reported their work unit has the job-relevant knowledge and skills 

necessary to accomplish organizational goals — an increase from 90% in 2019. 

• 91% of employees reported they are given a real opportunity to improve skills — an 

increase from 84% in 2019.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

26

Moving forward, FCA’s Learning and Organizational Change Team plans to build on existing 

efforts to develop our workforce by instituting a more systemic and integrated set of learning 

solutions. Some examples planned for FYs 2022 and 2023 include the following:

• Updating all learning, training, and education policies by modernizing and streamlining

procedures to support a more mission-driven and results-oriented approach to meeting

the needs of our workforce

• Revising the agency’s leadership competency model to reflect a more contemporary 

framework that supports effective succession management

• Increasing the utility of the agency’s eLearning platform by centralizing all required and 

discretionary learning resources

Examiner commissioning program

Through our Commissioning Program, we are developing the next generation of diverse and 

highly skilled examiners, ensuring they have the knowledge, skills, and talents necessary to 

accomplish the agency’s mission. The program helps examiners develop their skills in FCA’s 

primary areas of oversight — credit, finance, and operations, as well as examination 

management.

We also invest in the development of our commissioned examiners through human capital 

planning, examiner career development, and specialty programs. The specialty programs enable 

examiners to gain technical expertise and encourage them to pursue professional development 

and certification. Various professional development and certification programs are available to 

help our examiners hone their expertise. 

Diversity and inclusion

Because we recognize the value of diversity and inclusion to the agency, we work hard to attract 

and retain staff with varied backgrounds and skills. Our recruiters regularly visit job fairs at 

universities with high minority enrollment, and we have several Special Emphasis Programs at 

the agency to raise awareness about diversity and inclusion in our workforce. As a result of our 

emphasis on diversity and inclusion, in 2019 the Partnership for Public Service ranked FCA 

number 1 among small federal agencies for support of diversity. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

27

FCA compensation program

Section 5.11(c)(2)(A) of the Farm Credit Act was amended in 1989 by the Financial Institutions 

Reform, Recovery, and Enforcement Act (FIRREA). This provision authorizes the FCA chairman 

to set and adjust FCA employees’ compensation without regard to the general pay schedule 

applicable to most federal agencies. The chairman may also provide additional pay and benefits 

to enable FCA to maintain comparability with other federal banking agencies as defined in 

FIRREA. Section 1206 of FIRREA was subsequently amended to require the heads of FCA, the 

Federal Deposit Insurance Corporation, the Comptroller of the Currency, the National Credit 

Union Administration Board, the Federal Housing Finance Board, the Office of Financial 

Research, and the Bureau of Consumer Finance Protection to inform Congress and one another 

of their compensation and benefits and to “seek to maintain comparability regarding 

compensation and benefits.” 

To comply with FIRREA, we participate in a biennial survey of the other federal financial

regulators and adjust our employees’ compensation and benefits accordingly. Our compensation 

rates are similar to the average market rate provided by other agencies covered under FIRREA.

We use a pay-for-performance program to adjust each employee’s salary according to his or her 

performance rating and salary range position. We make salary adjustments each calendar year 

based on several factors, including the compensation programs of other FIRREA regulators and 

available funding.

The FCA board approved for the 2022 compensation program a 1% increase in our base salary 

range structures and a merit pay matrix with pay increases ranging from 0.39% to 3.1%, 

depending on each employee’s performance rating and placement in the salary range for his or 

her grade. The board also approved increases to locality rates to align them with the locality 

rates of the Federal Deposit Insurance Corporation. Table 12 provides the revised 2021 locality 

rates for FCA locations. 

Table 12. FYs 2021 and 2022 locality rates

Locality 2021 rate 2022 rate

McLean 29.52% 30.76%

Bloomington 19.62% 20.27%

Denver 21.53% 22.65%

Dallas 20.99% 21.50%

Sacramento 22.89% 23.66%

Rest of United States 14.99% 15.67%
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

28

External contracting and shared services

As table 13 shows, we continue to outsource several functions. We have a shared-service 

agreement with the Bureau of the Fiscal Service (BFS). We also outsource our payroll function to 

USDA’s National Finance Center and our personnel security and credentialing function to the 

Department of Interior’s Business Center. Outsourcing these services allows us to manage 

employee benefits and other agency functions without additional personnel costs.

Table 13. Shared services, FY 2022 

Contract Services provided Amount

Administrative Service Center (BFS) Full-service accounting, e-Travel, credit card, 

and platform procurement services

$809,058

National Finance Center (USDA) Payroll services $50,835

Department of Interior Personal security and credential services $26,479

Defense Counterintelligence 

Security Agency

Background investigation services $90,000

Tables 14 and 15 provide a summary of our competitive consulting service contracts for FYs 

2021 and 2022. 

Table 14. Competitive consulting service contracts of more than $25,000, FY 2021

Contract Purpose Amount

Second Pillar Consulting 

(17-FCA-450-005)

Financial risks evaluation and assessment for 

the Office of Secondary Market Oversight $70,000

August Schell Enterprises

(19-FCA-651-037) U.S. federal production support $60,775

Harper, Rains, Knight & Company 

(18-FCA-700-001) Financial statement audit services $55,432

Wells Fargo Retirement

(19-FCA-641-004) Retirement administration services $56,000

Williams and Adley

(20-FCA-700-003) FISMA evaluation services $69,139*

MetLife (19-FCA-641-005) Long-term disability services $159,386

Personnel Decisions Research 

Institute (15-FCA-301-001) Commission test and staff evaluation services $66,136

Stafford Consulting 

(19-FCA-641-026)

Administrative support services for the Office of 

Agency Services $61,766

Totem (20-FCA-641-022) Human resource support services $84,650

* We erroneously reported this amount as $60,850 in our FY 2022 Proposed Budget and Performance Plan.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

29

Table 15. Competitive consulting service contracts of more than $25,000, FY 2022 

Contract Purpose Amount

Second Pillar Consulting 

(17-FCA-450-005)

Financial risk evaluation and assessment for 

the Office of Secondary Market Oversight $75,000

August Schell Enterprises

(20-FCA-651-006) U.S. federal production support $60,774

Harper, Rains, Knight & Company 

(18-FCA-700-001) Financial statement audit services $57,021

Principal

(21-FCA-641-018) Retirement administration services $58,240

Williams and Adley

(20-FCA-700-003) FISMA evaluation services $70,453

MetLife (22-FCA-641-006) Long-term disability services $162,127

Personnel Decisions Research 

Institute (20-FCA-301-001) Commission test and staff evaluation services $67,248

Other functions and activities

In FY 2021, we spent $218 on reception and representation expenses and had no foreign travel 

expenses. 

Leveraging FCA technology

We have designed a flexible IT program at FCA that can adapt to changing technical and 

business needs. The Office of Information Technology holds regular partnership meetings with 

staff from other business units to ensure that we monitor our IT investments closely and adjust 

our priorities as needed. Through these partnership meetings, we identify multiyear IT 

initiatives and include these in our annual Information Resources Management (IRM) Strategic 

Plan. 

The IRM Strategic Plan drives IT spending through the current fiscal year and beyond. In 2022, 

we will continue to improve FCA’s data reporting, dashboard, and analysis capabilities and 

strengthen our cybersecurity. We will engage contractors when we need specialized expertise, 

and we will expand use of cloud services where appropriate. 

In 2021, we accomplished the following:

• Created several reports/dashboards and forms to allow for compliance with COVID-19–

related restrictions 

• Implemented new hybrid conferencing capabilities that allow some individuals to join a 

meeting in person while others participate online
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

30

• Replaced desk phones to address a security issue

• Enhanced the examination toolset

• Improved user productivity by creating a system to notify users when items are due

• Completed phase I of a project to modernize the collection of data from System 

institutions

• Continued to strengthen our cybersecurity and privacy programs by, for example, 

updating our policies and procedures 

• Implemented a requisition routing system to automate the submission and tracking of 

requisitions

• Rolled out a policy management tool to enable us to track staff attestation to agency 

policies

• Developed an online form for borrow complaints

• Created a more robust enterprise risk-management solution to better track enterprise 

risks

• Implemented multifactor authentication for our cloud services

• Replaced software collaboration tools that are no longer vendor supported

• Improved our disaster recovery plan and procedures

• Responded to the significant increase in governmentwide mandates

For more information about the ways we will use technology in FYs 2022 and 2023 to achieve 

our strategic goals, see table 2 on page 6. 

Independent auditing and accountability

The Office of Inspector General contracted with Harper, Rains, Knight & Company, P.A., to 

perform the FY 2021 audit of FCA’s financial statements. On November 10, 2021, Harper, Rains, 

Knight & Company issued an unmodified opinion on our financial statements for the fiscal year 

ended September 30, 2021. 

The auditors opined that the financial statements presented fairly, in all material respects, FCA’s 

financial position as of September 30, 2021, in conformity with generally accepted accounting 

principles. In addition, although the auditors did not express an opinion on the matter, they did 

not identify any deficiencies in internal control over financial reporting that would be 

considered material weaknesses. 

The auditors also did not identify any instances of noncompliance with selected provisions of 

laws and regulations or other reportable matters that could have a direct and material effect on 

the financial statements.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

31

Ensuring Safety and Soundness

The Farm Credit Administration’s role is to regulate the Farm Credit System and to ensure that 

System institutions comply with applicable laws and regulations. In doing so, we ensure the 

safety and soundness of the System, including Farmer Mac. 

The first section below, titled “The Farm Credit System,” summarizes examination and 

supervisory activities performed on the banks, direct-lending associations, and service 

organizations of the FCS. Because the role of Farmer Mac is different from that of the rest of the 

System, we discuss Farmer Mac separately in the second section below. In addition, we provide 

examination and other services on a reimbursable basis to certain entities that are not part of 

the System. These activities are summarized in the third section below, titled “Other Entities.”

Our examination and supervision responsibilities are carried out by staff located in our 

headquarters in McLean, Virginia, and in four field offices — in Bloomington, Minnesota; 

Dallas, Texas; Denver, Colorado; and Sacramento, California. We do not expect any changes in 

the field office structure in FY 2022. 

The Farm Credit System

Statutory and regulatory requirements

The Farm Credit Act requires FCA to examine each FCS institution at least once every 18 

months. We meet this requirement through a risk-based process of oversight and examination 

designed to maximize efficiency while addressing System risk effectively. 

To monitor and evaluate the System’s safety and soundness, we need loan portfolio and other 

data from System institutions. Our regulations include the following reporting requirements:

• Each System institution must prepare and file reports of condition and performance with 

FCA each quarter in accordance with 12 CFR 621.12. These reports provide detailed 

information on each institution’s financial performance and portfolio quality and other 

relevant information.

• The Federal Farm Credit Banks Funding Corporation must prepare consolidated System 

information and make this information available to investors and the public in 

accordance with 12 CFR part 630.

System institutions submit other data to us through our Consolidated Reporting System. Some 

of the submitted information is available to the public on our website (www.fca.gov). We also 

collect loan data from all System institutions. We have been expanding loan data collection and 

analysis to enhance our evaluation of risk to the System as a whole. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

32

In addition to overseeing and examining the System, we establish policies and regulations to 

ensure that the System addresses key risk areas. For example, our regulations require System 

institutions to have effective loan underwriting and loan administration processes, to achieve 

and maintain minimum capital levels, to provide strong asset-liability management, and to 

establish high standards for governance and transparent disclosures for shareholder 

information.

Risk-based examination and supervision

We design examination and supervision processes to address material risks and emerging issues 

at the institution level and Systemwide. We base our examination and supervision strategies on 

institution size, existing and prospective risk exposure, and the scope and nature of each 

institution’s business model. We also evaluate whether each institution’s business model will 

ensure that it fulfills its public mission as a government-sponsored enterprise. In addition to 

overseeing and examining individual institutions, we identify and evaluate Systemwide 

emerging risk and allocate examination resources to matters of highest priority and potential 

risk.

We have developed a comprehensive regulatory and supervisory framework to promote and help 

ensure the System’s safety and soundness and its compliance with laws and regulations. This 

approach recognizes each institution’s responsibility and ability to identify and manage both 

institution-specific and systemic risks. Our examination and supervision program promotes 

accountability in System institutions for their programs, policies, procedures, and controls. 

System institutions have developed effective risk-management cultures in response to our 

examination and supervision programs and our policies and regulations. These programs, 

policies, and regulations continue to set high standards for the System.

Because of volatility in the agricultural and credit markets, as well as significant changes in the 

financial markets, ensuring the safety and soundness of the System is more important and 

challenging than ever. To address these challenges, we annually identify and use risk topics to 

set examination priorities, identify potential regulatory issues, allocate resources, and evaluate 

emerging risk exposures. The examination and supervision program includes strategies for 

addressing these emerging risks and communicating our expectations to both internal and 

external audiences. Risk topics for 2022 are as follows:

• Cybersecurity in an increasing threat environment

• Loan underwriting in a period of significant volatility
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

33

When our examiners identify unsafe and unsound practices or conditions within a System 

institution or find that an institution has violated a law or regulation, we outline the corrective 

actions the institution must take in a Report of Examination or other form of communication. If 

necessary, we use our enforcement powers to bring about changes in an institution’s policies 

and practices to correct unsafe or unsound conditions or violations of law or regulations. 

However, in most cases, we achieve corrective action without the use of formal enforcement 

powers.

Measuring the safety and soundness of the System

We use our Financial Institution Rating System (FIRS) as a key method to assess the safety and 

soundness of each FCS institution. The FIRS provides a general framework, consisting of 

component and composite ratings, for evaluating and assimilating significant financial, asset 

quality, and management factors. Similar to systems used by other federal financial regulators, 

the FIRS evaluates six key component areas to properly assess the degree of risk in an 

institution. These key component areas are capital, assets, management, earnings, liquidity, and 

sensitivity (CAMELS). 

Based on our CAMELS ratings, we assign an overall composite rating for the institution. The 

rating system ranges from 1 to 5. A composite rating of 1 indicates that an institution is sound in 

every respect and that it exhibits the strongest performance and risk-management practices, 

whereas a rating of 5 represents an extremely high, immediate, or near-term probability of 

failure. 

Our examiners continually evaluate institutional risk and regularly review and update FIRS 

ratings to reflect current risks and conditions in each System institution. We provide guidance 

on both quantitative benchmarks and qualitative factors to help examiners apply the FIRS 

process consistently. 

We disclose these confidential FIRS composite and component ratings to the institution’s board 

and management to provide perspective on relative safety and soundness. Examination reports 

and other forms of communication also provide the institution’s board with an assessment of 

the governance, management, quality of assets, and financial condition and performance of the 

institution.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

34

Recent results 

As the composite FIRS ratings show, the System’s condition and performance have been sound 

over the past several years. The following summarizes FIRS ratings for System banks and 

associations as of October 1, 2021: 

• Thirty-one institutions were rated 1.

• Thirty-seven were rated 2.

• Three were rated 3 or lower.

See figure 2 for information on FIRS rating trends. For a more detailed discussion of the 

financial condition and performance of the System, see part III of this report.

Figure 2. Farm Credit System Financial Institution Rating System (FIRS) composite 

ratings

Source: FCA's FIRS Ratings Database.

Note: This chart reflects ratings for only the System’s banks and direct-lending associations; it does not include ratings for the 

System’s service corporations, Farmer Mac, or the Federal Farm Credit Banks Funding Corporation. Also, the numbers in the 

bars indicate the number of institutions by FIRS rating.

44 39 34 30 32 31 

31 29 

32 35 35 37 

2 5 7 7 4 3 

0%

20%

40%

60%

80%

100%

01/01/17 01/01/18 01/01/19 01/01/20 01/01/21 10/01/21

Percentage of Rated Institutions

1 Rated 2 Rated 3 Rated or Lower
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

35

Table data for figure 2

FIRS Ratings

01/01/1701/01/1801/01/1901/01/2001/01/21 10/01/21 

1 rating 44 39 34 30 32 31

2 rating 31 29 32 35 35 37

3 rating or lower 2 5 7 7 4 3 

Total 77 73 73 72 71 71

Federal Agricultural Mortgage Corporation

Through our Office of Secondary Market Oversight (OSMO), we provide for the examination and 

general supervision of Farmer Mac’s safe and sound performance of its powers, functions, and 

duties. OSMO performs annual CAMELS-based examinations, which include examination of 

capital, assets, management, earnings, liquidity, and sensitivity.

Statutory authority

OSMO was established in 1992 by the Food, Agriculture, Conservation, and Trade Act 

Amendments of 1991 (Public Law 102 – 237), which amended section 8.11 of the Farm Credit 

Act. OSMO is required to be managed by a full-time director who reports to the FCA board, and 

OSMO’s activities, to the extent practicable, must be carried out by individuals not responsible 

for supervising the banks and associations of the FCS.

Data reporting requirements

Farmer Mac is required to submit quarterly Call Reports to OSMO in addition to meeting 

several other periodic reporting requirements related to Farmer Mac’s regulatory risk-based 

capital, mission, liquidity, and financial derivatives portfolio. Farmer Mac is also subject to the 

disclosure and reporting requirements of the Securities and Exchange Commission.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

36

Financial condition and performance

Farmer Mac’s financial condition and performance trends were generally positive in FY 2021 

despite a modest increase in troubled loan volume. 

• Net income available to common shareholders was $107.1 million for the 12 months 

ended September 30, 2021, compared with $88.8 million during FY 2020. 

• Farmer Mac’s statutory core capital totaled $1,179 million at the end of FY 2021, 

compared with $984.2 million at the end of FY 2020. The minimum statutory core 

capital requirement for Farmer Mac’s on- and off-balance-sheet exposures totaled 

$699.6 million at the end of FY 2021. Thus, Farmer Mac exceeded its statutory minimum 

core capital requirement by approximately $479.5 million. 

• At the end of FY 2021, Farmer Mac had $1.2 billion in regulatory capital (as defined in 

the Farm Credit Act) available to meet the $210.7 million minimum requirement 

established by FCA’s Risk-Based Capital Model.

• Program activity increased approximately 5.1%, ending FY 2021 at $23.1 billion. Farmer 

Mac had $4.6 billion in its liquidity portfolio as of the year-end. 

Credit quality remained stable and generally good. Farmer Mac held no real estate owned as of 

fiscal year-end 2021, unchanged from fiscal year-end 2020. Total acceptable loan volume 

increased 2 percentage points to 93.5% in FY 2021. 

Risk-Based Capital (RBC) Model

Section 8.32 of the Farm Credit Act requires the RBC Model to be used to determine the amount 

of regulatory capital that Farmer Mac needs to maintain positive capital during a 10-year period 

under certain credit risk and interest rate risk situations. The RBC Model must estimate credit 

losses on agricultural mortgages and rural utility loans owned or guaranteed by Farmer Mac. 

The rate of loan default and severity of losses on agricultural mortgages must be reasonably 

related to the default rate and severity of losses experienced in contiguous areas of the United 

States; the contiguous areas considered must contain at least 5% of the total U.S. population 

that experienced the highest rate of default and severity of agricultural mortgage losses during 

the past two consecutive years or more. The rate of loan default and severity of losses on rural 

utility loans must be reasonably related to risks in electric and telephone facility loans.

The Farm Credit Act also requires the RBC Model to incorporate an interest rate risk stress 

scenario based on prescribed changes in interest rates on Treasury obligations of various terms. 

In addition, the Farm Credit Act requires Farmer Mac to maintain capital to protect against 

management and operational risks. This additional capital must amount to 30% of the sum of 

the credit loss and interest rate risk components of the RBC Model.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

37

The output of the stress test depends on Farmer Mac’s risk profile. High-risk loan assets or 

significant interest rate risk exposure causes the RBC Model to calculate a higher regulatory 

capital requirement. Conversely, if Farmer Mac maintains a low risk profile in both its loan 

portfolio and interest rate risk exposure, the stress test will calculate a low capital requirement. 

Our regulations require Farmer Mac to have its operation of the RBC Model validated by an 

independent third party at least every three years. In all these third-party validations, Farmer 

Mac has been found to be operating the model appropriately. 

Other entities

On a reimbursable basis, we perform examinations of certain entities that are not part of the 

Farm Credit System.

As mandated by 12 U.S.C. 3025, we oversee the safety and soundness examinations of the 

National Consumer Cooperative Bank, which owns a federal savings bank, has a congressional 

charter, and specializes in nonagricultural cooperative loans. Costs have been negligible because 

of our agreement with the Office of the Comptroller of the Currency. Through this agreement, 

we generally rely on their safety and soundness examinations to effectively and more efficiently 

carry out our statutory responsibilities with respect to NCB.

From time to time, the U.S. Department of Agriculture contracts with us to provide examination 

services for specific USDA programs. We annually review the amount of resources dedicated to 

providing these services, and we have no current contracts. 

We also provide services on a reimbursable basis to the Farm Credit System Insurance 

Corporation (FCSIC), an independent, government-controlled corporation that insures the 

timely payment of principal and interest on certain System notes, bonds, and other obligations 

issued to investors. The FCSIC board consists of the members of the FCA board. Section 

5.59(a)(5) of the Farm Credit Act provides that, to the extent practicable, FCSIC must use FCA 

personnel and resources to minimize duplication of effort and to reduce costs.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

38

Developing Regulations and Policies 

FCA routinely issues regulations, informational memorandums, policy statements, and other 

guidance to ensure that the System complies with the law, operates in a safe and sound manner, 

and efficiently carries out its statutory mission.

We are committed to providing a flexible regulatory environment that allows the System to offer 

high-quality, reasonably priced credit and related services to farmers and ranchers, their 

cooperatives, rural residents, and other entities on which farming operations depend. 

We strive to develop balanced, well-reasoned, and flexible regulations, always taking into 

account both the benefits and the costs of these regulations to System institutions. Our 

objectives are to ensure that the System’s activities remain consistent with the law and safety 

and soundness principles and to encourage participation by member-borrowers in the 

management, control, and ownership of their institutions.

Regulatory and policy projects active at end of FY 2021

The FCA board periodically reviews its regulatory agenda to evaluate progress on open projects 

and to determine the need for additional initiatives. The FCA board-approved agenda is part of 

the federal Unified Agenda, which is published online at www.reginfo.gov. We publish our 

Regulatory Projects Plan on our website to notify the public of our upcoming regulatory actions 

and to encourage the public to participate in the regulatory process, but we are not obligated to 

act on our agenda items. The following list summarizes the topics for which we are considering 

regulatory action.

Collateral evaluation: We plan to issue a final rule that revises our regulations on collateral 

appraisals and valuations to address changing credit and economic conditions. 

Implementation of the current expected credit losses methodology for allowances:

We plan to publish a final rule that will amend our regulations to address recent changes to U.S. 

generally accepted accounting principles.

Risk weighting of high-volatility commercial real estate (HVCRE): We plan to issue a 

final rule that will update the definition of HVCREs in our regulations and require Baselcompliant risk weights for HVCRE exposures by FCS institutions. 

Farm Credit System bridge bank: We plan to issue a proposed rule to provide the authority 

to charter and supervise a System bridge bank and also to revise FCA regulations to comply with 

the Agriculture Improvement Act of 2018. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

39

Young, beginning, and small (YBS) farmers and ranchers: We plan to issue a proposed 

rule that requires annual YBS strategic planning and establishes a YBS rating system that 

evaluates each institution’s YBS program and measures its progress in achieving its YBS 

objectives.

Borrower rights: We plan to issue a proposed rule to clarify disclosure and servicing 

requirements related to borrower rights.

Limitations on bank director compensation: We plan to issue a proposed rule that would 

revise FCA regulations on compensation of bank directors to comply with the Agriculture 

Improvement Act of 2018.

Bank liquidity reserve: We plan to issue a proposed rule to amend our liquidity regulations 

to more closely align with the Basel III liquidity framework and the approach of other federal 

bank regulatory agencies.

Cooperative principles: We plan to complete a review of cooperative principles and practices 

at System institutions.

Regulatory and policy projects completed in FY 2021 and early FY 2022 

Following is a list of projects we completed in FY 2021 and early FY 2022, along with a list of 

communications we issued to System institutions to clarify our rules.

Standards of conduct: We issued a final rule to clarify and strengthen regulations related to 

the standards of conduct of directors, employees, and agents of System institutions.

Tier 1/tier 2 capital framework: We issued a final rule to make technical and minor 

substantive corrections and clarifications to our regulations governing tier 1/tier 2 regulatory 

capital.

Collateral evaluation: We issued a proposed rule to make changes to existing FCA policy on 

collateral appraisals and valuations. 

Risk-weighting of high-volatility commercial real estate: We issued a proposed rule to 

update the definition of HVCREs to be consistent with other federal banking regulatory agencies 

and to require higher risk weights for HVCRE exposure. 

Flood insurance questions and answers: We issued a notice and request for comment on 

proposed interagency questions and answers regarding private flood insurance, which would 

replace existing interagency questions and answers.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

40 

Civil money penalty adjustment: We published a final rule to adjust FCA’s civil money 

penalties for inflation as required by the Federal Civil Penalties Inflation Adjustment Act 

Improvements Act of 2015.

Criminal referrals: We issued a bookletter to System institutions to provide additional 

guidance about how to deter, detect, and report known or suspected criminal violations of 

federal laws or regulations. 

Sound governance of wholesale funding: We issued a bookletter to System institutions to 

convey agency expectations regarding the governance and management of wholesale funding 

and related processes and to reinforce a cooperative operating structure as it relates to wholesale 

funding arrangements.

Maintaining stockholder lists: We issued an informational memorandum to provide 

guidance on maintaining stockholder lists and how to use these lists to establish who should 

receive voting and financial information.

Financing hemp: We issued a revised informational memorandum to provide additional 

guidance and information that System banks and associations should consider when assessing 

how financing hemp fits into the lending strategies at their institutions. 

Guidelines for submitting an application to form a service corporation: We issued an 

informational memorandum that specifies information we require to evaluate requests

submitted by System institutions to form service corporations.

Managing the LIBOR transition: We issued an updated informational memorandum to 

provide additional guidance to System institutions, including Farmer Mac, on the transition 

away from the London Interbank Offered Rate (LIBOR).

FCS corporate activity and other prior approvals and clearances

In accordance with the Farm Credit Act and our regulations, we issue prior approvals for 

corporate and noncorporate applications. Corporate applications include requests from FCS 

institutions for us to issue new or amended charters, as well as to cancel charters because of 

mergers, consolidations, liquidations, or terminations of System status. 

Noncorporate applications include clearance and capital determination requests related to stock 

requirements and to offerings of preferred stock and subordinated debt. They also include 

requests for prior approval of funding, mission-related investments, and any new financially 

related services.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

41 

Corporate activities in FY 2021 and early FY 2022 

On January 1, 2022, an agricultural credit association (ACA) affiliated with AgriBank merged 

into another ACA affiliated with CoBank, resulting in an ACA with two subsidiaries.

On January 1, 2022, an ACA affiliated with CoBank merged into another ACA affiliated with 

CoBank, resulting in an ACA with two subsidiaries.

Projected mergers and FCS institution size

As of January 1, 2022, the System had 65 direct-lender associations and 4 banks. Eight service 

corporations and special-purpose entities (see pages 47 to 49) brings the total number of FCS 

institutions, including Farmer Mac, to 77. Because of mergers and consolidations, the number of 

FCS associations has decreased by 23% since 2010, and the number of FCS banks has decreased 

by 20%.

Merger and combination activity has increased over the past two years. Therefore, we estimate 

that the number of direct-lender associations will continue to decrease. These mergers, coupled 

with asset growth, will increase the size of System entities. System institutions will also have 

more complex management systems and offer a broader range of financial services to their 

borrowers.

Securities offerings by individual associations during FY 2021 

There were three preferred stock offerings in FY 2021: Capital Farm Credit, ACA, issued $200 

million; Compeer Financial, ACA, issued $100 million; and American AgCredit, ACA, issued 

$300 million. There were also three subordinated debt offerings in FY 2021: Compeer Financial, 

ACA, had a $150 million offering, as well as a separate $50 million offering, and American 

AgCredit, ACA, had a $200 million offering. 

Funding Corporation activity

The FCS raises funds for loans and investments primarily by selling Systemwide debt securities 

through the Federal Farm Credit Banks Funding Corporation, the fiscal agent for the FCS banks. 

In this way, funds flow from worldwide capital market investors to agricultural producers, 

agricultural cooperatives, and rural communities, providing them with efficient access to global 

resources. Systemwide debt securities are issued as discount notes, master notes, bonds, or 

designated bonds. As required by the Farm Credit Act, the System must obtain FCA approval for 

all debt issuances.

For the 12 months ended September 30, 2021, the FCS issued $378 billion in Systemwide debt, 

compared with $426 billion in FY 2020 and $353 billion in FY 2019. Systemwide debt issuances 

decreased considerably in FY 2021 compared with FY 2020 primarily because of the large 

reduction in the number of callable bonds whose call options were exercised and were then 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

42 

reissued at more favorable interest rates. Call options exercised in FY 2021 totaled $42.5 billion, 

compared with $117.2 billion in FY 2020. This reduction in callable activity was due to the 

general increase in interest rates and steepening of the FCS debt yield curve during FY 2021. 

Interest rates for Systemwide debt, compared with rates for U.S. Treasuries of similar 

maturities, remained favorable. Investor demand for FCS debt instruments remained strong as a 

result of the System’s long-standing solid financial performance as well as the substantial 

reduction in the overall debt outstanding of other government-sponsored enterprises (GSEs), 

namely Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Systemwide debt 

outstanding increased to $330 billion at the end of FY 2021, an increase of $21 billion from the 

end of FY 2020. FCS debt outstanding increased to 22.8% of the cumulative GSE debt 

outstanding at the end of FY 2021 compared with 17.5% at the end of FY 2020. 

The financial markets continued to experience volatility because of the global pandemic and its 

effect on the global economy. The Federal Reserve, along with other central banks, continued to 

provide very accommodative monetary policies, such as fortifying liquidity in the market by 

continuing its sizeable monthly bond purchases. 

Rural business investment companies

The 2002 Farm Bill created the Rural Business Investment Program for leveraged rural business 

investment companies (RBICs) and gave the secretary of agriculture the authority to license and 

examine them. The 2008 Farm Bill modified the program to allow for nonleveraged RBICs and 

to permit System institutions to form and invest in nonleveraged RBICs.

In 2012, we entered into an interagency agreement with USDA whereby we performed the 

following services for USDA regarding nonleveraged RBICs:

• Provided technical advice regarding regulatory and program requirements

• Reviewed nonleveraged RBIC licensing applications for RBICs in which System 

institutions would hold at least 10% in total ownership and advised USDA as to whether 

to approve the applications

• Examined licensed nonleveraged RBICs

The 2012 agreement was replaced with a new five-year agreement in 2017, under which we 

continued to review nonleveraged RBIC licensing applications and examined licensed 

nonleveraged RBICs. The agreement expired at the end of fiscal year 2021. 

Since 2012, FCA has reviewed 16 nonleveraged RBIC applications, of which 9 were licensed by 

the USDA at the time the agreement expired. FCA has completed 12 examinations of 6 licensed 

nonleveraged RBICs.
Part III 

Farm Credit System 

_________________________________________________________________

Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

45

Profile of the Farm Credit System

The Farm Credit System consists of a network of borrower-owned cooperative financial 

institutions, along with related service organizations, the Federal Farm Credit Banks Funding 

Corporation, and the Federal Agricultural Mortgage Corporation. The Farm Credit System was 

created by Congress in 1916 to provide American agriculture with a dependable source of credit. 

It is the oldest of the government-sponsored enterprises (GSEs). As of January 1, 2022, the 

System had four banks providing loan funds to

• 65 agricultural credit association (ACA) parent organizations, each of which generally 

has two subsidiaries — a production credit association (PCA) and a federal land credit 

association (FLCA), and

• 1 stand-alone FLCA.

The map in figure 3 shows each bank’s chartered territory.

Although legally separate, the ACA and its PCA and FLCA subsidiaries operate as an integrated 

lending business, with loans made through the subsidiaries appropriate to the authority of each 

subsidiary. The ACA, the PCA, and the FLCA are jointly and severally liable for the full amount 

of their indebtedness to the funding bank under a general financing agreement. In addition, the 

parent company and its subsidiaries pledge their respective assets as security for each other’s 

debts and obligations and share each other’s capital. 

The three associations have a common board and management and a common set of 

shareholders. Under the Farm Credit Act, ACAs make long-term agricultural mortgage loans 

and short- and intermediate-term operating loans. PCAs make short- and intermediate-term 

loans. FLCAs, which are organized as federal land bank associations, originate long-term 

agricultural mortgages. FLCAs are exempt from federal and state income taxes; ACAs and PCAs 

are not tax-exempt.

System institutions provide credit and financially related services to farmers, ranchers, 

producers or harvesters of aquatic products, and farmer-owned cooperatives. Institutions also 

make loans for agricultural processing and marketing activities, rural housing, certain farmrelated businesses, agricultural and aquatic cooperatives, rural utilities, and foreign and 

domestic entities in connection with international agricultural trade. The System raises its loan 

funds by selling debt securities in the national and international money markets; these securities 

are subject to FCA’s approval, but they are not guaranteed by the U.S. government.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

46

Figure 3. The chartered territories of Farm Credit System banks as of January 1, 2022

NOTE: CoBank, ACB, funds 19 associations in the indicated areas and serves cooperatives nationwide; Farm Credit Bank of 

Texas funds 14 associations; AgriBank, FCB, funds 13 associations; and AgFirst Farm Credit Bank funds 19 associations. The 

Farm Credit System contains a total of 69 banks and direct-lending associations.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

47 

Additional System entities and service corporations

In addition to the System’s banks and associations, we are responsible for regulating and 

examining the Federal Agricultural Mortgage Corporation and the Federal Farm Credit Banks 

Funding Corporation. We also regulate and examine the six service corporations organized 

under section 4.25 of the Farm Credit Act:3

• AgVantis, Inc.

• Farm Credit Leasing Services Corporation

• Farm Credit Financial Partners, Inc. 

• FCS Building Association

• Farm Credit Foundations

• SunStream Business Services 

Federal Agricultural Mortgage Corporation — Farmer Mac4 is a stockholder-owned, 

federally chartered instrumentality of the United States created in 1988 to establish a secondary 

market for agricultural real estate and rural housing mortgage loans. In May 2008, the Food, 

Conservation, and Energy Act of 2008 expanded Farmer Mac’s program authorities by allowing 

it to purchase and guarantee securities backed by rural utility loans made by cooperatives.

Farmer Mac conducts its business primarily through four core programs: 

• Farm & Ranch 

• USDA Guarantees

• Rural Utilities 

• Institutional Credit 

Under the Farm & Ranch and Rural Utilities segments, Farmer Mac purchases, or commits to 

purchase, qualified loans, or obligations backed by qualified loans, that are not guaranteed by 

3 Section 4.25 of the Farm Credit Act provides that one or more FCS banks or associations may organize 

a service corporation to perform functions and services on their behalf. These federally chartered service 

corporations are prohibited from extending credit or providing insurance services.

4 Farmer Mac is established in law as a federal instrumentality of the FCS. However, Farmer Mac has no 

liability for the debt of any other System institution, and the other System institutions have no liability for 

Farmer Mac’s debt. Farmer Mac is organized as an investor-owned corporation, not a member-owned 

cooperative. Investors in voting stock may include commercial banks, insurance companies, other 

financial organizations, and FCS institutions. Nonvoting stock may be owned by any investor. Farmer Mac 

is regulated by FCA through the Office of Secondary Market Oversight. The director of this office reports 

directly to the FCA board on matters of policy.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

48

any instrumentality or agency of the United States. Under USDA Guarantees, Farmer Mac 

purchases the guaranteed portions of farm ownership and farm operating loans, rural business

and community development loans, and certain other loans guaranteed by USDA. Under 

Institutional Credit, Farmer Mac purchases bonds backed by eligible debt obligations of 

agricultural and rural utility lenders. 

Federal Farm Credit Banks Funding Corporation — The Funding Corporation is owned 

by System banks; it sells debt securities on behalf of the banks to raise funds for loans and other 

purposes. System institutions obtain the majority of their funds through the sale of these 

securities in the nation’s capital markets. These securities, chiefly in the form of bonds and 

discount notes, are offered by the Funding Corporation through a nationwide group of securities 

dealers and dealer banks. The Funding Corporation’s debt issuance programs provide the 

System banks with funds to lend to farmers, ranchers, agricultural cooperatives, rural 

homeowners, and rural utilities; debt issuances also provide the banks with funding for their 

other operations.

AgVantis, Inc. — AgVantis provides technology-related and other support services to 

associations in the CoBank, ACB, district. It was chartered by FCA in 2001 and is owned by 11

associations in the CoBank district. 

Farm Credit Leasing Services Corporation — The Leasing Corporation, owned by 

CoBank, provides equipment leasing services to eligible borrowers, including agricultural 

producers, cooperatives, and rural utilities.

Farm Credit Financial Partners, Inc. — Owned by five agricultural credit associations, 

Farm Credit Financial Partners provides support services to three associations affiliated with 

CoBank and two associations affiliated with AgriBank.. 

FCS Building Association — The Building Association, which acquires, manages, and 

maintains facilities to house our headquarters and field office staff, was formed in 1981. It is 

owned by System banks and is subject to the oversight and direction of the FCA board.

Farm Credit Foundations — Farm Credit Foundations provides human resource services to 

its employer-owners, including payroll processing, benefits administration, centralized vendor 

management, workforce management and operations services, corporate tax and financial 

reporting services, and retirement workshops. It is owned by 34 System entities (31 FCS 

associations, 2 service corporations, and 1 FCS bank).
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

49

SunStream Business Services — SunStream provides technology-related and other services 

to the bank and associations in the AgriBank district. Chartered by FCA in 2020, it is owned by 

the district bank, 2 district associations, and an ownership collaboration of 8 district 

associations.

FCS mission fulfillment

The System fulfills its overall mission by lending to agriculture and rural America. Through the 

System’s original authorization in the Federal Farm Loan Act of 1916 and subsequent revisions 

to the law, System lending authorities have evolved to include the following:

• Long-term agricultural real estate loans and rural home loans

• Short- and intermediate-term agricultural loans

• Loans to producers and harvesters of aquatic products

• Loans to certain farmer-owned agricultural processing facilities and farm-related 

businesses

• Loans to farmer-owned agricultural cooperatives

• Loans that finance agricultural exports and imports

• Loans for rural utilities

• Limited portions of loans to entities that qualify under the System’s similar-entity 

authority

Financial Condition and Performance

The FCS continued to be safe and financially sound despite the ongoing challenges presented by 

COVID-19. Through the first nine months of 2021, the System reported strong financial results, 

including robust loan growth, increased earnings, higher capital, and low portfolio credit risk. 

FCS banks maintained access to debt capital markets and held liquidity positions well above the 

regulatory minimum. System institutions are strongly capitalized, with significant risk-bearing 

capacity. They remain well-positioned to accomplish the System’s mission of providing reliable 

credit and related services in support of agriculture and rural America.

A resilient U.S. economy and strong exports boosted demand for agricultural products in 2021, 

but supply chain disruptions, labor availability problems, and major cost increases for energy, 

transportation, and chemicals presented significant challenges for agricultural producers. 

Difficulties obtaining farm equipment and parts added to farmers’ problems.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

50

Overall, farm income is estimated to be above average for 2021. For crop sectors, although 

margins were favorable, rising input costs eroded revenue gains. Livestock margins were 

generally good with strong demand and limited production gains helping to lift prices. Dairy 

returns were a notable exception with milk price gains falling far short of rising feed costs. 

Strong crop sector returns, favorable farm financials, low borrowing rates, and greater farmer 

and investor demand also propelled cropland values higher in 2021, especially in the Midwest. 

For farmland markets in the Pacific Northwest and California, valuations have been steady to 

increasing, but drought and weather concerns continue for some regions, particularly in the 

West.

Note: All financial data in this section are as of September 30, 2021, unless noted otherwise.

Earnings

The FCS earned $5.201 billion in the first nine months of 2021, a 17.0% increase from the 

$4.446 billion earned in the same period last year. As table 16 shows, net income increased in 

2021 because of higher net interest income and the reversal of provision for loan losses, partially 

offset by higher noninterest expense.

Table 16. Net income (dollars in millions)

System net income First 9 months 

of 2020

First 9 months 

of 2021

Dollar 

change

Percent 

change

Net interest income $6,682 $7,260 $578 8.7%

− Provision (reversal) for 

loan losses

165 (142) (307) (186.1%)

= Net interest income after 

loss provision (reversal) $6,517 $7,402 $885 13.6%

+ Noninterest income 548 571 23 4.2%

− Noninterest expense 2,478 2,632 154 6.2%

= Pretax income $4,587 $5,341 $754 16.4%

− Provision for income tax 141 140 (1) (0.7%)

= Net income $4,446 $5,201 $755 17.0%

Source: Third Quarter 2021 Quarterly Information Statement of the Farm Credit System, p. F-3.

The increase in net interest income was primarily due to higher average interest-earning assets, 

which increased to $393.3 billion for the nine months ended September 30, 2021, from $364.3

billion a year earlier. Net interest margin was 2.46%, up 1 basis point from the same period a 

year ago (table 17). Net interest spread increased 11 basis points. This change was driven by a 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

51

59-basis-point decrease in the annualized rate on interest-bearing liabilities, which was partially 

offset by a 48-basis-point decrease in the rate on total interest-earning assets.

Table 17. Interest margin in annualized percentages

Net interest margin First 9 months 

of 2020

First 9 months 

of 2021

Change 

(bps)

Total interest-earning assets 3.65 3.17 (48)

Total loans 4.12 3.61 (51)

Investments and other assets 1.67 1.14 (53)

Total interest-bearing liabilities 1.43 0.84 (59)

Net interest spread 2.22 2.33 11

Impact of noninterest-bearing items 0.23 0.13 (10)

Net interest margin 2.45 2.46 1

Source: Third Quarter 2021 Quarterly Information Statement of the Farm Credit System, p.15.

bps = basis points

As table 18 shows, all districts except AgriBank reported an increase in the return on average 

assets, and all districts reported an increase in the return on average capital from the prior year.

Table 18. Profitability across System districts for the first nine months of year

Profitability ratios AgFirst AgriBank Texas CoBank

Percentage return 

on average assets

2020 1.62 1.64 1.63 1.41

2021 1.90 1.63 1.72 1.53

Percentage return 

on average capital

2020 9.55 9.14 11.23 10.33

2021 11.08 9.41 11.77 11.30

Source: Third Quarter 2021 Quarterly Information Statement of the Farm Credit System, p. F-55

Note: The financial ratios are for the district bank and affiliated associations combined.

System growth

The System reported moderately strong year-over-year growth. FCS assets were up $25.7 billion 

or 6.7% to $410.6 billion. Much of the increase was the result of growth in the System’s loan 

portfolio, which grew by $24.2 billion or 8.0%.

Balances for all major loan categories (real estate mortgage, production and intermediate-term, 

agribusiness, and rural infrastructure) were up. Real estate mortgage and agribusiness lending 

accounted for much of the growth, increasing 11.9% and 6.5%, respectively.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

52

All System districts reported higher loan portfolio balances. The Texas district reported the 

largest percentage increase in volume, with loan balances growing 13.5% year over year. 

Provided in table 19 are the gross loan volume and the percentage change in volume for System 

districts.

Table 19. Gross loan growth by district and Systemwide (dollars in millions)

District September 30, 2020 September 30, 2021 Change in 

dollars

Percent 

change Gross 

loans

Percent 

total

Gross 

loans

Percent 

total

AgFirst $31,672 10.5 $33,815 10.4 $2,143 6.8

AgriBank 124,025 41.2 134,313 41.2 10,288 8.3 

Texas 27,830 9.2 31,577 9.7 3,747 13.5

CoBank 123,344 40.9 131,455 40.4 8,111 6.6

Insurance 

Fund and 

Intra-System 

Eliminations

(5,310) (1.8) (5,376) (1.7) (66) 1.2 

Total for 

System $301,561 100.0 $325,784 100.0 $24,223 8.0 

Source: Third Quarter 2020 Quarterly Information Statement of the Farm Credit System, p. F-52; and Third Quarter 2021 

Quarterly Information Statement of the Farm Credit System, p. F-51.

As noted in figure 4 below, the System’s total assets increased by 6.7% during the 12-month 

period, down from 8.7% for the same period a year ago.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

53

Figure 4. Year-over-year percent change in System assets, September 2011 – 2021

Source: Quarterly Information Statements of the Farm Credit System.

Table data for figure 4

Year

Year-over-year 

percent change in 

System assets

2011 3.2

2012 5.3

2013 5.5

2014 7.3

2015 7.4

2016 7.9

2017 2.3

2018 4.2

2019 5.7

2020 8.7

2021 6.7

3.2%

5.3% 5.5%

7.3% 7.4%

7.9%

2.3%

4.2%

5.7%

8.7%

6.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

54

Assets — Investments

The System’s investments totaled $70.4 billion, up 3.4% from a year earlier. As shown in table 

20, investments available for sale totaled $68.3 billion. Investments held to maturity were $2.1 

billion, including $1.4 billion for mortgage-backed securities. 

The System increased its holdings of U.S. Treasury securities, mortgage-backed securities, and 

other securities but reduced its holdings of money market instruments, U.S. agency securities, 

and asset-backed securities.

During the most recent 12-month period, the weighted average yield on investments available 

for sale decreased from 1.42% to 1.09%, with yields decreasing on all available-for-sale segments 

except for U.S. agency securities. For investments held to maturity, the yield decreased from 

2.75% to 2.06% mainly because of a decrease in the yield for mortgage-backed securities.

Ineligible investments held by the System totaled $0.46 billion at fair value, down from $0.53 

billion a year ago.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

55

Table 20. FCS investments (dollars in millions)

Investment classification

September 30, 

2020

September 30, 

2021

Change

Amount

Amount WAY 

(%) Amount WAY (%) Dollars Percent WAY (bps)

Available for 

sale 

(fair value)

Money market 

instruments $6,138 0.70 $4,704 0.55 ($1,434) (23.4) (15)

U.S. Treasury 

securities 24,521 1.34 26,676 0.96 2,155 8.8 (38)

U.S. agency 

securities 2,989 1.89 2,386 1.97 (603) (20.2) 8

Mortgagebacked 

securities

27,480 1.54 29,866 1.12 2,386 8.7 (42)

Asset-backed 

securities 4,363 1.90 3,623 1.88 (740) (17.0) (2)

Other 

securities 862 1.14 1,094 1.11 232 26.9 (3)

Total $66,353 1.42 $68,349 1.09 $1,996 3.0 (33)

Held-tomaturity 

(amortized 

cost)

Mortgagebacked 

securities

$1,040 3.40 $1,357 2.57 $317 30.5 (83)

Asset-backed 

securities 651 1.39 695 0.78 44 6.8 (61)

Other 

securities 62 6.14 47 6.24 (15) (24.3) 10

Total $1,753 2.75 $2,099 2.06 $346 19.7 (69)

Total

All FCS 

investments $68,106 1.46 $70,448 1.12 $2,342 3.4 (34)

Source: Third Quarter 2020 Quarterly Information Statement of the Farm Credit System, pp. F-10 – 12; and Third Quarter 2021 

Quarterly Information Statement of the Farm Credit System, pp. F-9 – 11.

WAY = weighted average yield; bps = basis points.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

56

Loan quality

System portfolio credit quality is very good with credit risk declining significantly over the past 

10 years. The System’s risk-bearing capacity remains strong despite the unprecedented 

challenges faced by agricultural since 2020. Nonperforming assets totaled $1.784 billion or 

0.55% of total loans and other property owned, as compared with $2.321 billion or 0.77% a year 

earlier.

In the first nine months of 2021, the System reported net loan recoveries of $4 million 

compared with net loan charge-offs of $81 million for the same period a year ago. The allowance 

for loan losses decreased to $1.653 billion in the first nine months of 2020, down 9.6% from the 

same period in 2020. See table 21 for additional information about the allowance for loan losses 

and other loan quality measures.

Although portfolio loan quality is strong, stress is elevated for producers in certain sectors and 

geographic regions. More costly inputs and supply chain problems are affecting agricultural 

producers and marketers; major cost increases have occurred in energy, transportation, 

chemicals, and labor. High-cost producers and those with significant leverage will be the most 

vulnerable to financial stress.

Table 21. FCS loan quality

Loan quality September 30, 

2020

September 30, 

2021

Change in

percentage 

points

Nonperforming assets as percentage of 

total loans and other property owned 0.77% 0.55% (0.22)

Nonperforming assets as percentage of 

capital 3.52% 2.57% (0.95)

Nonaccrual loans as percentage of 

total loans 0.60% 0.41% (0.19)

ALL as percentage of total loans 0.61% 0.51% (0.10)

ALL as percentage of nonperforming 

assets 78.8% 92.7% 13.9

ALL as percentage of nonaccrual loans 100.7% 123.4% 22.7

Source: Third Quarter 2020 Quarterly Information Statement of the Farm Credit System, p. 22 and 25; and Third Quarter 2021 

Quarterly Information Statement of the Farm Credit System, p. 21 and 24.

ALL = allowance for loan losses.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

57

Liabilities, funding, and liquidity

The System’s total liabilities increased by 7.0% to $341.1 billion. See table 22 below. Short-term 

debt securities (due within one year) decreased 2.4% to $123.3 billion. Systemwide debt 

securities due after one year increased 12.3% to $208.7 billion. Short-term debt securities 

represented 35.3% of the total Systemwide liabilities, down from 38.6% a year earlier.

Table 22. Systemwide debt (dollars in millions)

System debt by maturity September 30, 

2020

September 30, 

2021

Change

Dollars Percent

Systemwide discount notes 

due within one year $23,917 $18,790 ($5,127) (21.4)

Systemwide bonds, mediumterm notes, and master notes 

due within one year

99,337 101,545 2,208 2.2

Total short-term liabilities $123,254 $120,335 ($2,919) (2.4)

Systemwide bonds, mediumterm notes, and master notes 

due after one year

185,812 208,673 22,861 12.3

Other liabilities 9,850 12,083 2,233 22.7

Total liabilities $318,916 $341,091 $22,175 7.0

Source: Third Quarter 2020 Quarterly Information Statement of the Farm Credit System, p. F-2; and Third Quarter 2021 

Quarterly Information Statement of the Farm Credit System, p. F-2.

Liquidity risk management is necessary for the Farm Credit System to ensure its ability to meet 

its financial obligations. These obligations include the repayment of Systemwide debt securities 

as they mature, the ability to fund new and existing loans, and the ability to fund operations in a 

cost-effective manner. The Bank’s aggregate liquidity position increased slightly to 174 days 

from 172 days a year earlier. Each bank met the three tiers of the liquidity reserve requirements 

and exceeded the regulatory minimum of 90 days of liquidity.5

The aggregate duration gap for the FCS (the sum of the banks’ duration gaps) was a positive 3.9 

months compared with a positive 0.9 months a year earlier. A duration gap of a positive six 

months to a negative six months generally indicates a small exposure to interest rate risk. An 

5The first tier of the liquidity reserve must consist of enough cash and cash-like instruments to cover each 

bank’s financial obligations for 15 days. The second tier must contain enough cash and highly liquid 

instruments to cover a bank’s obligations for the next 15 days, and the third tier of the liquidity reserve 

must contain enough cash and highly liquid instruments to cover a bank’s obligations for the next 60 days. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

58

institution’s overall exposure to interest rate risk is a function not only of its duration gap but 

also of the financial leverage inherent in the institution’s capital structure.

Capital

The System continued to build capital in 2021. According to the System’s combined financial 

statements, capital totaled $69.5 billion, a 5.3% increase from a year earlier (see table 23). The 

increase in capital was driven by an increase in net income earned and retained, partially offset 

by cash distributions to stockholders. Retained earnings as a percentage of total capital 

increased to 79.6% compared with 79.0% a year ago. The System’s overall capital-to-assets ratio 

declined to 16.9% from 17.1% a year ago.

Table 23. FCS capital composition (dollars in millions)

System capital September 30,

2020

September 30,

2021

Change

Dollars Percent

Preferred stock $3,222 $3,531 $309 9.6

Capital stock and participation 

certificates 1,951 2,049 98 5.0

Additional paid-in capital 3,738 3,785 47 1.3

Restricted capital (Insurance 

Fund) 5,368 5,833 465 8.7

Accumulated other 

comprehensive income (loss) (437) (1,051) (614) 140.5

Retained earnings 52,172 55,351 3,179 6.1

Total capital $66,014 $69,498 $3,484 5.3

Source: Data from the Third Quarter 2020 Quarterly Information Statement of the Farm Credit System, p. F-2; and Third Quarter 

2021 Quarterly Information Statement of the Farm Credit System, p. F-2.

Note: FCA does not include the Insurance Fund as a capital component in its regulatory capital regulations. In addition, FCA 

regulations treat earnings that have been allocated to members as equities, not retained earnings. Unallocated retained 

earnings make up most of the System’s retained earnings category.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

59

All System institutions were in compliance with FCA’s regulatory minimum capital 

requirements: 

• Common equity tier 1 capital (CET1) ratio of 4.5% of risk-adjusted assets 

• Tier 1 capital ratio of 6.0% of risk-adjusted assets 

• Total capital ratio of 8.0% of risk-adjusted assets

• Tier 1 leverage ratio of 4.0% of total assets, of which at least 1.5% must consist of 

unallocated retained earnings (URE) and URE equivalents

• Permanent capital ratio of at least 7.0% of risk-adjusted assets

The regulatory capital framework includes a capital cushion (capital conservation buffer) of 

2.5% above the CET1 ratio, tier 1 capital ratio, and total capital ratio requirements. The 

regulations also require a leverage capital buffer of 1.0% above the tier 1 leverage ratio 

requirements. If capital ratios fall below these buffer thresholds, FCA must approve capital 

distributions and certain discretionary compensation payments before the distributions are 

made. Table 24 shows that all banks exceeded all minimum capital regulatory requirements. 

Table 24. Regulatory capital ratios of FCS banks

Regulatory capital ratios AgFirst AgriBank Texas CoBank

Common equity tier 1 

9/30/2020 18.0 17.1 9.6 12.7

9/30/2021 18.5 17.0 9.5 12.9

Tier 1 capital

9/30/2020 18.4 17.7 16.0 14.8

9/30/2021 18.7 17.6 15.3 14.8

Tier 1 leverage

9/30/2020 6.8 5.4 7.1 7.4

9/30/2021 6.7 5.3 6.5 7.6

Permanent capital 

ratio

9/30/2020 18.4 17.8 15.9 14.9

9/30/2021 18.7 17.6 15.3 14.9

Total capital 9/30/2020 18.5 17.8 16.0 15.8

9/30/2021 18.9 17.7 15.4 15.8

Change 0.4 (0.1) (0.6) 0.0

Source: Data from the Third Quarter 2020 Quarterly Information Statement of the Farm Credit System, p. F-47; the Third 

Quarter 2021 Quarterly Information Statement of the Farm Credit System, p. F-46; and the Third Quarter 2020 and 2021 

Quarterly Shareholder Reports for FCS banks.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

60

System associations also exceeded all minimum requirements. The System reported capital 

levels as follows:

• CET1 capital ratio: 10.8% to 33.7% 

• Tier 1 capital ratio: 10.8% to 33.7% 

• Tier 1 leverage ratio: 10.0% to 32.4% 

• Total capital ratio: 12.0% to 34.7% 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

61

Young, Beginning, and Small Farmers and Ranchers 

FCA supports the Farm Credit System’s mission to serve young, beginning, and small (YBS) 

farmers, ranchers, and producers and harvesters of aquatic products. We define young farmers 

as those who are 35 years old or younger, beginning farmers as those who have been farming for 

10 years or less, and small farmers as those with less than $250,000 in annual sales.

The System’s YBS mission is outlined in the Farm Credit Act of 1971, as amended, and we have 

adopted regulations to implement the YBS provisions of the act. The Farm Credit Act and FCA 

regulations require each FCS bank to have written policies that direct each association to have 

the following:

• A program for furnishing sound and constructive credit and financially related services 

to YBS farmers

• A mission statement describing the program’s objectives and specific means to achieve 

the objectives

• Annual quantitative targets for credit to YBS farmers

• Outreach efforts and annual qualitative goals for offering credit and related services that 

meet the needs of YBS farmers

An association’s board oversight and reporting are key parts of every YBS program. Each 

institution must report annually to FCA on the operations and achievements of its YBS program. 

Each association also must establish an internal controls program to ensure that it provides 

credit in a safe and sound manner.

In addition, FCA regulations require association business plans to include a marketing plan and 

strategies with specific outreach toward diversity and inclusion within each market segment. 

Operational and strategic business plans must include the goals and targets for the association’s 

YBS lending. System institutions must also coordinate with other government and private 

sources of credit in implementing their YBS programs. FCA’s oversight and examination 

activities monitor each institution’s assessment of its performance and market penetration in 

the YBS area.

In 2021, we continued to make progress on the objectives included in the 2019 advance notice of 

public rulemaking. We continue to work with the System to leverage existing data assets to 

improve usability and consistency of YBS lending data, while also reducing regulatory burden. 

Over the past year, we have made significant strides in improving the collection of YBS 

nonlending data. This information will improve our understanding of effective YBS programs, 

and it will help us identify best practices that can be shared across the System. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

62

Our fall regulatory project plan also introduced a proposed YBS rule for the spring of 2022. The 

rulemaking would require an annual, independent YBS strategic plan as part of the YBS 

program required by section 4.19 of the Farm Credit Act. The rule would set out minimum 

requirements of the plan. The rule would be designed to result in a rating system that evaluates 

each institution’s program and measures each institution’s year-over-year progress in lending 

and nonlending support provided to the YBS population.

In the fall of 2021, the University of Nebraska–Lincoln (UNL) and FCA facilitated an event to 

identify strategies for agricultural lenders to better serve the credit needs of beginning producers 

and rural communities. The event was a success and included staff from FCA, USDA’s Farm 

Service Agency (FSA), political leaders, land grant university faculty, professionals from the 

agricultural lending community, and a diverse group of YBS farmers.

As a result of the successful UNL event, FCA is facilitating a national YBS conference at 

Colorado State University in March 2022 for YBS decision-makers. The conference will bring 

YBS decisionmakers together to share and learn best practices, leading to enriched and 

expanded YBS programs in the Farm Credit System. 

We continue to work with FSA and other stakeholders to further solidify this first step of many 

to improve financing opportunities for beginning farmers. 

Results

The following information summarizes the quantitative information that System institutions 

provided for their YBS programs. (See tables 25 and 26.)

In 2020, the System made a total of 370,943 new loans, totaling $119.7 billion. The total number 

of outstanding loans at year-end 2020 was 946,119, amounting to $311.9 billion.

Table 25: YBS loans made during 2020 

YBS 

category

Number of 

loans

Percentage 

of total 

number of 

System 

loans

Dollar 

volume of 

loans in 

millions

Percentage 

of total 

dollar 

volume of 

System 

loans

Average 

loan size

Young 65,807 17.7% $13,810 11.5% $209,850 

Beginning 94,329 25.4% $22,488 18.8% $238,402 

Small 166,282 44.8% $23,437 19.6% $140,946 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

63

Table 26: YBS loans outstanding (as of December 31, 2020) 

YBS 

category

Number of 

loans

Percentage 

of total 

number of 

System 

loans

Dollar 

volume of 

loans in 

millions

Percentage 

of total 

dollar 

volume of 

System 

loans

Average 

loan size

Young 181,378 19.2% $33,586 10.8% $185,170 

Beginning 283,936 30.0% $54,779 17.6% $192,927 

Small 470,836 49.8% $58,587 18.8% $124,432 

Sources: Annual Young, Beginning, and Small Farmer Reports submitted by each System lender through the FCS banks.

Note: The YBS totals listed in tables 25 and 26 include loans, advancements, commitments, and participation interests to 

farmers, ranchers, and aquatic producers. The totals exclude rural home loans made under FCA regulation 613.3030, loans to 

cooperatives, and the activities of the Farm Credit Leasing Services Corporation.

Young: The System reported making 65,807 new loans to young farmers in 2020, and the 

volume of these loans amounted to $13.8 billion. The new loans made to young farmers in 2020 

represented 17.7% of all loans the System made during the year and 11.5% of the dollar volume 

of loans made. At the end of 2020, the System reported 181,378 loans outstanding to young 

farmers, totaling $33.6 billion.

Beginning: The System reported making 94,329 new loans to beginning farmers in 2020, and 

the volume of these loans amounted to $22.5 billion. The new loans made to beginning farmers 

in 2020 represented 25.4% of all System loans made during the year and 18.8% of the dollar 

volume of loans made. At the end of 2020, the System reported 283,936 loans outstanding to 

beginning farmers, totaling $54.8 billion.

Small: System institutions reported making 166,282 new loans to small farmers in 2020, 

totaling $23.4 billion. The new loans made to small farmers in 2020 represented 44.8% of all 

System loans made during the year and 19.6% of the dollar volume of loans made. At the end of 

2020, the System reported 470,836 loans outstanding to small farmers, totaling $58.6 billion.

Please note: Because the YBS mission is focused on each borrower group separately, data are 

reported separately for each of the three YBS categories. Since some loans fit more than one 

category, adding the loans across categories does not produce an accurate measure of the 

System’s YBS lending.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

64

Market Share of Farm Debt 

According to the U.S. Department of Agriculture’s November 2021 forecast, total farm debt is 

estimated to have topped $454 billion at the end of 2021, up 2.9% from a year earlier and up 

24% since 2016. Commercial banks and the Farm Credit System are the primary suppliers of 

credit to farmers; other providers include life insurance companies, USDA programs, Farmer 

Mac, individuals, and merchants and dealers.

The System’s share of the $441 billion farm debt market at the end of calendar year 2020 was 

44.4%, up from 42.4% at the end of 2019. The market share for commercial banks stood at 

36.3% at the end of 2020, down from 40.1% at the end of 2019. The combined share of other 

lender groups declined by 1.8%.

Historically, except for the high credit stress period of the 1980s and various market 

adjustments in the 1990s, FCS institutions have typically held the largest share of the farm real 

estate debt market, while commercial banks have held the largest share of non-real estate farm 

debt. At year-end 2020, the share of farm debt secured by farm real estate was 48.7% for the 

System and 33.6% for commercial banks. At year-end 2020, the share of farm debt secured by 

collateral other than farm real estate was 36.2% for the System and 41.4% for commercial banks.
Part IV 

Performance Budget 

FY 2023

_________________________________________________________________

Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

67

Performance Budget Overview

Our FY 2023 performance budget reflects our commitment to maintaining a flexible regulatory 

environment that meets current and future agricultural credit needs while ensuring the safety 

and soundness of the FCS. FY 2023 will be our first year operating under our new strategic plan 

for FYs 2022 to 2026. We have revised our strategic goals with input from internal and external 

stakeholders, including the Office of Management and Budget (OMB). However, our two core 

program activities, which are essential to carrying out our agency’s mission, remain unchanged. 

Our new strategic goals encompass these core program activities: 

• Policy and regulation: This program tracks the costs of achieving a regulatory 

environment that enables the System and Farmer Mac to fulfill their public missions.

• Safety and soundness: This program tracks the product and service costs of 

identifying risks and mitigating those risks in a timely fashion. 

For purposes of our performance budget, we established a third program activity for our 

reimbursable activities. We track these activities separately from the two agency mission 

program budgets for policy and regulation and safety and soundness.

The total performance budget (table 27) is $89.12 million and reflects a 5.1% increase from FY 

2022. 

Table 27. FCA performance budget, FYs 2021 – 2023

FY 2021 revised 

budget

FY 2022 revised

budget

FY 2023 proposed

budget

Policy and regulation $18,064,099 $19,064,643 $20,961,037

Safety and soundness 61,630,600 64,167,022 66,471,376

Reimbursable activities* 1,175,301 1,578,335 1,687,587

Total $80,870,000 $84,810,000 $89,120,000

* In contrast to the reimbursement numbers in table 5, these totals include indirect costs.

Policy and regulation

Our performance budget includes approximately $21.0 million for the policy and regulation 

program, a 9.9% increase from FY 2022. Most of the funds requested for policy and regulation 

in FY 2023 will support regulatory projects that were published in the Unified Agenda in the fall 

of 2021. 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

68

We will also use these funds to support other statutory and regulatory activities, including policy 

studies and market research; management of our Consolidated Reporting System, which stores 

the financial information that System institutions submit to us; and approvals of corporate 

applications, System funding requests, and mission-related investment programs.

Safety and soundness

The performance budget includes approximately $66.5 million for the safety and soundness 

program, a 3.6% increase from FY 2022. This increase is necessary because we have reallocated 

resources from reimbursable activities to meet System examination needs.

By statute, we are required to examine each FCS institution at least once every 18 months except 

Farmer Mac, which we must examine at least once a year. Examiners evaluate the overall 

condition and performance of these institutions and communicate the results to the institutions’ 

boards of directors and management through discussions and reports of examination. The 

Financial Institution Rating System ratings are evaluated and assigned to individual institutions 

at least quarterly. In FY 2023, budgeted monies will continue to support development of 

examination guidance and systemic risk oversight of System institutions and Farmer Mac.

Reimbursable activities

During FY 2023, we expect to perform approximately $1.69 million in reimbursable work for the 

following organizations. 

• Farm Credit System Insurance Corporation (FCSIC) — We will provide 

services to support examination, information technology, human resources, and 

communication and public affairs. We will also help complete one premium audit.

• USDA — We will support USDA in its review of the Rural Business Investment 

Program.

• National Consumer Cooperative Bank (NCB) — We will oversee the NCB’s 

safety and soundness examinations. Costs have been negligible due to our reliance on 

an agreement with the Office of the Comptroller of the Currency.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

69

Table 28 summarizes the costs associated with our program activities, broken down by products 

and services.

Table 28. FY 2023 proposed budget and full-time equivalents for program activities

Program activity Products and services Budget amount FTEs

Policy and 

regulation

Regulation and policy development $17,008,179 50.77

Statutory and regulatory approvals 3,952,858 11.57

Total for policy and regulation $20,961,037 62.34

Safety and 

soundness

Examination $61,136,101 250.35 

Economic, financial, and risk 

analysis 5,123,555 11.49 

FCS data management 211,720 0.59 

Total for safety and soundness $66,471,376 262.43

Reimbursable 

activities Total for reimbursable activities $1,687,587 8.00

All program 

activities Total $89,120,000 332.77
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

70

Our Strategic Plan Framework

The strategic goals outlined in our FY 2022 – 2026 strategic plan provide an overarching 

framework for achieving our public mission. They are clear statements of what FCA wants to 

achieve to advance its mission and address relevant national problems, needs, challenges, and 

opportunities. 

Strategic Goal 1: Ensure a sound financial system that provides a sustainable 

source of credit for agriculture and rural America. 

This strategic goal directly reinforces FCA’s mission to ensure that Farm Credit System 

institutions and Farmer Mac are safe, sound, and dependable sources of credit and related 

services for all creditworthy and eligible persons in agriculture and rural America. 

This goal also addresses three focus areas for the current planning cycle: 

• First, FCA will consider the challenges facing the System’s small versus large associations 

when evaluating merger proposals and administering its examination and regulatory 

program. 

• Second, FCA will evaluate the effectiveness of the contingency plans of System 

institutions and Farmer Mac in addressing the weather and other environmental threats 

to agriculture that have been identified through scenario testing. 

• Third, FCA will assess the preparedness of System institutions and Farmer Mac for 

cybersecurity threats and events.

Strategic Goal 2: Foster the long-term viability of the U.S. agricultural

economy, while supporting young, beginning, and small (YBS) farmers, 

ranchers, and aquatic producers. 

This strategic goal underscores the importance of continued agricultural production in the 

United States. FCA is committed to continue promoting the long-term viability of the U.S. 

agricultural economy and encouraging Farm Credit System institutions to support young, 

beginning, and small (YBS) farmers, ranchers, and aquatic producers. 

The supporting strategic objectives for each strategic goal reflect the outcome or management 

impact the agency intends to achieve. Each objective is tracked through performance goals and 

other indicators. Table 29 is a matrix of the strategic objectives associated with each strategic 

goal.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

71

Table 29. FY 2023 strategic goals and strategic objectives

Strategic goal Strategic objectives

1. Ensure a sound financial 

system that provides a 

sustainable source of 

credit for agriculture and 

rural America.

1.1 Support a continued safe and sound System as a continued viable 

source of credit and related services for creditworthy and eligible 

borrowers.

1.2 Ensure the System makes available products and services to all 

creditworthy and eligible borrowers in a fair and impartial manner.

1.3 Ensure Farmer Mac provides secondary market programs that 

increase the availability of credit and liquidity to agriculture, rural 

communities, and infrastructure.

1.4 Promote opportunities for stakeholder engagement when 

establishing and reviewing regulatory and policy proposals.

1.5 Promote System lending for, and investments in, rural 

infrastructure to foster vitality of rural communities.

1.6 Encourage board and workforce diversity at System institutions 

and Farmer Mac.

1.7 Ensure the System and Farmer Mac identify and implement 

safeguards to mitigate the potential impact of established and 

emerging risks.

2. Foster long-term viability 

of the U.S. ag economy 

while supporting young, 

beginning, and small 

(YBS) farmers, ranchers, 

and aquatic producers.

2.1 Promote access to YBS lending programs and financial services for 

eligible borrowers.

2.2 Encourage effective outreach by System institutions that promote 

the success of YBS farmers, ranchers, and aquatic producers.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

72

Performance goals and measures

Measuring the achievements

Tables 30 and 31 show the measures we will use to evaluate our efforts to carry out our mission 

in FY 2023. 

Table 30. Strategic Goal — Ensure a sound financial system that provides a sustainable 

source of credit for agriculture and rural America

Strategic

objectives

Performance goals Measures

SO1.1 – Support 

a continued safe 

and sound 

System as a 

continued viable 

source of credit 

and related 

services for 

creditworthy and 

eligible 

borrowers.

SO1.1.1 – Ensure policy and 

regulatory requirements address 

safety and soundness and their 

objectives.

SO1.1.2 – Evaluate each merger 

or re-affiliation application for 

continued safety and soundness 

for the institution and the System 

and further the objectives of the 

Farm Credit Act. 

SO1.1.3 – Employ examination 

oversight activities to ensure the 

continued safety and soundness of 

individual institutions and the 

System.

SO1.1.a – Whether most objectives listed 

in the preamble of each final rule were met 

on the 2-year anniversary of the rule’s 

effective or implementation date. 

SO1.1.b – Percentage of System 

institutions where supervisory agreement 

requirements are at least substantially 

complied within 18 months of execution. 

(Target: >80%) 

SO1.1.c – Percentage of institutions with 

satisfactory audit and review programs, 

including institutions with acceptable 

corrective action plans. (Target: 100%)

SO1.2 – Ensure 

the System 

makes available 

products and 

services to all 

creditworthy and 

eligible borrowers 

in a fair and 

impartial manner.

SO1.2.1 – Identify and eliminate 

unnecessary regulatory burdens 

and other barriers to the System’s 

ability to serve the needs of all 

eligible borrowers.

SO1.2.2 – Ensure lending 

programs continue to serve 

creditworthy and eligible to 

borrowers.

SO1.2.a – Percentage of FCS institutions 

providing products and services that serve 

creditworthy and eligible persons and 

perform outreach to enhance diversity and 

inclusion. (Target: > 90%)

SO1.2.b – Whether FCA solicits comments

from the public and other interested parties 

on certain guidance and all regulations 

issued by the Agency.

SO1.2.c – Percentage of direct-lender 

institutions with satisfactory consumer and 

borrower rights compliance. (Target: > 

90%) 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

73

Strategic

objectives

Performance goals Measures 

SO1.3 – Ensure 

Farmer Mac 

provides 

secondary 

market programs 

that increase the 

availability of 

credit and 

liquidity to 

agriculture, rural 

communities, and 

infrastructure.

SO1.3.1 – Develop and implement 

a dynamic examination, oversight, 

and risk-monitoring program that 

ensures the safety and soundness 

of Farmer Mac. 

SO1.3.2 – Emphasize Farmer 

Mac’s public purpose and mission 

through the evaluation of Farmer 

Mac’s mission achievement.

SO1.3.3 – Assess regulatory and 

policy guidance for Farmer Mac as 

new risks emerge, with focus on 

capital and stress testing policies 

that promote long-term resiliency. 

SO1.3.a – Whether the Office of 

Secondary Market Oversight (OSMO) 

effectively identifies emerging risks as part 

of the examination and oversight process.

SO1.3.b – Whether OSMO takes 

appropriate supervisory and corrective 

actions to effect change.

SO1.3.c – Whether OSMO evaluated if 

Farmer Mac’s business plan contains 

strategies to promote and encourage the 

inclusion of all qualified loans (including 

loans to small farms and family farmers) in 

its secondary market programs.

SO1.3.d – Whether OSMO evaluated 

Farmer Mac’s progress toward achieving 

their mission to provide a source of longterm credit and liquidity for qualified loans.

SO1.3.e – Whether OSMO assessed the

need for new or revised regulatory and 

policy guidance for Farmer Mac as new 

risks emerged.

SO1.4 – Promote 

opportunities for 

stakeholder 

engagement 

when 

establishing and 

reviewing 

regulatory and 

policy proposals. 

SO1.4.1 – Continue 

communication with our 

stakeholders through meetings, 

briefings, and written 

communication. 

SO1.4.a – Whether FCA requested input 

from persons outside of FCA for most prerulemaking projects and proposed rules. 

(Target: >90%) 

SO1.5 – Promote 

System lending 

for, and 

investments in, 

rural 

infrastructure to 

foster vitality of 

rural 

communities.

SO1.5.1 – Reinforce the 

importance of Farm Credit System 

serving rural infrastructure needs.

SO1.5.a – Whether FCA mentions 

importance of rural infrastructure in 

congressional testimony and public 

communications. 

SO1.5.b – Whether FCA evaluated System 

institution requests for compliance with 

agency regulations and guidance 

regarding investments in rural 

infrastructure.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

74

Strategic

objectives

Performance goals Measures 

SO1.6 – 

Encourage board 

and workforce 

diversity at 

System 

institutions and 

Farmer Mac.

SO1.6.1 – Identify policy and 

regulatory obstacles for board and 

workforce diversity. 

SO1.6.2 – Ensure System 

institutions’ and Farmer Mac’s 

human capital plans, as part of the 

annual business planning process, 

incorporate board and workforce 

diversity initiatives. 

SO1.6.a – Whether FCA solicits comments 

from the public and other interested parties 

on guidance and regulations issued by the 

agency. 

SO1.6.b – Percentage of System 

institutions and Farmer Mac with objectives 

for addressing board and workforce 

diversity within the annual business plan. 

(Target: 100%) 

SO1.7 – Ensure 

the System and 

Farmer Mac 

identify and 

implement 

safeguards to 

mitigate the 

potential impact 

of established 

and emerging 

risks.

SO1.7.1 – Ensure System 

institutions and Farmer Mac 

incorporate contingency plans to 

address weather and other 

environmental threats to 

operations.

SO1.7.2 – Ensure System 

institutions and Farmer Mac 

establish controls to address 

cybersecurity threats and events.

SO1.7.3 – Enhance risk analysis 

and incorporate findings in 

policymaking and examination.

SO1.7.a – Percentage of System 

institutions and Farmer Mac with 

contingency plans to ensure continued 

capital adequacy, earnings capacity, and 

access to funding. (Target: 100%) 

SO1.7.b – Percentage of System 

institutions and Farmer Mac addressing 

cybersecurity threats and controls in risk 

assessments and internal audit plans. 

(Target: 100%) 

SO1.7.c – Whether FCA publishes a semiannual Unified Agenda that outlines the 

agency’s planned regulatory actions 
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

75

Table 31. Strategic Goal — Foster the long-term viability of the U.S. agricultural economy 

while supporting young, beginning, and small (YBS) farmers, ranchers, and aquatic 

producers

Strategic 

objectives

Performance goals Measures

SO2.1 – Promote 

access to YBS 

lending programs 

and financial 

services for eligible 

borrowers.

SO2.1.1 – Ensure lending programs 

continue to serve creditworthy and eligible 

YBS borrowers. 

SO2.1.2 – Identify best practices through 

enhanced YBS reporting. 

SO2.1.3 – Evaluate YBS regulations and 

guidance to support programming that 

meets the credit and financial services 

needs of eligible YBS borrowers.

SO2.1.4 – Continue to enhance YBS data 

analysis to better evaluate and rate the 

effectiveness of System institution 

programs in serving YBS borrowers and 

to identify further opportunities for 

improving service to these borrowers.

SO2.1.a – Percentage of directlender institutions with YBS 

programs in compliance with 

YBS regulations. (Target: 100%) 

SO2.1.b – Whether FCA 

publishes a semiannual Unified 

Agenda that outlines the 

agency’s planned regulatory 

actions, including YBS, for the 

next 12 to 24 months. 

SO2.1.c – Qualitative and 

quantitative improvements to 

YBS data quality.

SO2.2 – Encourage 

effective outreach 

by System 

institutions that 

promote the 

success of YBS 

farmers, ranchers, 

and aquatic 

producers.

SO2.2.1 – Promote outreach efforts and 

the sharing of best practices to promote 

the success of YBS farmers and ranchers 

and other agricultural producers by 

System institutions. 

SO2.2.a – Percentage of System 

institutions identifying outreach 

efforts for YBS in the annual 

business plan. (Target: > 90%) 

SO2.2.b – Whether FCA 

facilitates sharing of YBS 

effective practices among 

System institution decision 

makers.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

76

Budgets

We track the associated costs of executing our strategic goals and objectives using two of the 

three program activities discussed earlier:

• Policy and regulation program: We established the policy and regulation program 

to track the costs of achieving a regulatory environment that enables the System and 

Farmer Mac to fulfill their public missions. We track costs associated with the following 

products and services:

- Regulation and policy development 

- Statutory and regulatory approvals

• Safety and soundness program: We established the safety and soundness program 

to track the product and service costs of identifying risk and taking timely corrective 

action. We track costs associated with the following products and services:

- Examination

- Economic, financial, and risk analysis

- FCS data management

Tables 32 and 33 provide the budgeted amounts for FYs 2021 to 2023 in support of our mission 

and primary program areas.

Table 32. Budgets to achieve policy and regulation program

FY 2021

revised budget

FY 2022

revised budget

FY 2023

proposed budget

Regulation and policy development $15,358,980 $15,756,359 $17,008,179

Statutory and regulatory approvals 2,705,119 3,308,284 3,952,858

Total $18,064,099 $19,064,643 $20,961,037

Table 33. Budgets to achieve safety and soundness program

FY 2021

revised budget

FY 2022

revised budget

FY 2023

proposed budget

Examination $56,695,997 $59,254,653 $61,136,101

Economic, financial, and risk analysis 3,528,344 4,718,612 5,123,555

FCS data management 1,406,259 193,757 211,720

Total $61,630,600 $64,167,022 $66,471,376
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

77

Stewardship Objectives

In addition to our strategic objectives listed above, we have three stewardship objectives that 

also support our core strategic goals. The costs associated with these stewardship objectives are 

built into the costs of carrying out our public mission and safety and soundness programs; 

therefore, we have not separately budgeted funds for achieving the stewardship objectives.

Stewardship Objective 1: Ensure a well-trained, engaged, and diverse staff working 

effectively in a safe, efficient, and modern workplace.

Stewardship Objective 2: Ensure data and technology assets are accessible, protected, and 

used effectively in a modern environment.

Stewardship Objective 3: Ensure sound management and oversight of agency financial 

resources to achieve strategic goals.
Farm Credit Administration FY 2023 Proposed Budget and Performance Plan

78

Performance Measurement and Reporting

Our performance measurement system evaluates our progress in achieving the goals outlined in 

our Strategic Plan for FYs 2022 to 2026. The system provides a balanced view of our overall 

performance, considering the inputs used, the products and services produced, and the 

achievement of desired outcomes. As we have shown in this report, the agency-level measures 

are tracked at the program activity level and linked to our strategic goals.

Our chief executive officer, with assistance from our chief operating officer and designated office 

directors, is responsible for measuring performance by collecting and analyzing performance 

data. The chief executive officer monitors the agency’s progress and results relative to the 

agency-level measures on a quarterly basis. Periodic performance reports are provided to the 

FCA board. The annual performance report is incorporated in the FCA Performance and 

Accountability Report, which is submitted to the president and Congress.

Copies are available from

Office of Congressional and Public Affairs

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102-5090

703-883-4056 

www.fca.gov

0322/70