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Remarks by 

The Honorable Jill Long Thompson 

Board Chair and CEO, Farm Credit Administration

Farm Credit Council Annual Meeting

Orlando, Florida 

February 4, 2014

Good morning. It’s a pleasure to join you again this year for the Farm Credit Council Annual 

Meeting. Thank you so much for this opportunity.

I am privileged today to recognize my two Board colleagues, Ken Spearman and Lee Strom, as 

well as FCA senior staff who are here. And it is always a pleasure to acknowledge a long-time 

friend, Ken Auer.

You will recall when I spoke at your annual meeting in San Diego last year I shared with you my 

strategic priorities for the year. I am pleased to report that we have made good progress in 

meeting those objectives. 

And I would like to update you on one of them in particular this morning—the capital rule. This 

rule has been a priority of mine since I became Chair. To serve the System’s mission, it is 

critical that each of your institutions maintains an adequate level of capital—not only when times 

are good, as they are now—but also when agricultural conditions aren’t good for the farmers 

and ranchers in the territories you serve. 

Therefore, this rule is key to maintaining the safety and soundness of System institutions and 

their capacity to serve the System’s mission. In addition, we want our rule to be consistent with 

Basel III criteria and the capital rules of the Federal banking agencies. However, as we work 

through the many issues related to the rule, we also recognize that we must consider that the 

System, as stated in the Farm Credit Act, is a “farmer-owned cooperative.”

Although there is still much work ahead, I am confident we will have the proposed rule ready for 

FCA Board consideration this spring. In our rulemaking, it is important that we not only “get it 

right,” but that we do it expeditiously. We have an obligation to do all we can to keep uncertainty 

to a minimum.

Having spent more than a few years on a farm, I know of only one constant in production 

agriculture. And that is change, which creates uncertainty. Growing up on our family farm in 

northern Indiana, at an early age, I was helping with the milking, livestock feeding, and other 

farm chores. Just like our neighbors, we had a little bit of everything back then—grain, cows, 

hogs, and chickens. 

Compared to our farm today, our operation was small. I remember when we got a four-bottom 

plow and we thought we had made it big. Today, we don’t even have a plow.
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Agriculture has changed so much since then. One of the biggest changes over the past halfcentury has been the increase in yields. As you know, thanks to bigger, more sophisticated farm 

machinery, pesticides, commercial fertilizers, advances in genetics, and—most recently—

precision agriculture, yields have risen tremendously. 

In 1960, when I was very young, the U.S. average yield for corn was about 55 bushels per acre; 

in 2009, it was almost three times that amount. For soybeans, the average yield was about 24 

bushels per acre in 1960; by 2009, it was around 42. 

The increase in agricultural productivity has greatly increased the number of people we can 

feed. In the 1960s, one farmer could feed about 26 people; today, one farmer can feed 144. 

As a result, the cost of food to the consumer has declined greatly. We spent about 17 percent of 

our disposable personal incomes on food in 1960; now we spend less than 10 percent. 

As yields have gone up, commodity prices have become more volatile, and for many farmers 

that has meant expanding their operations and their marketing expertise or getting out of the 

business. And you know as well as I that credit has been a critical component of expanding farm 

operations.

Farmers borrowed from the Farm Credit System, and they borrowed from commercial banks 

and other sources. They used this credit to buy bigger equipment and more sophisticated

fertilizers and seed. 

Agriculture is a risky enterprise. I am not telling you anything you don’t already know—we are all 

aware of the fact that many farmers have sold out to larger, more profitable farms.

Farms have become bigger and fewer. Today we have 1.1 million fewer farms than we had 50

years ago.

By the 1990s, it was widely believed that the future of agriculture lay exclusively with large 

farms, and many were lamenting the demise of the small family farm. 

But something happened during the 1990s that again changed the course of American 

agriculture. Gradually more and more consumers began to demand local foods and organic 

products. 

What was the source of this demand? It varied. Many sought local products simply because 

they were longing for the vine-ripened taste they had enjoyed when they were kids. Others had

concerns about health and environmental issues. 

Whatever the reason for the demand, it has strengthened over time. And because the producers 

of local and organic products are often small, this demand has produced a noticeable uptick in 

the number of small farms in this country. 
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Now does this mean large farms have anything to fear? Of course not. To supply food for our 

planet’s growing population, large farms are and will always be critical. But small farms will also

be an important part of the equation.

Maximizing food production is becoming one of the most critical issues facing the planet. By 

2050, the world is expected to have 9 billion people. According to one source, that means we 

will need to produce more food in the first half of this century than we did in the past 10,000 

years. 

And compounding the challenge of rising population is climate change. The warming of the 

planet is triggering extreme weather events, including drought and flooding, that can devastate 

farms. Farmers have always been at the mercy of weather, but they may be even more 

vulnerable now.

So how can agriculture meet these challenges? The same way it did in the past—through 

innovation. 

New technologies have ushered in the era of precision farming. Self-steering tractors and 

combines navigate fields perfectly, reducing row overlaps that waste time and fuel. Sensors on 

farm equipment measure the precise amount of moisture, fertilizer, and pesticide that plants 

need to thrive. The beauty of precision agriculture is that, in addition to increasing productivity, it 

can reduce many of the environmental concerns associated with agricultural activities. 

And some of the technologies that are right around the corner promise to take precision 

agriculture to a whole new level. 

Drones, for example. Converting drones to agricultural use may be the 21st century’s version of 

turning swords to plowshares. What was at one time used solely by the military now shows 

promise as a valuable farming tool. Although the FAA has not yet approved these devices for 

private use in the United States, as you know, ag researchers have tested them and farmers in 

other countries have already begun using them. 

Another innovation of the near future is agricultural robotics. Although they sound like they 

belong in a science fiction movie, ag robots may already be in use on your farm or coming soon 

to a farm near you. As you know, they are already being used to milk cows.

But innovations in agriculture go beyond drones and robots. They include innovations in the 

delivery and distribution of food. Thanks to innovations like CSAs and food co-ops and the 

growing popularity of farmers markets, the distance between consumers and farmers is 

shrinking—literally and figuratively. 

These innovations serve the needs of consumers who want their food fresh and local, and they 

reduce the environmental impacts of transporting food long distances. These direct-to-consumer 
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marketing techniques also strengthen communities because they encourage consumers to 

establish relationships with the farmers who grow their food.

Urban farming is another innovation stemming from the local foods movement. In fact, thanks to 

growing consumer interest in eating fresh, sustainably produced foods, many urban farms 

already exist in cities like New York, Tokyo, London, and Berlin. One form of urban agriculture 

even involves raising plants indoors—in vacant warehouses or in greenhouses erected on 

rooftops. 

We’re still in the early stages of urban farming, but just because an enterprise is not profitable 

today doesn’t mean it won’t be profitable tomorrow. Large-scale production agriculture will 

always be critical to meeting future food needs, but innovations like CSAs and urban farming 

can help supplement the food supply.

We don’t know exactly how farming will change. But we do know farming tomorrow will be 

different from farming today.

And where there is innovation and change in farm practices, there must eventually be 

innovation and change in farm lending. At the turn of the 20th century, farmers who wished to 

switch from horses and mules to tractors needed credit to purchase them. Likewise, producers 

of local foods and others in underserved markets need credit to build and grow their operations.

Over the past year, many of you have taken important measures to reach out to local-foods

producers and other underserved markets. You have created outreach programs for minority 

and socially disadvantaged farmers; at least one institution has added a staff position for a YBS 

Producer Specialist; and you are also using social media to extend outreach to underserved 

markets. 

These are excellent steps in the right direction. By reaching out to underserved markets, you 

are not only doing the right thing but the smart thing. Expanding the types of operations the 

System finances can add diversity to portfolios, which in the long run benefits all System 

borrowers. 

Do I expect loans to local-foods farmers to become a significant segment of the System’s 

portfolio in the next five years? Probably not. But in the next 15 or 20 years, who knows?

The point is we don’t want to miss a good chance—a chance to help these producers thrive and 

a chance to strengthen the System’s safety and soundness and its relevance to the agriculture 

industry.

Broadening your customer base is also a powerful marketing tool. So many people in this 

country don’t even know that the System exists. Serving a greater diversity of customers can 

help you get your story out to more people than ever before.
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And you have a powerful story to tell. The Farm Credit System has been serving American 

farmers for almost a century through good times and bad. Today, it provides nearly half of this 

nation’s agricultural credit. And the System will continue to serve American agriculture—whether 

we’re talking about thousands of acres of waving grain in the Heartland or a dozen acres of 

vegetables right outside downtown Chicago.

By getting this message out to more Americans, you can increase public understanding of, and 

appreciation for, the System and its role in our economy.

Of course, at the same time you are reaching out to underserved markets, you also cannot take 

your eye off the ball of safety and soundness. Here, too, you have taken important steps. 

You have worked closely with us to ensure we have the data we need to identify credit risk. 

During 2013, you created a protocol to identify and report shared assets, and you have begun 

implementing the protocol across the System. I know this is a huge undertaking. I also 

commend you for your progress on the data repository project. By enhancing the quality of loan 

data, we—both the System and the Agency—can greatly improve our ability to identify threats to 

safety and soundness.

I also appreciate the measures you have taken to guard against collateral risk. As we knew they 

eventually would, grain prices have begun to fall, causing land prices to soften. Your efforts to 

strengthen your capital position and your loan underwriting standards, and your improvements 

in stress testing will help mitigate the effects of these market shifts. 

And, finally, I commend you for your efforts to strengthen institutional governance. Over the past 

year, many institutions have strengthened board governance by providing training for current 

board members and by appointing outside directors with specialized skills. I encourage you to 

keep up this important work. In fact, you may want to consider each board meeting as an 

opportunity to provide some form of training.

Agriculture has had an exciting past, and I know it has an exciting future. Last week the House 

passed a new Farm Bill and the Senate is expected to vote on the bill later this morning.

Although some segments of agriculture fared better than others, generally speaking, passage of 

the bill will be good news for farmers. Now we will know what Government farm policy is for the 

next five years. This knowledge allows farmers (and farm lenders) to make business decisions 

more confidently. 

We will closely monitor the industry to see what effects these policy changes may have on 

certain segments of the farm economy. I look forward to continuing to work with you to ensure 

the safety, soundness, and mission achievement of the Farm Credit System.

Thank you.