Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Board Member

MINUTES OF THE REGULAR MEETING

OF THE

FARM CREDIT ADMINISTRATION BOARD

July 13, 2017

These minutes reflect the business transacted at the July 13, 2017, Regular Meeting of the Farm 

Credit Administration Board (FCA Board) pursuant to the Government in the Sunshine Act (Act), 5 

U.S.C. § 552b, and the regulations of the Farm Credit Administration (FCA) adopted thereunder.

The FCA Board meeting was held at the FCA office in McLean, Virginia, beginning at 9:00 a.m. and 

concluding at 9:54 a.m. Members of the Board present were:

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Member

Others present included Charles Rawls, General Counsel; Dale Aultman, Secretary to the Board; staff 

of the FCA and Farm Credit System Insurance Corporation (FCSIC); and four members of the general 

public. (A list of staff attendees is attached as Exhibit A.) 

Statements Regarding Retirement of Inspector General Elizabeth Dean

Chairman Tonsager noted that FCA Inspector General Elizabeth Dean is retiring later in the month. 

He directed the Board Secretary to attach to the minutes his statement regarding Elizabeth’s service 

to the Federal Government. (A copy of the statement is attached as Exhibit B.)

Mr. Hall stated that he also had a statement which he requested to be attached to the minutes. 

Chairman Tonsager directed the Board Secretary to attach the statement to the minutes. (A copy of 

the statement is attached as Exhibit C.)

Inspector General Elizabeth Dean thanked the Board Members and FCA Senior Staff for their support in 

positively furthering FCA’s mission and operations.

1
The Secretary read a statement that announced the meeting would be conducted according to the 

requirements of the Government in the Sunshine Act. 

Chairman Tonsager reviewed the published Agenda. (A copy of the Public Announcement publishing 

the Agenda for the meeting is attached as Exhibit D.)

Mr. Hall moved to adopt the Agenda as published. 

Chairman Tonsager seconded the motion.

There being no further discussion, Chairman Tonsager called the question.

The Secretary polled the Board Members and the motion carried unanimously.

Mr. Hall noted that the Agenda did not include any items that should be discussed in closed session, 

as permitted by the Government in the Sunshine Act, and therefore moved that the entire meeting 

remain open to the public. 

Chairman Tonsager seconded the motion.

There being no further discussion, Chairman Tonsager called the question.

The Secretary polled the Board Members and the motion carried unanimously.

OPEN SESSION

Approval of Minutes

Minutes for June 8, 2017 

(BM-13-JUL-17-01) 

Mr. Hall moved to approve the minutes for the June 8, 2017, FCA Regular Board Meeting. 

Chairman Tonsager seconded the motion.

There being no further discussion, Chairman Tonsager called the question.

The Secretary polled the Board Members and the motion carried unanimously. (BM-13-JUL-17-01) 

(A copy of the official “Board Action Item” is attached as Exhibit E.)

2
Report

Why We Are Not Facing Another 1980s-Style Farm Sector Crisis 

Chief Economist Stephen Gabriel of the Office of Regulatory Policy presented a report titled, “Why 

We Are Not Facing Another 1980s-Style Farm Sector Crisis.” 

Chairman Tonsager asked if there were any questions or further discussion from the Board. 

There were no further questions or discussion. 

(A copy of the PowerPoint presentation is attached as Exhibit F.)

ADJOURNMENT

There being no further business to come before the Board, Chairman Tonsager indicated he would 

entertain a motion to adjourn the meeting.

Mr. Hall moved that the meeting be adjourned.

Chairman Tonsager seconded the motion.

Chairman Tonsager called the question. 

The Secretary polled the Board Members and the motion carried unanimously.

The meeting adjourned at 9:54 a.m.

NOTATIONAL VOTE ACTIONS 

There were five notational vote actions approved by the FCA Board from June 9, 2017, through July

13, 2017 as follows:

Item Number Action Date Voting Results Subject

NV 17-14 06/15/2017 Approved Preliminary approval, with conditions, of proposed plan of merger of Farm 

Credit Ness City, FLCA with and into Farm Credit of High Plains, FLCA, a 

wholly owned subsidiary of High Plains Farm Credit, ACA. If all conditions 

for final approval are met, the merger is scheduled to take effect October 1, 

2017.

NV 17-15 06/21/2017 Approved Federal Agricultural Mortgage Corporation’s request to invest up to $250 

million in Rural Enterprise Bonds secured by agricultural chattel loans.

NV 17-16 06/28/2017 Approved Authorization to the Chief Financial Officer to reallocate funds in the Office of

Information Technology’s budget.

NV 17-17 06/29/2017 Approved CoBank’s request to invest, with conditions, up to $2.8 million in bonds issued 

by a subsidiary of a rural hospital in Colorado.

NV 17-18 07/13/2017 Approved Appointment of Wendy R. Laguarda to the position of FCA Inspector General.

3
The undersigned hereby certify that the foregoing minutes are the official minutes of the Regular

Meeting of the Farm Credit Administration Board held on July 13, 2017. 

______ _/s/________________ ______ _/s/________________

Dallas P. Tonsager Dale L. Aultman

Board Chairman and Chief Executive Officer Secretary to the Board

 Approved: _August 10, 2017_____

4
Exhibit A 

Page 1 of 2

STAFF PRESENT AT THE 

FCA REGULAR BOARD MEETING

July 13, 2017

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Board Member

OFFICE

OPEN 

SESSION

Office of the Board

Aultman, Dale X

Laguarda, Wendy X

Kramp, Kevin X

Calhoun, Gaye X

Corey, Kathryn X

COO

Hoffman, William X

OIT

Golley, Jerry X

OCPA

Stokke, Mike X

Middleton, Russell X

OSMO

Rea, Laurie X

OGC

Rawls, Charles X

Donner, Mary Alice X

Strickland, Joy X

5
Exhibit A 

Page 2 of 2

OFFICE OPEN 

SESSION

OE

Coleman, Robert X

OIG

Dean, Elizabeth X

ORP

Van Meter, Gary X

Johansen, Mark X

Gabriel, Stephen X

OCFO

Smith, Stephen X

OAS

Fowlkes, Jerome X

FCSIC

Rubin, Howard X

Pfitzinger, Rick X

GENERAL PUBLIC 4

6
Exhibit B

Statement

Dallas P. Tonsager, Chairman

Farm Credit Administration Board Meeting, July 13, 2017 

Before we get started on the agenda, I’d like to take a few minutes to acknowledge the retirement of 

one of FCA’s longstanding leaders – our Inspector General, Elizabeth Dean.

 

Liz has been at FCA since 1986, where she served as a senior attorney in our Office of General 

Counsel for 3 years. Prior to coming to FCA, Liz served on active duty as a United States Navy Judge 

Advocate from 1982-1986. She retired from the United States Naval Reserves in 2000.

Liz has been in the Inspector General’s office since 1989, where she served as Deputy IG, Counsel to 

the IG, and as the Inspector General for the last 4 years.

We thank you, Liz, for your service to our country and for all the fine contributions you made to FCA 

over the years. We wish you the best in your well-deserved retirement and hope that you’ll come 

back and visit us from time to time.

7
Exhibit C

Statement

Jeffery S. Hall, Member

Farm Credit Administration Board Meeting, July 13, 2017

Mr. Chair, when first approached about becoming a Board Member of the Farm Credit 

Administration I wondered what I could offer if confirmed to this position. I determined one area was 

to continue and perhaps improve the efficient and effective governance of the Farm Credit System. 

When I finally was confirmed to the Board I instantly recognized that I was going to have several 

partners in this pursuit. One of the first who introduced herself was Elizabeth Dean.

She has a keen interest to ensure accountability to the ideals of good government in general and the 

Agency specifically. Liz fiercely defended the Inspector General's independence and always called it 

like she saw it. That reputation made her a respected leader in the IG community. 

The men and women of the IG community have a huge burden. Liz developed partnerships with 

those "in the line" to make sure the FCA operated efficiently and effectively. I wish her nothing but 

the best in retirement. Liz, take a deep breath, look back and take pride in how much your leadership 

has affected this agency. We are grateful for your service to the Agency and to our Nation.

8
Exhibit D 

Farm Credit Administration Farm Credit Administration

 1501 Farm Credit Drive McLean, Virginia 22102-5090

 

PUBLIC ANNOUNCEMENT OF

MEETING SUBJECT TO THE GOVERNMENT IN THE SUNSHINE ACT

Farm Credit Administration Board

Regular Meeting

July 13, 2017 

Summary: Notice is hereby given, pursuant to the Government in the Sunshine Act (5 U.S.C. Sec. 552b (e) (1)), of the 

forthcoming regular meeting of the Farm Credit Administration Board.

Date and Time: The regular meeting of the Board will be held July 13, 2017. The meeting is scheduled to be held at the 

office of the Farm Credit Administration in McLean, Virginia, from 9:00 a.m. until such time as the Board may conclude its 

business.

Address: Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. Submit attendance 

requests via e-mail to VisitorRequest@FCA.gov. See SUPPLEMENTARY INFORMATION for further information about 

attendance requests. 

For Further Information Contact: Dale L. Aultman, Secretary to the Farm Credit Administration Board (703) 883-4009. 

TTY is (703) 883-4056.

Supplementary Information: This meeting of the Board will be open to the public (limited space available). Please send 

an e-mail to VisitorRequest@FCA.gov at least 24 hours before the meeting. In your e-mail include: name, postal address, 

entity you are representing (if applicable), and telephone number. You will receive an e-mail confirmation from us. 

Please be prepared to show a photo identification when you arrive. If you need assistance for accessibility reasons, or if 

you have any questions, contact Dale L. Aultman, Secretary to the Farm Credit Administration Board, at (703) 883-4009. 

The matters to be considered at the meeting are:

OPEN SESSION

Approval of Minutes

1 June 8, 2017 

Report

2 Why We Are Not Facing Another 1980s-Style Farm Sector Crisis

_ July 3, 2017_______ ______ _/s/______________

 Date Dale L. Aultman

 Secretary to the Board

9
Exhibit E 

Farm Credit Administration 1501 Farm Credit Drive

 McLean, Virginia 22102-5090

 (703) 883-4000

BOARD ACTION ITEM

 

FCA BOARD ACTION ON

Minutes for June 8, 2017 Regular Board Meeting

BM-13-JUL-17-01

Effective Date: July 13, 2017

Effect on Previous Action: None

THE FCA BOARD HEREBY:

 

Approves the minutes for June 8, 2017, Regular Board Meeting as submitted.

DATED THIS 13th DAY OF JULY 2017 

BY ORDER OF THE BOARD

 

______ _/s/__________________

Dale L. Aultman

Secretary to the Board 

10
FCA Board Meeting 

July 2017

Why we are not facing another 

1980s-style farm sector crisis

July 13, 2017

Stephen Gabriel

Chief Economist

Office of Regulatory Policy

Exhibit F

11
The 1980s crisis was preceded 

by the golden era of the 1970s

Farm income was high, peaking in 1973

Exports surged (Russian wheat deal)

Inflation raged

Farmland values soared

Real interest rates were low

Farm debt swelled

2

12
A confluence of adverse factors 

hammered the farm sector in the ‘80s

Inflation

Interest rates

Oil prices

U.S. recessions

World economic growth

U.S. dollar exchange rate

Agricultural exports 3

13
Inflation exceeded 13% in 1980; 

under 2% today

4

-2

0

2

4

6

8

10

12

14

16

CPI for All Urban Consumers: All Items, % Change from Year Ago, Annual, Seasonally Adjusted

Source: U.S. Bureau of Labor Statistics

14
Interest rates were very high in 

1981; historically low now

5

0

2

4

6

8

10

12

14

16

18

20

10-Year Treasury Constant Maturity Rate

Bank Prime Loan Rate

Source: Federal Reserve

Percent, Annual

15
-6

-4

-2

0

2

4

6

8

10

Real 10-Yr Treasury Bond Rate

Real Prime Rate

Percent, Annual

Source: Board of Governors of the Federal Reserve System; Bureau of Labor Statistics

Low real interest rates in the ‘70s 

gave way to soaring rates in the ‘80s

6

16
The oil price jumped 167% in ‘79/’80;

the price is down sharply today

7

0

20

40

60

80

100

120

Source: Federal Reserve Bank of St. Louis

Spot Crude Oil Price: West Texas Intermediate (WTI), Dollars per Barrel, Annual

17
U.S. recessions in ‘80 and ‘81/’82; now

in 3rd longest post WWII expansion

8

-10

-5

0

5

10

15

20

Real Gross Domestic Product, Percent Change from Preceding Period, Quarterly

Source: Bureau of Economic Analysis

18
World GDP growth down in ’80-’82; 

averaged about 3% since 2010

9

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

World Real GDP Growth, Percent Change Annual

Source: World Bank

19
Dollar strengthened in early ‘80s; 

also strengthened in recent years

10

0

20

40

60

80

100

120

140

Source: Board of Governors, Federal Reserve System

Trade Weighted U.S. Dollar Index: Broad, Index Jan 1997=100, Monthly

20
Exports down sharply from ’81-’86;

doing well in recent years

11

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Corn Exports Soybean Exports Wheat Exports

Source: USDA, FAS

Thousand Metric Tons

21
Real net cash income is returning 

to its long-term average

12

0

20

40

60

80

100

120

140

160

 Real net cash income (Billion 2009 $)

1980 - 2010 Average

Source: USDA

1973

1981

2012

22
Average price of Iowa cropland 

dropped 61% from 1981-1987

13

 -

 1,000

 2,000

 3,000

 4,000

 5,000

 6,000

 7,000

 8,000

 9,000

 10,000

Value of Iowa Cropland

Value of Iowa Cropland (inflation-adjusted, 2009 $)

Source: USDA, NASS

Dollars/acre

The average price of Iowa cropland

rose 383% from 1972 to 1981.

23
Low real interest rates & high income 

caused debt to grow rapidly in ‘70s

14

0

50

100

150

200

250

300

350

400

450

Total Farm sector debt

Real estate Debt

Nonreal estate Debt

Source: USDA, ERS

Billion dollars

24
Real farm debt has not reached the 

high point of the previous boom

15

0

50

100

150

200

250

300

350

400

Total Farm Debt (Inflation-Adjusted, 2009 $)

Source: USDA, ERS

25
Measures of the debt burden 

soared in the early 1980s

16

16.2

22.2

11.3

13.9

0

5

10

15

20

25

Debt-to-Asset Ratio (percent)

Source: USDA, ERS

1985

0.21

0.33

0.46

0.2

0.28

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

(Interest + Principal)/Value of Production

Source: USDA, ERS

Debt Service Ratio

1983

26
Today's situation is similar to the 80s, 

but there are important differences

17

Similarities Differences

Then Now

Preceded by a demand shock Interest rates Very high Very low, but rising

Prices and Incomes rose sharply Inflation Very high Very low

Value of the dollar strengthened Oil prices Surged Declining

Strong growth in farm debt Recessions Two recessions Long, slow expansion

Prices and incomes declined sharply Exports Declined Holding up

Farmland values declined Demand from biofuels Low demand Substantial demand

Farm programs support farm income Farmland values Declined sharply Controlled correction

Crop insurance Limited use Widespread use

Farm program payments' Larger share Smaller share

 share of farm revenue

Underwriting Collateral lending Conservative 

FCS regulator Not arm's length Arm's length

27
So, we have nothing to worry 

about?

 Conditions in the farm sector could get worse

 It would likely take multiple adverse events (similar to 

the 1980s) to cause a 1980s-like crisis

 Agriculture faces many risks

Continued low grain and soybean prices

International trade disruption 

Global recession

Higher interest rates

18

28
The System is well positioned to 

deal with more stress in its portfolio

Prudent underwriting

Credit quality is very good

Strong capital position

19

29
System nonaccruals are at very 

low levels

20

0.56%

0.64%

0%

2%

4%

6%

8%

10%

12%

14%

Source: FCS Annual Information Statements

Nonaccrual Loans as a % of total loans outstanding

30
System capital has grown and is 

better quality

21

7%

9%

11%

13%

15%

17%

19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Surplus/Total Capital (left axis)

Total Capital/Total Assets (right axis)

Source: FCS Annual Information Statements

31
Questions

THANK YOU

32