1

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Board Member

Glen R. Smith, Board Member

MINUTES OF THE REGULAR MEETING 

OF THE 

FARM CREDIT ADMINISTRATION BOARD

February 8, 2018 

These minutes reflect the business transacted at the February 8, 2018, Regular Meeting of the 

Farm Credit Administration Board (FCA Board) pursuant to the Government in the Sunshine 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 10:18 a.m. Members of the Board present were:

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Member

Glen R. Smith, Member

The above named constitute the full Board.

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

Board; staff of the FCA and the Farm Credit System Insurance Corporation; and one member of 

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

Board Chairman Tonsager welcomed Mr. Smith’s new Executive Assistant Jim Morris to the 

meeting. 

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

the requirements of the Government in the Sunshine Act. 

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

Announcement publishing the Agenda for the meeting is attached as Exhibit B.)

Mr. Hall moved to adopt the Agenda as published. 

Mr. Smith seconded the motion.

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

The Secretary polled the Board Members and the motion carried unanimously.
2 

Mr. Smith noted that the Agenda did include portions of the meeting that should be closed to the 

public as permitted by the Government in the Sunshine Act and therefore moved that the 

meeting be closed at that point. 

Mr. Hall seconded the motion.

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

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

OPEN SESSION

Approval of Minutes

Minutes for January 11, 2018

(BM-8-FEB-18-01) 

Mr. Hall moved to approve the minutes for the January 11, 2018, FCA Regular Board Meeting. 

Mr. Smith seconded the motion.

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

The Secretary polled the Board Members and the motion carried unanimously. (BM-8-FEB-18-

01) 

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

Report

Cost of Production Trends for Grain and Soybean Producers

Steve Gabriel, of the Office of Regulatory Policy presented the report on Cost of Production 

Trends for Grain and Soybean Producers.

Board 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 D.)

CLOSED SESSION

Board Chairman Tonsager noted that this was a Closed Session and ensured that nonessential 

staff were not in the room so the Board could meet in Closed Session with the Office of 

Secondary Market Oversight. 

Board Chairman Tonsager convened the closed session of the meeting at 9:43 a.m. and 

instructed the Secretary to activate the electronic recording device so that the proceedings of 

the closed session were properly recorded as required by the Government in the Sunshine Act. 

Board Chairman Tonsager then instructed the General Counsel to furnish the Secretary with 

a certification, pursuant to 5 U.S.C. § 552b(f), that the portions of the meeting held in closed 

session may be properly closed to the public. (A copy of the Certification is attached hereto as 

Exhibit E.) 
3

Members of the Board present were:

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Board Member

Glen R. Smith, Board Member

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

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

Report

Office of Secondary Market Oversight Report

Laurie Rea and Jeremy Del Moral, of the Office of Secondary Market Oversight (OSMO) 

presented the OSMO Periodic Report.

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

Board.

There were no further questions or discussion.

ADJOURNMENT

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

he would entertain a motion to adjourn the meeting.

Mr. Smith moved that the meeting be adjourned.

Mr. Hall seconded the motion.

Board Chairman Tonsager called the question.

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

The meeting adjourned at 10:18 a.m.
4 

NOTATIONAL VOTE ACTION

There was one notational vote action approved by the FCA Board from January 12, 2018, through 

February 7, 2018 as follows:

Item 

Number

Action Date Voting 

Results

Subject

NV 18-02 01/25/2018 Approved Joint Proposed Rule on Margin and Capital Requirement for 

Covered Swap Entities 

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

Meeting of the Farm Credit Administration Board held on February 8, 2018.

________/s/______________

Dallas P. Tonsager

Board Chairman and Chief Executive Officer

_______/s/______________

Dale L. Aultman

Secretary to the Board

Approved: _March 8, 2018__
5

Exhibit A 

STAFF PRESENT AT THE 

FCA REGULAR BOARD MEETING

February 8, 2018 

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Board Member

Glen R. Smith, Board Member

OFFICE OPEN 

SESSION 

CLOSED

SESSION 

Office of the Board

Aultman, Dale X X

Batta, Todd X X

Kramp, Kevin X X

Morris, James X X

Corey, Kathryn X

Buccolo, Debra X

Calhoun, Gaye X

COO

Hoffman, William X X

OIT

Golley, Jerald X X

OCPA

Stokke, Michael X X

Delancey, Toni X X

Middleton, Russell X X

OSMO

Rea, Laurie X X

Del Moral, Jeremy X X

Hudson, Bruce X X

Conner, Joe X X

OGC

Rawls, Charles X X

Virga, Jane X X

Donner, Mary Alice X X

OE

Coleman, Robert X X

Paulsen, Roger X X

OIG

Laguarda, Wendy X X

ORP

Mardock, Barry X X

Gabriel, Steve X X

OCFO

Smith, Stephen X X

OAS

Fowlkes, Jerome X X

Bell, Vonda X X

FCSIC

Wynn, Wade X X
6 

OFFICE OPEN 

SESSION

CLOSED

SESSION

GENERAL PUBLIC 1
7

Exhibit B

Farm Credit Administration 1501 Farm Credit Drive

McLean, VA 22102-5090

(703) 883-4000

PUBLIC ANNOUNCEMENT OF

MEETING SUBJECT TO THE GOVERNMENT IN THE SUNSHINE ACT

Farm Credit Administration Board

Regular Meeting

February 8, 2018

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 February 8, 2018. 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: Parts of this meeting of the Board will be open to the public (limited space 

available), and parts will be closed to the public. 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 January 11, 2018

Report

2 Cost of Production Trends for Grain and Soybean Producers

CLOSED SESSION

3 Office of Secondary Market Oversight Periodic Report 

______January 29, 2018______

Date

___________/s/_________________

Dale L. Aultman

Secretary to the Board
8 

Exhibit C

Farm Credit Administration

BOARD ACTION ITEM

1501 Farm Credit Drive

McLean, VA 22102-5090

(703) 883-4000

FCA BOARD ACTION ON

Minutes for January 11, 2018 Regular Board Meeting

BM-8-FEB-18-01

Effective Date: February 8, 2018 

Effect on Previous Action: None

THE FCA BOARD HEREBY:

Approves the minutes for January 11, 2018, Regular Board Meeting as submitted.

DATED THIS 8th DAY OF FEBRUARY 2018 

BY ORDER OF THE BOARD

__________/s/_________________

Dale L. Aultman

Secretary to the Board
FCA Board Meeting 

February 2018

Cost of Production Trends for 

Grain and Soybean Producers

February 8, 2018

Stephen Gabriel

Chief Economist

Office of Regulatory Policy

Exhibit D
Iowa corn producers to earn thin 

profits in 2017 and 2018

1.63 

0.96 

(0.10)

1.64 

2.23 

1.45 

(0.18) (0.29) (0.23) (0.13)

0.08 0.02 

4.29 4.10

3.59

5.23

6.20

6.92

4.49

3.71 3.52 3.36

3.25 3.30

2.80

3.32

3.84 3.74 4.11

5.66

4.81

4.39 4.02

3.58

3.17 3.28

-1.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F

Dollars per Bushel

Iowa Season-average Corn Profit Margin Estimates

Margin w/ Government Payments Iowa Price Total Production Costs

10

Source: FCA-ORP using data from USDA and Iowa State University. 2018 forecast assumes USDA baseline price and trendline yields.

As of 1/12/2018 
Good yields helped boost 

Soybean producers’ profits

11

0.28 

4.20 

1.98 

0.06 

2.85 3.55 

2.47 

1.20 

(0.90) (0.60)

0.53 0.70 0.57 

6.58

10.50 10.20 9.52

11.20

12.60

14.40

13.10

9.96

8.91

9.42

9.25 9.25

6.40

6.47 8.42

9.62

8.50 9.20

12.13 12.04

10.91

9.70

8.89 8.55 8.68

-2.00

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F

Dollars per Bushel

Iowa Season-average Soybean Profit Margin Estimates

Margin w/ Gov. Payments Iowa Price Total Production Costs

As of 1/12/2018 

Source: FCA-ORP using data from USDA and Iowa State University. 2018 forecast uses USDA Baseline prices and trendline yields. 
Wheat producers face another 

year of red ink

12

(1.25)

0.79 0.98 1.53 

0.33 

(4.03)

(2.73)

(1.09) (1.59) (1.27)

4.79

5.14

7.03 7.48

6.99

6.07

4.74

3.20 3.87 4.34

6.40

4.69

6.48 6.32

7.07

10.83

8.03

4.53

5.46 5.61

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

10.00

12.00

2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F

Dollars per Bushel

Kansas Season-average Wheat Profit Margin Estimates

Margin w/ Government Payments Kansas Price Total Cost per Bushel

Source: FCA-ORP using data from USDA and Kansas State University.

Notes: For 2014-2018F, government payment is Agriculture Risk Coverage and excludes loan deficiency payments. For 2017 

and 2018, ARC payment is expected to be zero, compared with about 60 cents for Price Loss Coverage. 

Large loss due to 

low yield.

As of 1/22/18

Smaller loss due to record yield. 
Illinois corn producers’ expenses 

concentrated in rent, fertilizer, seed

13

0%

1%

1%

1%

1%

1%

1%

2%

2%

2%

2%

2%

3%

3%

8%

8%

15%

16%

32%

0% 5% 10% 15% 20% 25% 30% 35%

Light vehicle

Building repair and rent

Utilities

Misc

Storage

Drying

Insurance

Machine hire/lease

Building depreciation

Fuel and oil

Interest (non-land)

Hired labor

Machine repair

Crop insurance

Mach. depreciation

Pesticides

Seed

Fertilizers

Cash Rent

Source: 2018 Crop Budgets, Central Illinois - High Productivity Farmland, University of Illinois.

Expense Item for corn-after-soybeans production as a percent of the total

Assumes 100% of land is

cash rented.
Illinois soybean farmers’ expenses 

concentrated in rent, seed, machinery

14

0%

0%

1%

1%

1%

1%

2%

2%

2%

2%

2%

2%

3%

3%

6%

7%

9%

12%

43%

0% 10% 20% 30% 40% 50%

Light vehicle

Drying

Building repair and rent

Utilities

Misc

Storage

Building depreciation

Insurance

Machine hire/lease

Fuel and oil

Interest (non-land)

Crop insurance

Hired labor

Machine repair

Fertilizers

Pesticides

Mach. depreciation

Seed

Cash Rent

Source: 2018 Crop Budgets, Central Illinois - High Productivity Farmland, University of Illinois.

Expense Item for soybeans-after-corn production as a percent of the total

Assumes 100% of land is

cash rented.
Kansas wheat farmers’ top costs are 

custom field work, rent, fertilizer

15

2%

2%

2%

3%

5%

5%

6%

12%

18%

46%

0% 10% 20% 30% 40% 50%

Herbicides

Miscellaneous

Interest on operating capital

Fungicides

Seeds

Crop insurance

Labor (ex. custom field operations)

Fertilizers

Cash rent

Custom Field Operations

Source: 2018 Continuous Wheat Cost and Returns Budget, South Central Kansas, Kansas State University.

Expense item for continuous wheat production as a percent of the total

Assumes 100% of land is

cash rented.
Crop sector input prices paid seem 

impervious to declining crop prices

16

0

20

40

60

80

100

120

0

2

4

6

8

10

12

14

16

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

(Jan -

Nov)

CORN, GRAIN - PRICE RECEIVED, MEASURED IN $ / BU SOYBEANS - PRICE RECEIVED, MEASURED IN $ / BU

WHEAT - PRICE RECEIVED, MEASURED IN $ / BU CROP SECTOR - PRICES PAID INDEX, 2011

Crop prices, $/bu. Prices paid index (2011 = 100)

Source: USDA, NASS.
Cash rent and seed prices have 

declined recently, but still high

0

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

(Jan -

Nov)

17

FERTILIZER

CASH RENT

SEEDS & PLANTS

Index of Prices Paid (2011 = 100)

Source: USDA, NASS.
Most input prices continued to rise 

despite collapse in grain prices

-34%

-33%

1%

2%

4%

12%

12%

16%

29%

5%

-49%

-33%

-42%

66%

103%

24%

22%

109%

49%

31%

20%

68%

50%

240%

135%

126%

-100% -50% 0% 50% 100% 150% 200% 250% 300%

FUELS

FERTILIZER

CHEMICAL TOTALS

INSECTICIDES

SEEDS & PLANTS

MACHINERY TOTALS

INTEREST

LABOR, WAGE RATES

CASH RENT

CROP SECTOR

CORN

SOYBEANS

WHEAT

% change in prices (2005 - 2012)

% change in prices (2012 - 2017)

Source: USDA, NASS. 18

Percent change in crop prices measured in dollars/bu. Percent change in input prices based on index for prices paid, 2011.
Iowa corn farmers’ cost per acre 

is down just 14% since 2012

0

100

200

300

400

500

600

700

800

900

Total Costs ($/Acre) - Landowner

Total Costs ($/Acre) - Tenant

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Iowa State University. 19

Dollars/Acre

% change in cost/bu.

2012 - 2017

Corn -42%

Soybeans -28%
Cash rents peaked in 2014 in some 

Midwest states; still rising in others 

20

0

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

ILLINOIS

INDIANA

IOWA

OHIO

WISCONSIN

Source: USDA, NASS.

Cash Rent ($/acre)

% Change 

(2012 - 2017)

ILLINOIS 3%

INDIANA 11%

IOWA -2%

OHIO 25%

WISCONSIN 21%
Lower cash rent can be critical to 

the survival of some farmers

21

 $(400)

 $(200)

 $-

 $200

 $400

 $600

 $800

 $1,000

Sep-00

Apr-01

Nov-01

Jun-02Jan-03

Aug-03

Mar-04

Oct-04

May-05

Dec-05

Jul-06

Feb-07

Sep-07

Apr-08

Nov-08

Jun-09Jan-10

Aug-10

Mar-11

Oct-11

May-12

Dec-12

Jul-13

Feb-14

Sep-14

Apr-15

Nov-15

Jun-16Jan-17

Aug-17

Iowa Corn Farmer Net Return/Acre - Landowner

Iowa Corn Farmer Net Return/Acre - Tenant

Source: Iowa State University.
Why Have Cash Rents Not 

Declined More?

 Landlords didn’t share in the high returns

during “fat” years – now catching up

 Many expect that commodity prices will

increase in coming years

 Intense competition to rent farmland

Source: Schnitkey, G. "Illinois Farmland Rents: 2017 State Values and 2018 Outlook." farmdoc daily (7):143, 

Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 8, 

2017.

22
Long-term interest rates have 

been rising since September 2017

23

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Source: Board of Governors of the Federal Reserve System.

10-Year Treasury Constant Maturity Rate, Percent, Weekly
Short-term interest rates have 

been rising since October 2015

24

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

3-Month London Interbank Offered Rate (LIBOR), based on U.S. Dollar, Percent, Weekly

3-Month Treasury Bill: Secondary Market Rate, Percent, Weekly

Source: Board of Governors of the Federal Reserve System, IBA.
Interest rates are forecast to 

continue to rise

25

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

Q2

2019

Q3

2019

Q4

2019

3-Month Treasury Bill

10-Yr Treasury Bond

3-Month Treasury Bill Forecast

10-Yr Treasury Bond Forecast

Percent

Source: Federal Reserve Board, Forecasts are from Wells Fargo Securities.
Summary

 The reduction in costs/acre have lagged the decline in

crop prices

 Strong yields in recent years helped support incomes

 Cash rents have been declining in some Midwestern

states, but, they are declining slowly

 Fertilizer and cash rents account for most of the decline

in costs per acre in several Midwestern states

 Interest rates are rising, posing a risk to land values and

cash flow 26
Questions

THANK YOU
28

Exhibit E 

Farm Credit Administration 1501 Farm Credit Drive

McLean, VA 22102-5090

(703) 883-4000

CERTIFICATE OF CLOSED MEETING

The General Counsel, in accordance with the Government in the Sunshine Act, 5 U.S.C. 

§ 552b(f)(1), hereby certifies that the Farm Credit Administration Board regular meeting of

February 8, 2018, was properly closed to the public on the basis of the exemption set forth

below:

Supervisory and Oversight Activities of FCS Institution(s) – 5 U.S.C. § 552b(c)(8)

and (9).

____February 8, 2018_________

Date

_____________/s/______________

Charles R. Rawls

General Counsel