Kenneth A. Spearman, Board Chairman and Chief Executive Officer

Dallas Tonsager, Board Member

Jeffery S. Hall, Board Member

MINUTES OF THE REGULAR MEETING

OF THE

FARM CREDIT ADMINISTRATION BOARD

May 12, 2016

These minutes reflect the business transacted at the May 12, 2016, 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 10:32 a.m. Members of the Board present were:

Kenneth A. Spearman, Board Chairman and Chief Executive Officer

Dallas Tonsager, Member

Jeffery S. Hall, Member

The above named constituted the full Board. 

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 two members of the general 

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

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 Spearman reviewed the published Agenda. (A copy of the Public Announcement 

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

Mr. Tonsager moved to adopt the Agenda as published. 

Mr. Hall seconded the motion.
There being no further discussion, Board Chairman Spearman called the question.

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

Mr. Hall 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. Tonsager seconded the motion.

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

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

OPEN SESSION

Approval of Minutes

Minutes for April 14, 2016 Regular Board Meeting

(BM-12-MAY-16-01)

Mr. Tonsager moved to approve the minutes for April 14, 2016, FCA Regular Board Meeting.

Mr. Hall seconded the motion.

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

The Secretary polled the Board Members and the motion carried unanimously. (BM-12-MAY-16-01)

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

Reports

Update on Farmland Values

Walter Gardiner of the Office of Regulatory Policy presented the Update on Farmland Values Report.

Board Chairman Spearman 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.)
Economic Conditions in the Almond Industry

Dennis Shields of the Office of Regulatory Policy presented the Economic Conditions in the Almond 

Industry Report.

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

There was no further discussion. 

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

CLOSED SESSION

The Board Chairman noted that this was a Closed Session and ensured that members of the public 

and nonessential FCA and FCSIC staff were not in the room so the Board could meet with Office of 

Secondary Market Oversight (OSMO) in Closed Session. 

Board Chairman Spearman convened the closed session of the meeting at 10:04 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 Spearman 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 F.) 

Members of the Board present were:

Kenneth A. Spearman, Board Chairman and Chief Executive Officer

Dallas Tonsager, Member

Jeffery S. Hall, Member

The above named constituted the full Board. 

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

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

Office of Secondary Market Oversight Quarterly Report

Laurie Rea of the Office of Secondary Market Oversight presented the OSMO Quarterly Report. 

Board Chairman Spearman 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 Spearman indicated he 

would entertain a motion to adjourn the meeting.

Mr. Hall moved that the meeting be adjourned.

Mr. Tonsager seconded the motion.

Board Chairman Spearman called the question. 

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

The meeting adjourned at 10:32 a.m.

NOTATIONAL VOTE ACTIONS

There were two notational vote actions approved by the FCA Board from April 14, 2016, through May 

11, 2016 as follows:

Item Number Action Date Voting Results Subject

NV 16-08 04/27/2016 Approved Reorganization that created the Office of the Chief Financial 

Officer

NV 16-09 05/10/2016 Approved Inflation Adjustment to Civil Money Penalties

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

Meeting of the Farm Credit Administration Board held on May 12, 2016.

__________/s/_______________ __________/s/_______________

Kenneth A. Spearman Dale L. Aultman

Board Chairman and Chief Executive Officer Secretary to the Board

Approved: __June 9, 2016_____
Exhibit A

Page 1 of 2

STAFF PRESENT AT THE 

FCA REGULAR BOARD MEETING

May 12, 2016

Kenneth A. Spearman, Board Chairman and Chief Executive Officer

Dallas Tonsager, Board Member

Jeffery S. Hall, Board Member

OFFICE

OPEN 

SESSION

CLOSED 

SESSION

Office of the Board

Aultman, Dale X X

Middleton, Russell X X

Laguarda, Wendy X X

Kramp, Kevin X X

Calhoun, Gaye X

Buccolo, Debra X

Corey, Kathryn X

COO

Hoffman, William X X

OIT

Golley, Jerald X X

OCPA

Stokke, Mike X X

Meaux, Willy X X

OSMO

Rea, Laurie X X

Connor, Joe X X

Hudson, Bruce X X

Del Moral, Jeremy X X

OGC

Rawls, Charles X X

Donner, Mary Alice X
Exhibit A

Page 2 of 2

OFFICE OPEN 

SESSION

CLOSED 

SESSION

OE

Paulsen, Roger X X

EEOI

Burlew, Thais X X

OIG

Gallo, Kathy X X

ORP

Mardock, Barry X X

Gardiner, Walter X

Shields, Dennis X X

Gabriel, Steve X X

OCFO

Smith, Stephen X X

OAS

Fowlkes, Jerome X X

FCSIC

Rubin, Howard X X

Pfitzinger, Rick X X

GENERAL PUBLIC 2
Exhibit B

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

May 12, 2016

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 May 12, 2016. 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 April 14, 2016

Reports

2 Update on Farmland Values

3 Economic Conditions in the Almond Industry

CLOSED SESSION

 4 Office of Secondary Market Oversight Quarterly Report1

_ May 3, 2016_______ _____________/s/_____________________

 Date Dale L. Aultman

Secretary to the Board 1Session Closed-Exempt pursuant to 5 U.S.C. Section 552b(c)(8) and (9).
Exhibit C

Farm Credit Administration 1501 Farm Credit Drive

McLean, Virginia 22102-5090

(703) 883-4000

BOARD ACTION ITEM

FCA BOARD ACTION ON

Minutes for April 14, 2016 Regular Board Meeting

BM-12-MAY-16-01

Effective Date: May 12, 2016

Effect on Previous Action: None

THE FCA BOARD HEREBY:

Approves the minutes for April 14, 2016, Regular Board Meeting as submitted.

DATED THIS 12th DAY OF MAY 2016

BY ORDER OF THE BOARD

__________/s/____________________

Dale L. Aultman

Secretary to the Board 
FCA Board Meeting 

May 2016

Update on Farmland Values

May 12, 2016

Walter Gardiner

Senior Economist

Office of Regulatory Policy

Exhibit D
4th Quarter 2015 Fed Surveys show 

widespread drop in cropland values

2

Kansas City

Nonirrigated -4%

Irrigated -2%

Ranchland 0%

San Francisco

Nonirrigated -6%

Irrigated -6%

Ranchland 0%

Chicago

All Farmland -3%

Percent changes are 4th quarter 2015 over 4th quarter 2014.

* Note: the San Francisco survey sample was extremely small.

Source: Federal Reserve Bank annual survey of agricultural bankers.

Minneapolis

Nonirrigated -3%

Irrigated -2%

Ranchland -1%

St. Louis

Nonirrigated -3%

Irrigated 2%

Ranchland -5% 
Value of nonirrigated cropland 

declines in nation’s midsection

3
Illinois farmland prices declined

from 8% to 9% in 2015

4
Illinois cropland values expected to 

drop between 5% and 10% in 2016

5
Nebraska farmland values down 

from 1% to 10% over past year

6
Pessimism over farmland market 

and rural economy remains

7
Farmland values in Midwest and 

Plains States under pressure

8
Cropland values and cash rents move 

together but rents slower to adjust

9
Returns to cropland and 10 yr Treasury 

rate on downward trend since mid-80s

10
10 year Treasury rate down 43 basis 

points since Dec 16 Fed rate hike 

11
Capitalized values indicate cropland 

values are not overpriced – yet!

12

10 Yr. Treasury 

increase to 2.5%, 

10% cut in cash 

rent: 

Capitalized value 

drops 23% and 

reduces premium 

over cropland value 

from 39% to 7.3%.
A big interest rate hike could lead to a 

significant correction in cropland values

13

10 Yr. Treasury 

increase to 3.5%, 

10% cut in cash 

rent: 

Capitalized value 

drops 45% and 

reduces premium 

over cropland 

value from 39% to 

a 23% discount.
Forces behind weakening 

cropland values

 Third consecutive year of declining crop prices 

and second year of declining livestock prices

 Producer profit margins being squeezed

 Farm income projected to drop again in 2016

 Export earnings constrained by strong dollar, 

trade disputes and sluggish economic growth

 Anticipation of interest rate rise by the Fed

14
USDA projects another year of 

lower crop and livestock prices

15
Recent rally in futures prices reflect 

crop problems in South America

16
Farm sector profitability forecast 

to decline for 3rd year in a row

17
Take aways

 Global forces will continue to pressure 

commodity prices and farm income in 2016

 Cropland values in nation’s midsection 

declining and expect further drop as long as 

farm profitability down

 Interest rates remain low, but an increase later 

in the year and beyond could put further 

downward pressure on farmland values 18
Questions?
FCA Board Meeting

May 12, 2016

Economic Conditions 

in the Almond Industry 

Dennis A. Shields

Senior Economist

Office of Regulatory Policy Exhibit E
Overview

• Almond demand expanded

• Higher prices resulted in increased tree 

plantings

• Will demand growth keep up?

• Potential breakeven prices for almonds

• Managing risks in almond farming

2
California almond profile

• $5-6 billion crop value

• #2 in state (#1 dairy

and #3 grapes)

• 70% of crop is exported

• 6,800 farms

• 900,000 bearing acres

• Spans 500 miles 

3

Source: Almond Board of California, Almond Almanac 2015.
U.S. dominates global production

4

U.S., 82%

EU (Spain/Italy), 

8%

Australia, 7%

Turkey, 1% Chile, 1% Other, 1%

Global almond production in 2014/15

Source: USDA/Foreign Agricultural Service.

World total = 2.29 billion pounds 

or 1.04 mil. metric tons (shelled basis)
U.S. almond exports

5

Source: Almond Board of California 

Americas, 

6%

Asia, 36%

Europe, 

42%

Mideast/Africa, 

16%

U.S exports in 2014/15

Total = 1.17 billion lbs. (shelled basis)

Leading export markets:

Spain, China/Hong Kong,

India, Germany, 

United Arab Emirates
$0.7 $0.7 $1.2 $1.6

$2.2 $2.5 $2.3 $2.4 $2.3 $2.3

$2.9

$4.0

$4.8

$6.4 $5.9

$4.8

0

2

4

6

8

2000 01 02 03 04 2005 06 07 08 09 2010 11 12 13 14 2015f

$ billion

Almond crop value peaked in 2013

6

Source: FCA-ORP from USDA/ERS Fruit and Tree Nut database.

Note: Market year beginning August. 2015 is FCA-ORP forecast ($2.55 per lb. x 1.87 billion pounds).

Strong demand growth
0.8 0.8

1.1 1.2

0.9

0.6

1.0

1.2

1.4 1.4

1.6

1.8

2.0 1.9

1.7

0

1

2

3

2000 01 02 03 04 2005 06 07 08 09 2010 11 12 13 14

Pounds per 

capita Domestic almond consumption

Domestic consumption increased

7

Source: FCA-ORP from USDA/ERS Fruit and Tree Nut database.

Note: Market year beginning August.

Small crop, record prices

Strong demand growth
Exports rose sharply after 2006

0

500

1,000

1,500

2,000

2000 2002 2004 2006 2008 2010 2012 2014

Mil. pounds

8

Domestic

2014 

Domestic = 30%

Exports = 70%

U.S. almond shipments

Source: FCA-ORP from USDA/ERS Fruit and Tree Nut database.

Note: Market year beginning August.

Exports
Domestic demand has increased...

Almond domestic demand

Consumers now buy more 

at higher prices. 

9

Source: FCA-ORP using season-average grower prices and 

consumption published by USDA/ERS.
. . . as has export demand

10

Source: FCA-ORP using season-average grower prices and 

exports published by USDA/ERS.

Almond export demand

Foreign consumers now 

buy more at higher prices. 
Grower returns rose sharply . . .

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

0

2,000

4,000

6,000

8,000

2004 2006 2008 2010 2012 2014

$ per lb. $ per bearing 

acre

Gross returns ($/acre) Grower price ($/lb.)

11

Source: FCA-ORP from USDA/ERS Fruit and Tree Nut database.

Note: Market year beginning August.
Non-bearing acreage is expanding

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

0

50

100

150

200

250

2004 2006 2008 2010 2012 2014

1,000 acres $ per lb.

Non-bearing acreage Grower price ($/lb.)

12

Source: FCA-ORP from acreage from Almond Board of California’s Almond Almanac 2015 and historical 

prices from USDA/ERS Fruit and Tree Nut database. Notes: 2015 price forecast = 80% of 2014 price; 

USDA estimate available in July 2016. 
Bearing acreage edges up

570 590 610 640

710 750 770 800 820

850 870 890 900

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

0

250

500

750

1,000

2004 2006 2008 2010 2012 2014 2016

$ per lb. 1,000 acres

Bearing acreage Grower price ($/lb.)

13

Source: FCA-ORP using acreage from Almond Board of California’s Almond Almanac 2015 and historical 

prices from USDA/ERS Fruit and Tree Nut database. Note: 2015 price forecast = 80% of 2014 price.
More acreage larger crops

Source: Bill Morecraft, Blue Diamond Almonds, presentation at 14

USDA’s Agricultural Outlook Forum, February 1, 2015.

Bil. lbs.
Larger crops lower prices

15

Average grower prices (USDA) 

• 2004 – 2010 crops = $1.96 per lb. 

• 2011 – 2014 crops = $2.74

• Based on recent demand-price 

relationship, grower prices for next several 

crop years could decline to $2.00 – $2.50 

per lb. in order for the “market to clear” 

• Possible alternative price outcomes: 

• Weaker: below $2 per lb. with aboveaverage yields or poor demand

• Stronger: above $2.50 with additional 

increases in demand

Year Ave. change from 2014 crop 

(1.87 bil. lbs)

2016 USDA forecast on 5/10/16 

2017 +330 mil. lbs. +18%

2018 +640 mil. lbs. +34%

2019 +765 mil. lbs. +41%

Additional potential production

$2.21

$2.81

$2.06

$1.75$1.45

$1.65 $1.79$1.99

$2.58

$3.21 $3.19

$2.55

2004 2006 2008 2010 2012 2014

Almond Prices

Source: Bill Morecraft, Blue Diamond Almonds.
Factors affecting producers 

• Positive

– Industry marketing and 

promotions

– Consumer income gain

• Negative

– Strong dollar

– Wholesale and export 

prices have been typically 

“sticky” – a faster downward 

adjustment would help 

move more product 16

Source: USDA Baseline Projections, February 2016.

Strong dollar
Breakeven returns to vary

• Almond prices at $2.50 would result in a farm loss or gain, 

depending on farm yield. 

• Prices near or below $2.00 would result in a loss across all yield 

scenarios.

17

Almond Returns Above Total Costs, $ per acre

Farm price ($/lb.) 1,800 2,000 2,200 2,400 Comment

$1.45 (2,332) (2,042) (1,752) (1,462) Lowest price in last decade (2008)

$2.00 (1,342) (942) (542) (142)

$2.50 (442) 58 558 1,058

$3.21 836 1,478 2,120 2,762 Highest price in last decade (2013)

Source: FCA-ORP-AEPT using cost data from UC-Cooperative Extension (2012 almonds, 2012 and 2015 walnuts).

Note: Total almond cost for 2015 is calculated at $4,942 per acre by applying the change in walnut cost 

of production between 2012 and 2015 (+34.5%) to the 2012 almond cost of production ($3,675 per acre).

Yield (lbs./acre)
Limited ways to trim farm costs

2012 cost of production $/acre % of total

Herbicide, insecticide, fungicide, rodenticide $93 8%

Fertilizer $371 10%

Irrigation $123 3%

Custom work needed (e.g., shake trees, sweep nuts, pollination) $1,132 31%

Labor $331 9%

Machinery $126 3%

Interest on operating capital $34 1%

Total operating costs $2,411 66%

Cash overhead (e.g., property tax, office expense, insurance) $357 10%

Non-cash overhead (e.g. land, establishment cost) $907 25%

TOTAL operating and overhead costs $3,675 100%

18 Source: University of California Cooperative Extension, 2012, 

http://coststudyfiles.ucdavis.edu/uploads/cs_public/cb/be/cbbe6906-0b85-499c-98a5-c100c468fd6f/almondsprinklesv2012.pdf

Note: Latest data available. Walnut cost of production rose 34.5% between 2012 and 2015; implies $4,942 per acre for almonds in 2015.
Water costs and current situation

• Short-term almond supply growth slowed by water 

issues 

• Irrigation costs for walnuts increased from $138 

per acre in 2012 to $270 in 2015 (+96%)

• Salt intrusion remains a problem

• Current water situation: improved in winter and 

spring; cooler spring weather also has been helpful

19
Modest rise in cropland value

$11,100 $11,500 $11,800 $12,100 $12,700

$3,480 $3,390 $3,400 $3,650 $4,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2011 2012 2013 2014 2015

$ per acre Irrigated Non-irrigated

20

Source: FCA-ORP from USDA/NASS Land Values, August 2015, 

http://www.usda.gov/nass/PUBS/TODAYRPT/land0815.pdf

California cropland value

5% growth 

in 2015
Managing risks in almond farming

• Federal crop insurance for yield loss

– 83% of almond acreage insured in 2015

– Catastrophic coverage is essentially free, additional 

coverage is subsidized

• USDA’s Tree Assistance Program (TAP)

– Free coverage for losses in excess of 15% to replant trees 

damaged by natural disasters

• Federal Marketing Order – Almond Board of California

– Industry-funded market promotion and research

– Volume regulation in times of low prices (last used in 1994)

21
Farm Credit System loans

$ million % of FCS total

FCS loans - tree fruits, nuts and grapes 11,392 4.83%

Total FCS loans 235,890 100%

22

Source: 2015 Annual Information Statement of the Farm Credit System.
Conclusions

• Almond demand has strengthened over time

• Larger supplies ahead, prices to decline 

• Potential for margin stress in next few years, 

particularly if almond grower prices drop to 

$2 to $2.50 per pound 

• Overall exposure for FCS and Farmer Mac is 

limited via diversification

• No immediate concerns with credit quality

23
Exhibit F

Farm Credit Administration 1501 Farm Credit Drive

McLean, Virginia 22102-5090

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 May 12, 2016, 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).

 ___________/s/____________________ Date: May 12, 2016

 Charles R. Rawls

General Counsel