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

October 13, 2016

These minutes reflect the business transacted at the October 13, 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 9:46 a.m. Members of the Board present were:

Kenneth A. Spearman, Board Chairman and Chief Executive Officer (by telephone)

Dallas Tonsager, Member

Jeffery S. Hall, Member

The above named constitute the full Board. 

Others present included 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.)

Chairman Spearman opened the meeting.

Statements Regarding 2016 National Cooperative Month

Chairman Spearman noted that October is National Cooperative Month and the 2016 theme is 

“Cooperatives Build.” He directed the Board Secretary to attach to the minutes a statement he 

prepared regarding the important roles cooperatives play in creating jobs and strengthening 

communities. (A copy of the statement is attached as Exhibit B.)
Mr. Tonsager stated that he also had a statement which he would like attached to the minutes. (A 

copy of the statement is attached as Exhibit C.)

Mr. Hall stated that he also had a statement which he would like attached to the minutes. (A copy of 

the statement is attached as Exhibit D.)

Chairman Spearman directed the Secretary to add the statement to the minutes.

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 E.)

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 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. 

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 September 8, 2016, Regular Board Meeting

(BM-13-OCT-16-01)

Mr. Tonsager moved to approve the minutes for September 8, 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-10-MAR-16-01)
(A copy of the official “Board Action Item” is attached as Exhibit F.)

Report

Profit Outlook for the 2016 Corn, Soybean and Wheat Crops

Steve Koenig and Dennis Shields of the Office of Regulatory Policy presented the Profit Outlook for 

the 2016 Corn, Soybean and Wheat Crops 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 G.)

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 9:46 a.m.

NOTATIONAL VOTE ACTIONS

There were three notational vote actions approved by the FCA Board from September 9, 2016, 

through October 12, 2016 as follows:

Item Number Action Date Voting Results Subject

NV 16-17 09/13/2016 Approved Proposed Merger of Southwest Kansas, ACA, and Subsidiaries with and into 

American AgCredit, ACA and Subsidiaries

NV 16-18 09/29/2016 Approved Revised FY 2017 and Proposed FY 2018 Budgets

NV 16-19 10/04/2016 Approved Appointment of Jerome Fowlkes as Director of Office of Agency Services
The undersigned hereby certify that the foregoing minutes are the official minutes of the Regular

Meeting of the Farm Credit Administration Board held on October 13, 2016.

_________/s/________________ _________/s/________________

Dallas Tonsager Dale L. Aultman

Presiding Board Chairman Secretary to the Board

Approved: November 10, 2016
Exhibit A

Page 1 of 2

STAFF PRESENT AT THE 

FCA REGULAR BOARD MEETING

October 13, 2016

Kenneth A. Spearman, Board Chairman and Chief Executive Officer (by telephone)

Dallas Tonsager, Board Member

Jeffery S. Hall, Board Member

OFFICE

OPEN 

SESSION

Office of the Board

Aultman, Dale X

Middleton, Russell X

Corey, Kathryn X

Kramp, Kevin X

Laguarda, Wendy X

Calhoun, Gaye X

Buccolo, Debra X

OIT

Golley, Jerald X

COO

Hoffman, William X

OGC

Donner, Mary Alice X

OCPA

Stokke, Mike X

OSMO

Rea, Laurie X

Hudson, Bruce X
Exhibit A

Page 2 of 2

OFFICE OPEN 

SESSION

OE

Coleman, Robert X

Paulsen, Roger X

OIG

Dean, Elizabeth X

ORP

Van Meter, Gary K. X

Mardock, Barry X

Koenig, Steve X

Shields, Dennis X

Gabriel, Stephen X

OCFO

Smith, Stephen X

OAS

Fowlkes, Jerome X

FCSIC

Rubin, Howard X

Wynn, Wade X

GENERAL PUBLIC 2
Exhibit B

Statement

Kenneth A. Spearman, Chairman

Farm Credit Administration Board Meeting, October 13, 2016

The theme, “Cooperatives Build,” is particularly appropriate for the 2016 National Cooperative 

Month. As our economy continues to strengthen following the Great Recession, the theme 

recognizes the important role that cooperatives play in creating jobs and strengthening 

communities.

Not only do cooperatives provide opportunities for economic growth, they do so in a way that is 

consistent with the democratic principles on which our country was founded. 

Cooperatives empower people. By definition, they are user-owned, user-controlled businesses 

that are governed democratically for the benefit of users. Also, the profits generated by a 

cooperative are either returned to its members or reinvested in the cooperative, keeping more 

of the profits local and incentivizing members to work hard and be engaged in the governance of 

the business. 

Cooperatives play an important role in the U.S. economy. The United States has approximately 

29,000 cooperatives with 350 million memberships, generating $650 billion in annual revenue 

and 2.1 million jobs. 

I discovered the unique value of the cooperative business model in the early 1980s when I joined 

a large agricultural supply and marketing cooperative in Florida. I later moved on to a federated 

agricultural cooperative. Then, in 2006, I had the chance to broaden my knowledge of the world 

of cooperatives still further. 

I joined the board of AgFirst Farm Credit Bank, one of the banks of the Farm Credit System, the 

network of cooperative lenders serving our nation’s farmers, ranchers, and farm cooperatives. A 

few years later I joined the board of the Farm Credit Administration, the regulator of the System.

The cooperative Farm Credit System was established by Congress exactly 100 years ago this year 

to provide a dependable, affordable source of financing for U.S. agriculture. Congress chose the 

cooperative business model after carefully considering agricultural credit systems in other 

nations. Now, 100 years later, the Farm Credit System is part of the reason the United States has 

such a strong agriculture economy. 

As the regulator of the System, FCA strongly supports cooperative principles, and we periodically 

issue guidance to promote member-borrower participation in the governance of their 

institutions. 

In observance of 2016 National Cooperative Month, I would like to recognize the many 

cooperatives in our nation and the contributions they make to our economy and our 

communities.
Exhibit C

Statement

Dallas Tonsager, Member

Farm Credit Administration Board Meeting, October 13, 2016

During this month of October, I would like to recognize the value and importance of 

cooperative business structures like the Farm Credit System (System). The System has been 

successful in large part because of the cooperative principles that guide the operations and 

decisions of each System bank and association: self-help, self-responsibility, democracy, 

equality, equity, and social responsibility. 

Agricultural and utility cooperatives are significant borrowers of the System and are integral to 

rural America and American agriculture. The member-borrowers of System institutions are the 

farmers and ranchers in their communities who have an interest in ensuring not only the value 

of their institution but also the productivity of agriculture and the rural communities that are 

served by the System institution. 

I commend Congress, in its wisdom, for creating the Farm Credit System as a cooperative 

structure and all of the agricultural producers who have created cooperatives to better serve 

their agricultural needs and the needs of their rural communities.
Exhibit D

Statement

Jeffery S. Hall, Member

Farm Credit Administration Board Meeting, October 13, 2016

Mr. Chairman I am happy to participate in recognizing October as National Cooperative Month. The 

theme for National Cooperative Month 2016 is “cooperatives build”. Cooperatives play a vital role in 

building the rural economy, rural communities and rural jobs and are deserving of national 

recognition.

The nation’s agriculture cooperatives have been instrumental in enabling agricultural producers to 

collectively process, prepare, handle and market their products. They are user-owned, usercontrolled businesses that are governed democratically for the benefit of users.

Nationwide there are nearly 30,000 cooperatives with 350 million members. The jobs they create 

are measured in the millions and annual revenue is measured in the hundreds of billions. Money 

earned is either reinvested in the cooperative or returned to its member-owners.

Cooperatives have allowed our nation’s farmers to do what they do best – produce the safest, most 

abundant and most affordable supply of food and fiber in the world. I am proud recognize October 

2016 as National Cooperative Month.
Exhibit E

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

October 13, 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 October 13, 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: 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 September 8, 2016

Report

 2 Profit Outlook for the 2016 Corn, Soybean and Wheat Crops

_ September 30, 2016_______ _________/s/________________

 Date Dale L. Aultman

Secretary to the Board
Exhibit F

Farm Credit Administration 1501 Farm Credit Drive

McLean, Virginia 22102-5090

(703) 883-4000

BOARD ACTION ITEM

FCA BOARD ACTION ON

Minutes for September 8, 2016 Regular Board Meeting

BM-13-OCT-16-01

Effective Date: October 13, 2016

Effect on Previous Action: None

THE FCA BOARD HEREBY:

Approves the minutes for September 8, 2016, Regular Board Meeting as submitted.

DATED THIS 13th DAY OF OCTOBER 2016

BY ORDER OF THE BOARD

_________/s/________________

Dale L. Aultman

Secretary to the Board 
Profit Outlook for the 2016 Corn, 

Soybean, and Wheat Crops 

1

Steven Koenig, Senior Economist

Dennis A. Shields, Senior Economist

Office of Regulatory Policy

FCA Board Meeting

October 13, 2016

EXHIBIT G
• Importance of cash grains in Farm Credit System 

loan portfolio

• Large crop supplies from good weather and higher 

U.S. corn and soybean acreage 

• Crop margins below breakeven levels 

• Farmers trying to adjust to lower prices

• Farm programs help but support payments decline 

as next farm bill debate approaches

2

Overview
3

Source: Federal Farm Credit Banks Funding Corporation, 2015 Annual Information Statement.

Cash grains

28.0%

Forestry 

10.0%

Field crops (Sugar beets, 

potatoes, vegs)

8.6%

Tree fruits, nuts, grapes

7.6%

General farms, 

primarily crops

5.8%

Horticulture 

1.7%

Cotton

1.5%

Cattle, 15.0%

Dairy farms

10.2%

Poultry and eggs

4.0%

Hogs

3.3%

General farms, 

primarily livestock

2.9% Other livestock

1.3%

System's agricultural loan portfolio by commodity 

12/31/2015

Cash grain accounts for a large share of 

System loans to farmers
0

2

4

6

8

10

12

14

Corn Soybeans Wheat

% change United States Foreign Total

Production of corn, soybeans, and 

wheat projected up in 2016

4

Percent change in production: 2015 to 2016

Source: USDA, September 2016 forecasts.
0

20

40

60

80

100

2000 2004 2008 2012 2016F

U.S.

Source: USDA. 5

Corn harvested area 

0

100

200

300

400

2000 2004 2008 2012 2016F

Foreign

Mil. acres Mil. acres

Late 2000’s: farmers respond to higher 

prices by increasing corn area
U.S. corn yield is above trend in 2016 

6

0

50

100

150

200

2000 2004 2008 2012 2016F

Bu. per acre

U.S. corn yield

Source: USDA.
7

Rapid growth in U.S. corn demand is a 

distant memory

0

1

2

3

4

5

6

2000 2004 2008 2012 2016F

Bil. bushels

Used for ethanol Exports

Source: USDA.
8

U.S. exports to expand in 2016 

marketing year

0

25

50

75

100

125

150

2000 2004 2008 2012 2016F

Mil. metric tons

U.S. exports

Corn Soybeans Wheat

Source: USDA.
Global grain stocks become burdensome 

9

Global ending stocks: record for grains, lower but still large for soybeans

0

100

200

300

400

500

2000 2004 2008 2012 2016F

Mil. metric tons Corn Wheat

0

25

50

75

100

2000 2004 2008 2012 2016F

Mil. metric tons Soybeans

Source: USDA.
U.S. soybean prices and revenues 

stabilize in 2016

10

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

0

100

200

300

400

500

600

700

1996 2000 2004 2008 2012 2016F

$ per acre U.S. soybean revenue and price $ per bushel

Revenue Per Acre (Left Axis)

10-year Average Revenue

Price (Right Axis)

Source: USDA.
Soybeans prices near breakeven level

11

6.12 5.73

6.69

10.67 10.40

9.68

11.36

12.74

14.61

13.24

10.02

9.18

9.10

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

2004 2006 2008 2010 2012 2014 2016F

$ per bushel

Iowa season-average soybean production cost estimates

Land Costs Labor Costs

Machinery Costs for Growing and Harvesting Seed, Chemicals and Fertilizer Costs

Source: FCA-ORP from USDA price and production data and Iowa State University cost of production estimates. 

As of 9/12/16 

Iowa farm price plus

program payments
Wheat prices and revenues fall

12

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

0

50

100

150

200

250

300

350

400

1996 2000 2004 2008 2012 2016F

$ per acre U.S. wheat revenue and price $ per bushel

Revenue Per Acre (Left Axis)

10-year Average Revenue

Price (Right Axis)

Source: USDA.
Wheat margins remain negative

13

6.40 7.32

5.16

5.48

7.47 7.85 7.39

6.80

5.37

3.78

0.00

2.00

4.00

6.00

8.00

10.00

12.00

2007 2010 2013 2016F

$ per bushel

Kansas season-average wheat production cost estimates

Land Costs Labor Costs

Machinery Costs Seed, Chemicals and Fertilizer Costs

Source: FCA-ORP from USDA price and production data and Kansas State University cost of production estimates. 

Kansas farm price plus

program payments

Low yield in 2014 

raised the perbushel cost

High yield 

in 2016 reduced

the per-bushel cost

As of 9/12/16 
Corn revenues fall with prices

14

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

0

100

200

300

400

500

600

700

800

900

1,000

1996 2000 2004 2008 2012 2016F

$ per acre U.S. corn revenue and price $ per bushel

Revenue Per Acre (Left Axis)

10-year Average Revenue

Price (Right Axis)

Source: USDA.
Negative corn margins persist

15

2.52

2.73

3.33

4.43 4.28

3.74

5.38

6.34

7.11

4.63

4.10

3.78

3.57

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2004 2006 2008 2010 2012 2014 2016F

$ per bushel

Iowa season-average corn production cost estimates

Land Costs Machinery Costs for Growing and Harvesting

Labor Costs Seed, Chemicals and Fertilizer Costs

Source: FCA-ORP from USDA price and production data and Iowa State University cost of production estimates. 

As of 9/12/16 

Iowa farm price plus

program payments
Current corn prices cover operating 

costs for many producers

16

At a corn price of $3.20 in 2016, 

most corn farms can cover 

operating costs.

89% of corn farms have 

operating costs of $3.20 per 

bushel or less, allowing them to 

cover their operating costs 

(seed, fertilizer, chemical, fuel, 

repairs, interest on working 

capital). 
Current corn prices do not cover 

total costs for most producers

17

At a corn price of $3.20 in 2016, 

most corn farms cannot cover 

total costs.

Only 19% of corn farms have 

total costs of $3.20 per bushel 

or less. A farm price at this level 

allows them to cover their total 

costs, which include land, 

machinery, and paid/unpaid 

labor.
Farm support under Agriculture Risk 

Coverage (ARC) uses historical prices

18

Agriculture Risk Coverage (ARC) 

revenue guarantee declines 

beginning in 2016 as recent lower 

prices enter into guarantee formula.

Price Loss Coverage (PLC) trigger 

(reference price) is fixed in statute 

at $3.70 per bushel.

Share of national base acres under 

Agriculture Risk Coverage 

Corn = 93% 

Soybeans = 97% 

Wheat = 58% 

Source: FCA-ORP using 2014 farm bill parameters and USDA prices. 

0

1

2

3

4

5

2014 2015 2016f 2017f 2018f

$ per bu.

Corn price protection to decline 

Corn price ($/bu.) Implied ARC price trigger PLC trigger
Per-acre corn ARC revenue guarantee 

to decline sharply in 2017

19

693

650

564

0

200

400

600

800

2015 2016F 2017F

$ per acre Corn revenue guarantee estimated at national level

Source: FCA/ORP.

ARC 

revenue

guarantee 

drops $86 

per acre
Higher wheat returns under 

Price Loss Coverage

20

Hypothetical example: 

2016 Kansas wheat

Program selected by farmer*

Agriculture Risk 

Coverage

Price Loss

Coverage

Guarantee depends on: Historical prices 

and county yields

Reference price of 

$5.50 / bu.

Market revenue $180 / ac. $180 / ac.

ARC payment $20 / base ac.

PLC payment $67 / base acre

Market revenue + payment = $200 / acre $247 / acre

*Farmer’s choice (in 2015) between ARC and PLC applies to all crop years of the 2014 farm bill (2014 to 2018).

Market revenue = $3.60 x 50 bu. / ac.
How fast can farmers adjust to negative 

or low margins? 

21

• Emphasis on crop 

marketing

• Controlling input costs

– Seed/chemical

– Machinery 

– Land 

• Cutting living expenses

Kansas average family living 

expenses, adjusted for inflation

Source: Kansas Farm Management Association, September 2016,

http://www.agmanager.info/analysis-family-living-expensecategories
22

Futures prices decline from June highs

Corn futures

December 2017

June Oct.

$4.20 

$3.87

$10.10 

$9.68

Soybean futures

November 2017

Wheat futures

July 2017

$5.84 

$4.40 

June Oct. June Oct.

Source: Barchart.com.
23

0

15

30

45

60

2014 2015 2016F 2017F

$ bil.

U.S. corn

Revenue

Gov. payments

0

15

30

45

60

2014 2015 2016F 2017F

$ bil. U.S. soybeans

Revenue

Gov. payments

0

5

10

15

20

2014 2015 2016F 2017F

$ bil.

U.S. wheat

Revenue

Gov. payments

Crop revenue plus government 

payments to decline in crop year 2017 

Source: Food & Agricultural Policy Research Institute. 

Note: Baseline projections for crop year revenue and government outlays associated with that crop year (actual 

payments are delivered one year later).
Outlook

24

• Large supplies pressure prices; exports 

increase for major crops 

• Additional cost adjustments by producers

• Opportunities for low-cost producers

• Farm support to decline in 2017 and 2018 

under Agriculture Risk Coverage

• Next farm bill for crops harvested in 2019+