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

September 13, 2018

These minutes reflect the business transacted at the September 13, 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 10:28 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 five 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 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.

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 meeting be 

closed as shown on the Agenda.
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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 August 9, 2018

(BM-13-SEPT-18-01)

Mr. Hall moved to approve the minutes for the August 9, 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-13-SEPT18-01)

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

Report

Quarterly Report on Economic Conditions and FCS Conditions

Dennis Shields of the Office of Regulatory Policy, and Hal Johnson of the Office of

Examination presented the Quarterly Report on Economic Conditions and FCS Conditions. 

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.)

New Business

Final Rule: Farmer Mac Investment Eligibility 

(BM-13-SEPT-18-02)

Joe Connor of the Office of Secondary Market Oversight, and Laura McFarland of the 

Office of General Counsel presented the Final Rule: Farmer Mac Investment Eligibility.

Board Chairman Tonsager opened the discussion for questions by the board.

Board Chairman Tonsager asked if there was any further discussion and asked staff to provide 

their recommendation. Staff provided their recommendation.

Board Chairman Tonsager called for a motion on the staff’s recommendation.

Mr. Smith moved to approve the Final Rule: Mac Investment Eligibility.

Mr. Hall seconded the motion.
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Board Chairman Tonsager asked if there was any further discussion.

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

The Secretary polled the Board Members and the motion carried unanimously. (BM-13-SEPT18-02)

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

Revised Bookletter: Director Election Nomination Procedures

(BM-13-SEPT-18-03)

Mike Wilson of the Office of Regulatory Policy, and Laura McFarland of the Office of 

General Counsel presented the Revised Bookletter: Director Election Nomination Procedures.

Board Chairman Tonsager opened the discussion for questions by the board.

Board Chairman Tonsager asked if there was any further discussion and asked staff to provide 

their recommendation. Staff provided their recommendation.

Board Chairman Tonsager called for a motion on the staff’s recommendation.

Mr. Smith moved to approve the Revised Bookletter: Director Election Nomination Procedures.

Mr. Hall seconded the motion.

Board Chairman Tonsager asked if there was any further discussion.

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

The Secretary polled the Board Members and the motion carried unanimously. (BM-13-SEPT18-03)

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

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 

Examination.

Board Chairman Tonsager convened the closed session of the meeting at 9:56 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 G.)

Office of Examination Quarterly Report

Robert Coleman and Roger Paulsen of the Office of Examination presented OE Quarterly 

Report.

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

Board.
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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. Hall moved that the meeting be adjourned.

Mr. Smith seconded the motion.

Board Chairman Tonsager called the question.

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

The meeting adjourned at 10:28 a.m.
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NOTATIONAL VOTE ACTIONS

There were three notational vote actions approved by the FCA Board from August 9, 2018, 

through September 12, 2018 as follows:

Item 

Number

Action Date Voting 

Results

Subject

NV 18-12 08/21/2018 Approved Extend effective date of subsidiary mergers of FCS Southwest, 

ACA; and Farm Credit West, ACA, to not later than 11/1/2021 

NV 18-13 09/04/2018 Approved Reissue EEO and Diversity Policy Statement #62

NV 18-14 09/05/2018 Approved FCA Revised 2019 and Proposed 2020 Budgets

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

Meeting of the Farm Credit Administration Board held on September 13, 2018.

_________/s/_____________

Dallas P. Tonsager

Board Chairman and Chief Executive Officer

______/s/_______________

Dale L. Aultman

Secretary to the Board

Approved: October 11, 2018
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Exhibit A

STAFF PRESENT AT THE

FCA REGULAR BOARD MEETING

September 13, 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

Roque-Brehm, Awilda X

Calhoun, Gaye X

COO

Hoffman, William X X

OIT

Golley, Jerald X X

OCPA

Stokke, Michael X X

DeLancy, Toni X

Middleton, Russell X X

OSMO

Rea, Laurie X X

Conner, Joe X X

Hudson, Bruce X X

Bravenec, Bill X X

OGC

Donner, Mary Alice X X

Strickland, Joy X X

McFarland, Laura X

OE

Coleman, Robert X X

Paulsen, Roger X X

Johnson, Hal X X

Lund, Zachary X X

OIG

Laguarda, Wendy X X

ORP

Van Meter, Gary X X

Mardock, Barry X X

Shields, Dennis X X

Wilson, Mike X

Gibbs, Paul X
7

OFFICE OPEN 

SESSION

CLOSED 

SESSION

Tulman, Sarah X X

OCFO

Smith, Stephen X X

Gandy, Doug X X

OAS

Bell, Vonda X X

FCSIC

Rubin, Howard X X

Wynn, Wade X X

GENERAL PUBLIC 5 N/A
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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

September 13, 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 September 13, 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. 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 August 9, 2018

Report

2 Quarterly Report on Economic Conditions and FCS Conditions and Performance 

New Business

3 Final Rule: Farmer Mac Investment Eligibility 

4 Revised Bookletter: Director Election Nomination Procedures 

CLOSED SESSION

5 Office of Examination Quarterly Report1

______September 4, 2018______

Date

______________/s/_____________

Dale L. Aultman

Secretary to the Board

 1 Session Closed-Exempt pursuant to 5 U.S.C. Section 552b(c)(8) and (9).
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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 August 9, 2018 Regular Board Meeting

BM-13-SEPT-18-01

Effective Date: September 13, 2018 

Effect on Previous Action: None

THE FCA BOARD HEREBY:

Approves the minutes for August 9, 2018, Regular Board Meeting as submitted.

DATED THIS 13th DAY OF SEPTEMBER 2018 

BY ORDER OF THE BOARD

___________/s/___________________

Dale L. Aultman

Secretary to the Board
Quarterly Report on 

FCS Condition 

September 13, 2018

Dennis A. Shields

Hal Johnson

FCA Board Meeting 

September 2018 Exhibit D

10
Economic Conditions Affecting 

the Farm Credit System

Dennis A. Shields

Chief Economist

Office of Regulatory Policy 11
Overview

▶ Economic growth continues to underpin agricultural

demand

▶ Land values remain stable

▶ Farm cash receipts trend sideways; farm liquidity falls

▶ Soybean and hog prices weaken

▶ Trade situation still developing

▶ Additional farm assistance (and the Farm Bill) to arrive

12
Global economic growth continues in major 

U.S. agricultural markets

13

Real gross domestic product per capita

Source: USDA/ERS using data and forecasts from Global Insight, International Monetary Fund, and Oxford 

Economics. 
Favorable trends for U.S. income, 

unemployment, and housing

Source: Consensus Economics, Inc. 14
Long-term interest rates moving up

Percent, 10-year Treasury rate

Source: Federal Reserve Bank of St. Louis. 15
Cropland values are flat to slightly higher in 

2018

▶ U.S. average

cropland value up

1.0% in 2018

▶ Small increase in

Corn Belt (+0.6%)

and no change in

Northern Plains

▶ Increases in most

other regions

Cropland values

Source: USDA/NASS. 16
U.S. farm cash receipts decline to pre-boom 

levels

Cash receipts adjusted for inflation 

Source: USDA/ERS. 17
U.S. soybean stocks to rise, corn and wheat stocks 

to fall

U.S. ending stocks

Source: USDA. 18
U.S. soybean prices to fall in 2018/19

U.S. season-average farm prices and returns

2016/17 2017/18 2018/19F

Soybean price ($/bu.) 9.47 9.35 8.73

Returns after variable costs ($/acre) 328 296 288

Corn price ($/bu.) 3.36 3.4 3.62

Returns after variable costs ($/acre) 237 259 306

Wheat price ($/bu.) 3.89 4.73 5.12

Returns after variable costs ($/acre) 95 110 131

Source: Food & Agricultural Policy Research Institute, University of Missouri. 19
Cow/calf returns are near breakeven

Source: Informa Economics. 20
Hog returns head south

Source: Informa Economics. 21
Milk prices run below last year

U.S. milk price received by farmers

Source: USDA/NASS. 22
Trade situation creates uncertainty

▶ China’s retaliatory tariffs

▶ Negotiations with Mexico and Canada

▶ Trade diversion and alternative suppliers

U.S. agricultural export forecasts 

Source: USDA, August 30, 2018. 23
Global soybean flows could shift

Source: USDA/ERS. 

Typical trade flows using 2013 data for soybeans and products. 

24
Possible impacts on California fruit and tree 

nuts from additional tariffs

Share of U.S. production exported to affected markets*

25

*Affected markets include China & Hong Kong, India, Mexico, and Turkey.

**Assumes all production exported to affected markets is absorbed by domestic or other foreign markets.

Source: University of California Agricultural Issues Center. August 1, 2018.
Emergency assistance for farmers affected by 

tariffs

USDA authorizes up to $12 billion in programs 

1. Initial farm payments to arrive this fall ($4.7 billion)

Payment rate times 50% of producer’s 2018 production, hog inventory, or historical milk production

Soybeans Hogs Cotton Sorghum Milk Wheat Corn

$1.65 / bu. $8 / head $0.06 / lb. $0.86 / bu. $0.12 / cwt. $0.14 / bu. $0.01 / bu.

$3,630 mil. $290 mil. $277 mil. $157 mil. $127 mil. $119 mil. $96 mil.

2. Commodities for nutrition programs ($1.2 billion)

Purchases scheduled for 31 products (e.g., fruits, tree nuts, beans, meat)

3. Trade promotion ($0.2 billion)

26
Farm Bill heads to the finish line

▶ Farm safety net expected to remain intact

▶ Modest changes/upgrades expected for farm programs

▶ Modifications in early 2018

▪Improvements to margin protection program for dairy

▪Cotton returns as a “covered” commodity

▪Eliminated payment limits on certain disaster programs

27
Risks ahead

▶ Upward pressure on interest expenses

▶ Supply gains and demand changes

▶ Trade policy that would shift U.S. export potential to

competitors

▶ Liquidity at the borrower level

28
Questions

THANK YOU

29
Farm Credit System 

Condition and Performance 

as of 

June 30, 2018

Hal Johnson

Sr. Financial Analyst

Office of Examination

30
Topics

▶ System Growth

▶ Portfolio Credit Quality

▶ Earnings

▶ Capital

▶ FIRS

31
System grows at a measured pace for the 1st 6 

months of 2018

Loan Growth by Loan Type

(% change year-to-date through June)

Source: FCS Information Statements 32
Loan portfolio risk edges up; level remains 

manageable

% of Loans Classified less than Acceptable

Source: FCS Information Statements 33

Nonperforming Loans as a % of Gross Loans
System is financially sound

System Earnings

Year-to-date through June

Source: FCS Information Statements 34
Strong earnings support continued capital 

growth

Total System Capital ($B)

Restricted capital represents capital associated with the 

Insurance Fund.

Source: FCS Quarterly Information Statements 35
System FIRS ratings

Composite FIRS Ratings

Farm Credit System Banks and Associations

Source: FCA's FIRS ratings database 36
Summary and final points

▶ Risks for agriculture:

▪trade uncertainties, rising interest rates, aligning production with demand,

declining farm liquidity, drought in the Southwest

▶ The System is financially safe and sound

▶ Loan portfolio risk is rising as financial challenges continue

for certain ag sectors, but the level remains manageable.

▶ System institutions are well-capitalized and have substantial

risk-bearing capacity

37
Questions

THANK YOU

38
39

Exhibit E

Farm Credit Administration

BOARD ACTION ITEM

1501 Farm Credit Drive

McLean, VA 22102-5090

(703) 883-4000

FCA BOARD ACTION ON

Final Rule: Farmer Mac Investment Eligibility

BM-13-SEPT-18-02 

Effective Date: September 13, 2018 

THE FCA BOARD HEREBY:

• Approves the Final Rule amending the non-program investment

eligibility criteria for the Federal Agricultural Mortgage

Corporation; and

• Authorizes staff to make any technical or grammatical changes

that may be necessary for publication in the Federal Register.

DATED THIS 13th DAY OF SEPTEMBER 2018 

BY ORDER OF THE BOARD

__________/s/__________________

Dale L. Aultman

Secretary to the Board
40

Exhibit F 

Farm Credit Administration

BOARD ACTION ITEM

1501 Farm Credit Drive

McLean, VA 22102-5090

(703) 883-4000

FCA BOARD ACTION ON

Revised Bookletter: Director Election Nomination Procedures 

BM-13-SEPT-18-03 

Effective Date: September 13, 2018 

Impact on Prior Board Actions: This bookletter replaces BL-043 Revised – 

“Guidance on Farm Credit Bank and Association Nominating Committees,” dated 

March 8, 2007. 

THE FCA BOARD HEREBY:

• Approves the Bookletter 043 Revised [2018] — “Guidance on Farm Credit Bank

and Association Nominating Committees” containing revisions that update

operational guidance on nominating committees within the Farm Credit System;

and

• Authorizes staff to make any technical or grammatical changes to the

Bookletter 043 Revised [2018] prior to its issuance.

DATED THIS 13th DAY OF SEPTEMBER 2018 

BY ORDER OF THE BOARD

__________/s/_________________

Dale L. Aultman

Secretary to the Board
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Exhibit G 

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

September 13, 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).

____September 13, 2018_________

Date

________/s/______________

Charles R. Rawls

General Counsel