[Federal Register Volume 87, Number 116 (Thursday, June 16, 2022)]
[Proposed Rules]
[Pages 36261-36266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-12803]


=======================================================================
-----------------------------------------------------------------------

FARM CREDIT ADMINISTRATION

12 CFR Parts 614 and 620

RIN 3052-AD54


Loan Policies and Operations

AGENCY: Farm Credit Administration.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The purpose of the proposed rule is to increase direct lender 
associations' Young, Beginning, and Small farmer and rancher (YBS) 
activity and reinforce the supervisory responsibilities of the funding 
banks, authorized by section 4.19 of the Farm Credit Act. The proposed 
rule requires direct lender associations to adopt an independent 
strategic plan for their YBS program. The direct lender association's 
funding bank will approve each YBS strategic plan, annually. The direct 
lender association's YBS strategic plan must contain specific elements 
that will be evaluated as part of a rating system to measure year-over-
year internal

[[Page 36262]]

progress. The rating system will enable the Farm Credit Administration 
(FCA) to compare the success of the direct lender association's 
extension of credit and services to the YBS borrowing population to its 
peers both within and outside its bank district.

DATES: You may send us comments on or before August 15, 2022.

ADDRESSES: We offer a variety of methods for you to submit comments. 
For accuracy and efficiency, commenters are encouraged to submit 
comments by email or through FCA's website. As facsimiles (fax) are 
difficult for us to process and achieve compliance with section 508 of 
the Rehabilitation Act, as amended, we are no longer accepting comments 
submitted by fax. Regardless of the method you use, please do not 
submit your comment multiple times via different methods. You may 
submit comments by any of the following methods:
    <bullet> Email: Send us an email at <a href="/cdn-cgi/l/email-protection#ed9f888ac08e828080ad8b8e8cc38a829b"><span class="__cf_email__" data-cfemail="493b2c2e642a262424092f2a28672e263f">[email protected]</span></a>.
    <bullet> FCA website: https://www.fca.gov. Click inside the ``I 
want to . . .'' field near the top of the page; select ``comment on a 
pending regulation'' from the dropdown menu; and click ``Go.'' This 
takes you to an electronic public comment form.
    <bullet> Mail: Autumn R. Agans, Deputy Director, Office of 
Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, 
McLean, VA 22102-5090.
    You may review copies of comments we receive at our office in 
McLean, Virginia, by appointment by contacting the Office of Regulatory 
Policy contact listed below, or on our website at https://www.fca.gov. 
Once you are on the website, click inside the ``I want to . . .'' field 
near the top of the page; select ``find comments on a pending 
regulation'' from the dropdown menu; and click ``Go.'' This will take 
you to the Comment Letters page where you can select the regulation for 
which you would like to read the public comments. We will show your 
comments as submitted, including any supporting data provided, but for 
technical reasons we may omit items such as logos and special 
characters. Identifying information that you provide, such as phone 
numbers and addresses, will be publicly available. However, we will 
attempt to remove email addresses to help reduce internet spam.

FOR FURTHER INFORMATION CONTACT: Technical information: Jessica Potter, 
Senior Policy Analyst, Office of Regulatory Policy, (703) 819-4667, TTY 
(703) 883-4056, <a href="/cdn-cgi/l/email-protection#f1819e858594839bb1979290df969e87"><span class="__cf_email__" data-cfemail="fb8b948f8f9e8991bb9d989ad59c948d">[email protected]</span></a>.
    or
    Legal information: Hazem Isawi, Senior Attorney, Office of General 
Counsel, (703) 883-4022, TTY (703) 883-4056, <a href="/cdn-cgi/l/email-protection#5d342e3c2a34351d3b3e3c733a322b"><span class="__cf_email__" data-cfemail="ee879d8f998786ae888d8fc0898198">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Objectives

    The objectives of this proposed rule are to:
    <bullet> Increase direct lender associations' YBS activity;
    <bullet> Reinforce the supervisory responsibilities of the funding 
banks, authorized by section 4.19 of the Farm Credit Act;
    <bullet> Require each direct lender association to adopt an 
independent strategic plan for their YBS program; and,
    <bullet> Provide elements that will be evaluated as part of a 
rating system to measure year-over-year YBS progress, allowing FCA to 
compare the success of the direct lender association to its peers with 
regard to extension of credit and services to the YBS borrowing 
population.

II. Background

    The Farm Credit System (System) is the oldest of the financial 
Government-sponsored enterprises (GSEs). The objective of the System is 
to improve the income and well-being of American farmers and ranchers 
by furnishing sound, adequate, and constructive credit and closely-
related services to them, their cooperatives, and selected farm-related 
businesses.\1\ The System has a unique mission to serve YBS farmers and 
ranchers. Section 4.19 of the Farm Credit Act of 1971, as amended 
(Act),\2\ requires each System association to establish a program to 
furnish sound and constructive credit and related services to YBS 
farmers and ranchers. In addition, each affiliated association's YBS 
program is subject to review and approval by their respective funding 
bank, which must report annually to FCA on the operations and 
achievements of their associations' programs.
---------------------------------------------------------------------------

    \1\ 12 U.S.C. 2001.
    \2\ 12 U.S.C. 2207.
---------------------------------------------------------------------------

    YBS farmers and ranchers, like all those in agriculture, face a 
wide range of challenges, including access to capital and credit; the 
impact of rising costs on profitability; urbanization and the 
availability of resources like land, water, and labor; globalization; 
and competition from larger or more established farms. Although all 
agricultural producers face these challenges, the hurdles that YBS 
farmers and ranchers face are often greater due to their lack of an 
agricultural production history, inexperience in production 
agriculture, low capital position, or limited credit history. The FCA 
continues to believe the System's YBS mission is important to enable 
small and start-up farmers and ranchers to make successful entries into 
agricultural production. Also, FCA believes it is important to ensure 
marketing and outreach efforts include all eligible and creditworthy 
persons, with specific outreach toward diversity and inclusion. The 
System's YBS mission is also critical to facilitate the transfer of 
agricultural operations from one generation to the next. FCA remains 
committed to ensuring the System fulfills its important mission to YBS 
farmers and ranchers.
    Since FCA's YBS regulation was first implemented in 1981, the 
agency has periodically strengthened the YBS framework through 
regulatory amendments,\3\ Board policy statements, bookletters, exam 
manual updates, public statements, and other initiatives to promote 
compliance and to highlight the System's efforts to provide service to 
YBS farmers and ranchers. In recent years, a focus on YBS has been a 
regular feature of FCA strategic and performance plans. Nonetheless, 
there remain opportunities for further improvement.
---------------------------------------------------------------------------

    \3\ The regulation was last amended in 2004. 69 FR 16460 (Mar. 
30, 2004).
---------------------------------------------------------------------------

    Pursuant to existing regulations, FCA receives YBS program 
information through associations' operational and strategic business 
plans.\4\ To meet the requirements of the regulation, these plans must 
discuss forward-looking information such as program objectives, annual 
quantitative and qualitative targets, and proposed methods to ensure 
credit and services are provided in a safe and sound manner.\5\ 
However, as part of the existing planning process, there is no 
requirement for associations to report on past performance. Without 
this assessment, plans are unlikely to target deficient areas (e.g., 
outreach, budget resources, terms of extended credit) for improvement. 
This information would help the funding banks and FCA to identify 
trends. For these reasons, we believe associations should include 
assessments of their past performance in their YBS plans.
---------------------------------------------------------------------------

    \4\ 12 CFR 614.4165(e).
    \5\ 12 CFR 614.4165(c)(1)-(4).
---------------------------------------------------------------------------

    As noted, a direct lender association's funding bank serves a role 
in YBS plan development. Indeed, the Act assigns to the banks the role 
of reviewing and approving their affiliated direct lender associations' 
YBS plans.\6\ Given this,

[[Page 36263]]

and to parallel what is required of direct lender associations, we 
believe funding banks should implement internal controls that establish 
clear lines of responsibility for approving, reviewing, and monitoring 
of their affiliated associations' YBS reporting and activities.
---------------------------------------------------------------------------

    \6\ 12 U.S.C. 2207(a).
---------------------------------------------------------------------------

    On August 12, 2021, the FCA Board Chairman announced the agency's 
work on a proposed YBS rule. The statement noted that while the System 
has made consistent efforts to serve YBS farmers, the average age of 
American farmers has continued to rise.\7\ On November 8, 2021, FCA and 
the University of Nebraska-Lincoln held a symposium to enhance YBS 
decision-making at System institutions. More recently, on March 23, 
2022, FCA and Colorado State University (CSU) co-hosted a national 
forum on serving the credit and related needs of YBS farmers and 
ranchers. The event covered a range of topics of interest to YBS 
producers and their lenders, with presentations by top industry 
stakeholders, experts from CSU, Farm Credit System representatives, and 
local agricultural producers.
---------------------------------------------------------------------------

    \7\ The Department of Agriculture (USDA) reported in 2017 that 
the average age of U.S. farm producers was 57.5 years, up 1.2 years 
from 2012. USDA National Agricultural Statistics Service (NASS), 
2017 Census of Agriculture.
---------------------------------------------------------------------------

III. Section-by-Section Analysis

A. Overview

    FCA proposes revisions to our regulations located in 12 CFR 
614.4165 to reinforce the supervisory responsibilities of the funding 
banks, require each direct lender association to adopt an independent 
strategic plan for its YBS program, and provide elements that will be 
evaluated as part of a rating system to measure year-over-year YBS 
progress. This proposed rule reflects FCA's expectation of bolstering 
YBS program planning and increasing both lending and non-lending YBS 
activity. FCA also proposes to revise Sec.  620.5(k)(2) to update 
referencing.

B. Definitions [Proposed Sec.  614.4165(a)]

    No substantial changes are proposed for the definitions in 
paragraph (a). We propose grammatical changes, including removing the 
word ``and'' between ``farmers'' and ``ranchers,'' and adjusting 
punctuation. Similar changes are made to the term throughout the 
regulatory text.

C. Farm Credit Banks Oversight [Proposed Sec.  614.4165(b)]

    We propose changing the paragraph heading in paragraph (b) from 
``Farm Credit bank policies'' to ``Farm Credit banks oversight.'' While 
direct lender associations have autonomy from their funding banks, 
section 4.19(a) of the Act clearly states that YBS programs are subject 
to bank review and approval. As such, this paragraph is more 
appropriately titled to include such oversight. We believe funding 
banks are in a unique position to know the YBS activities of all their 
affiliated direct lender associations and see how those associations 
respond to the needs of their respective borrowers. Funding banks can 
use this knowledge to encourage associations to enhance their YBS 
programs through best practice sharing among their direct lender 
associations. Further, funding banks serve as the YBS data collection 
center for their direct lender associations and, ultimately, are 
responsible for reporting to FCA. As a result of this structure and 
crucial data reporting, funding banks are positioned not only to help 
FCA in our YBS oversight but also to provide assistance to associations 
seeking to bolster their YBS programs.
    Proposed paragraph (b)(1)(i) requires each funding bank to adopt 
written policies that direct their affiliated associations to establish 
an annual strategic YBS plan. The creation of a YBS strategic plan is 
explained further in the discussion about proposed paragraph (c). Since 
a strategic plan is a newly-proposed requirement for direct lender 
associations, it is appropriate that the bank adopt written policies 
directing affiliated associations to establish a plan. It is also 
consistent with the statutory structure of section 4.19 of the Act, 
which requires associations to have YBS programs ``under policies'' of 
Farm Credit Bank boards. We propose grammatical edits to the reference 
to ``young, beginning, and small farmers, ranchers, and producers or 
harvesters of aquatic products,'' which will continue to be referred to 
in the shorthand as ``YBS farmers and ranchers'' or ``YBS.''
    Paragraph (b)(3) of the existing regulation requires each funding 
bank to adopt written policies that direct each affiliated direct 
lender association to provide a YBS operations and achievements report 
to the funding bank. Proposed paragraph (b)(1)(iii) replaces references 
to the operations and achievements reports with the proposed YBS 
strategic plan, along with any other information deemed necessary by 
the bank. The strategic plan should contain the elements previously 
submitted in the operations and achievements reports; thus, the intent 
of the requirement continues forward through the YBS strategic plan. 
Receiving the YBS strategic plan should also aid the funding bank in 
its oversight role as described previously, as well as supplementing 
data collection and reporting. In paragraph (b)(1)(iv), we propose a 
grammatical change from ``agency'' to ``FCA.'' We propose moving the 
review and approval requirements from existing paragraph (d) to 
proposed paragraph (b)(2). The existing regulation requires bank review 
and approval of each direct lender association's YBS program, but 
limits the review and approval to a determination that the YBS program 
contains required elements as set forth in existing paragraph (c). With 
the proposed requirement of a YBS strategic plan, we also propose 
adding bank review and approval of such plan. Further, we propose that 
the bank's review ensure all elements in proposed paragraphs (c) and 
(d) are contained in the plan and program, and remove existing 
limitations on the bank to only review for the presence of the required 
elements. This would provide funding banks with the opportunity to 
become more involved with their respective associations' efforts to 
enhance YBS programs.
    Existing paragraph (f) requires internal controls for direct lender 
associations. In paragraph (b)(3), we propose that banks also have 
internal controls in place to establish clear lines of responsibility 
in fulfilling their role regarding direct lender association YBS 
strategic plans, programs, and reporting. In the past, internal 
controls over YBS data reporting processes have been weak, resulting in 
inaccurate reporting to FCA. As the primary collectors, reviewers, and 
submitters of YBS data, internal controls are key to the funding banks' 
ability to provide reliable data. As with every area of operations, a 
strong internal control environment is essential.

D. Direct Lender Association YBS Strategic Plan [Proposed Sec.  
614.4165(c)]

    The existing YBS regulation requires the YBS program to be included 
in the direct lender association's annual operational and strategic 
business plan under Sec.  618.8440. Proposed paragraph (c) requires the 
adoption of an independent strategic plan specific to the direct lender 
association's YBS program. While direct lender associations have long 
been required to have a YBS program, limited emphasis has been placed 
on strategically planning, analyzing, and assessing such a program. 
Just as most direct lender associations require YBS borrowers to submit 
a business plan for their operation, we believe that business

[[Page 36264]]

planning is important when it comes to YBS programs. Direct lender 
associations plan their YBS programs to varying degrees. This proposed 
strategic plan requirement will add consistency to longer-term planning 
and program development at each institution, while also requiring 
performance analysis, all of which should strengthen the direct lender 
association's YBS program.
    The Farm Credit System, as a GSE, maintains a special 
responsibility to YBS, which is a mission-critical lending segment. For 
this reason, we propose the creation of an independent document that 
stands alone and separate from the operational and strategic business 
plan. Similar to the operational and strategic business plan required 
by Sec.  618.8440, we propose that the YBS strategic plan must be 
forward looking by 3 years and submitted no later than 30 days after 
the commencement of each calendar year. This should allow direct lender 
associations to complete their entire planning process at one time.
    We propose that the YBS strategic plan contain minimum elements 
detailed in proposed paragraph (d). Paragraph (e) of the existing 
regulation requires targets and goals be included in the direct lender 
association's strategic operational plan for the succeeding 3 years. We 
propose moving this requirement to paragraph (c)(2), and instead of 
including such goals in the operational and strategic business plan, 
they will be included in the standalone YBS strategic plan. YBS 
components will no longer be required as part of Sec.  618.8440.
    Further, we propose that the YBS strategic plan analyze 
performance. It is important for the direct lender association to use 
actual results when setting goals and developing the future years' YBS 
program. We also propose that the direct lender association discuss 
variances that occurred between actual performance and goals and 
provide the reasons for such variances. This analysis should also be 
helpful in ensuring the YBS program is relevant and appropriately 
serving the needs of the YBS segment. In proposed paragraph 
(c)(3)(iii), we propose that the YBS strategic plan identify how the 
efforts of the direct lender association, through its YBS program, are 
assisting YBS farmers and ranchers with receiving both credit and 
education. Also, under proposed paragraph (c)(3)(iv), we propose that 
the YBS strategic plan also assess the effectiveness in providing 
credit and services. This should discuss how the direct lender 
association's YBS planning, and program efforts are resulting in new 
and expanding YBS borrower operations and how the credit is being 
provided to these YBS borrowers.

E. Direct Lender Association YBS Program [Proposed Sec.  614.4165(d)]

    We propose redesignating existing paragraph (c) as paragraph (d) 
and reorganizing and revising its containing paragraphs. The YBS 
strategic plan outlined in proposed paragraph (c) will guide the 
development and implementation of the direct lender association's YBS 
program.
    We propose moving language in existing paragraph (c)(4) that reads, 
``safe and sound manner and within a direct lender association's risk-
bearing capacity,'' to the main body of paragraph (d). In addition to 
the requirement that each YBS program must operate in a safe and sound 
manner within the direct lender association's risk-bearing capacity, 
such operation must be done ``while meeting the unique needs of YBS 
farmers and ranchers.'' There can be actual and perceived risk in 
lending to the YBS segment. These borrowers often lack certain credit 
elements such as abundant repayment capacity, liquidity, or 
collateralization. Generally, loans to YBS borrowers can be made in a 
safe and sound manner despite some increased risk relative to non-YBS 
borrowers.
    Next, we propose adding paragraph headings to paragraphs (d)(1) 
(``Qualitative factors''), (d)(1)(i) (``Corporate governance''), 
(d)(1)(ii) (``Credit and related services''), (d)(1)(iii) (``Marketing, 
outreach, and education''), and (d)(2) (``Quantitative goals''). We 
propose moving the mission statement requirement in existing paragraph 
(c)(1) to proposed paragraph (d)(1)(i)(A), as a component of the 
Corporate Governance. Other than relocation, the requirement has not 
changed. We also propose moving the internal control requirement in 
existing paragraph (f) of current regulations to proposed paragraph 
(d)(1)(i)(B) and adding to its coverage the YBS strategic plan. We 
propose moving the related services requirement in existing paragraph 
(c)(3)(i) to proposed paragraph (d)(1)(ii)(A), and moving coordination 
requirements in existing paragraph (c)(3)(ii) to proposed paragraph 
(d)(1)(ii)(B). We also propose streamlining this requirement by 
striking the words, ``take full advantage of opportunities for 
coordinating,'' and replacing it with ``coordination.'' We propose to 
move outreach requirements in existing paragraph (c)(3)(iii) to 
proposed paragraph (d)(1)(iii). We propose minor changes to this 
requirement by replacing ``Implement'' with ``Implementation'' and 
adding the word ``retain.'' Further, we propose adding the 
consideration of a YBS mentoring program to the list of examples of 
outreach programs to better serve and understand the needs of this 
lending segment.
    Within proposed paragraph (d)(2), we propose replacing instances of 
``targets'' with ``goals'' to be more consistent with the terminology 
used in the remainder of the quantitative text section. We also propose 
adding the requirement that direct lender associations identify the 
sources of data used to establish the goals. Lastly, we propose 
replacing ``targets may'' with ``goals must.'' The regulatory text in 
proposed paragraphs (d)(2)(i)-(ii) remains the same as existing 
paragraphs (c)(2)(i)-(iv).

F. Annual Report Information Concerning YBS [Proposed Sec.  
620.5(k)(2)]

    FCA proposes to revise Sec.  620.5(k)(2) to update referencing. 
Specifically, we propose to change the paragraph's cross-reference from 
Sec.  614.4165(c) to instead point to Sec.  614.4165(d) which reflects 
the proposed reordering of text in that section. The rest of Sec.  
620.5(k)(2) remains unchanged.

IV. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), FCA hereby certifies that the proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. Each of the banks in the Farm Credit System, considered 
together with its affiliated associations, has assets and annual income 
in excess of the amounts that would qualify them as small entities. 
Therefore, Farm Credit System institutions are not ``small entities'' 
as defined in the Regulatory Flexibility Act.

List of Subjects

12 CFR Part 614

    Agriculture, Banks, banking, Flood insurance, Foreign trade, 
Reporting and recordkeeping requirements, Rural areas.

12 CFR Part 620

    Accounting, Agriculture, Banks, banking, Reporting and 
recordkeeping requirements, Rural areas.

    For the reasons set out in the preamble, FCA proposes to amend 12 
CFR parts 614 and 620 as follows:

[[Page 36265]]

PART 614--LOAN POLICIES AND OPERATIONS

0
1. The authority citation for part 614 continues to read as follows:

    Authority:  Secs. 1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 1.11, 2.0, 2.2, 
2.3, 2.4, 2.10, 2.12, 2.13, 2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 
3.20, 3.28, 4.12, 4.12A, 4.13B, 4.14, 4.14A, 4.14D, 4.14E, 4.18, 
4.18A, 4.19, 4.25, 4.26, 4.27, 4.28, 4.36, 4.37, 5.9, 5.10, 5.17, 
7.0, 7.2, 7.6, 7.8, 7.12, 7.13, 8.0, 8.5 of the Farm Credit Act (12 
U.S.C. 2011, 2013, 2014, 2015, 2017, 2018, 2019, 2071, 2073, 2074, 
2075, 2091, 2093, 2094, 2097, 2121, 2122, 2124, 2128, 2129, 2131, 
2141, 2149, 2183, 2184, 2201, 2202, 2202a, 2202d, 2202e, 2206, 
2206a, 2207, 2211, 2212, 2213, 2214, 2219a, 2219b, 2243, 2244, 2252, 
2279a, 2279a-2, 2279b, 2279c-1, 2279f, 2279f-1, 2279aa, 2279aa-5); 
12 U.S.C. 2121 note; 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.

0
2. Section 614.4165 is revised to read as follows:


Sec.  614.4165  Young, beginning, and small (YBS) farmers and ranchers.

    (a) Definitions. (1) For purposes of this subpart, the term 
``credit'' includes:
    (i) Loans made to farmers, ranchers, and producers or harvesters of 
aquatic products under title I or II of the Act; and
    (ii) Interests in participations made to farmers, ranchers, and 
producers or harvesters of aquatic products under title I or II of the 
Act.
    (2) For purposes of this subpart, the term ``services'' includes:
    (i) Leases made to farmers, ranchers, and producers or harvesters 
of aquatic products under title I or II of the Act; and
    (ii) Related services to farmers, ranchers, and producers or 
harvesters of aquatic products under title I or II of the Act.
    (b) Farm Credit banks oversight. (1) Each Farm Credit Bank and 
Agricultural Credit Bank must adopt written policies that direct:
    (i) The board of each affiliated direct lender association to 
establish an annual strategic plan, which includes the details of a 
program to provide sound and constructive credit and related services 
to young, beginning, and small farmers, ranchers, and producers or 
harvesters of aquatic products (YBS farmers and ranchers or YBS);
    (ii) Each affiliated direct lender association to include in its 
YBS program provisions ensuring coordination with other System 
institutions in the territory and other governmental and private 
sources of credit;
    (iii) Each affiliated direct lender association to submit to its 
funding bank its annual YBS strategic plan as described in paragraph 
(c) of this section and any other information regarding its YBS 
program, as described in paragraph (d) of this section, deemed 
necessary by the bank to meet the requirements of this paragraph (b); 
and
    (iv) The bank to provide the FCA a complete and accurate annual 
report summarizing the YBS program operations and achievements of its 
affiliated direct lender associations.
    (2) Annually, the direct lender association's YBS strategic plan 
and program are subject to the review and approval of its funding bank. 
The funding bank's review and approval must determine if the YBS 
strategic plan and program contain all required components as set forth 
in paragraphs (c) and (d) of this section. Any conclusion by the bank 
that a YBS strategic plan or program is deficient must be communicated 
to the direct lender association in writing.
    (3) The Farm Credit Banks and Agricultural Credit Bank must 
implement internal controls that establish clear lines of 
responsibility for approving, reviewing, and monitoring of affiliated 
direct lender association YBS strategic plans, programs, and reporting.
    (c) Direct lender association YBS strategic plan. (1) No later than 
30 days after the commencement of each calendar year, the board of 
directors of each direct lender association must adopt a 3-year YBS 
strategic plan to develop and guide its YBS program. The YBS strategic 
plan is an independent document submitted to the FCA along with the 
annual operational and strategic business plan required by Sec.  
618.8440 of this chapter.
    (2) At a minimum, the strategic plan must detail the operations of 
the YBS program, including all components in paragraph (d) of this 
section. Goals outlined in paragraph (d)(2) of this section must be 
included in each direct lender association's YBS strategic plan 
covering at least the succeeding 3 years.
    (3) The YBS strategic plan must:
    (i) Analyze the association's performance in the previous year 
toward achieving the components in paragraph (d) of this section;
    (ii) Discuss variances and reasons for the results;
    (iii) Identify how the efforts in paragraph (d) of this section 
assist YBS farmers and ranchers with both receiving credit and 
education; and
    (iv) Assess the direct lender association's effectiveness in 
providing these efforts that result in new and expanding YBS operations 
to which credit is now provided.
    (d) Direct lender association YBS programs. The board of directors 
of each direct lender association must establish a program to provide 
sound and constructive credit and services to YBS farmers and ranchers 
in its territory. Each YBS program must operate in a safe and sound 
manner and within the direct lender association's risk-bearing 
capacity, while meeting the unique needs of YBS farmers and ranchers. 
Such a program must include the following minimum components:
    (1) Qualitative factors--(i) Corporate governance.
    (A) A mission statement describing program objectives and specific 
means for achieving such objectives.
    (B) Internal controls that establish clear lines of responsibility 
for YBS strategic plan development and the corresponding YBS program 
implementation, tracking YBS program performance, and YBS quarterly 
reporting to the association's board of directors.
    (ii) Credit and related services. (A) Efforts to offer credit and 
related services, either directly or in coordination with others, that 
are responsive to the needs of the YBS farmers and ranchers in the 
territory. Examples include customized loan underwriting standards, 
loan guarantee programs, fee waivers, or other credit enhancements 
commensurate with the credit risk approved by the board of directors.
    (B) Coordination with other System institutions in the territory 
and other governmental and private sources who offer credit and 
services to YBS farmers and ranchers.
    (iii) Marketing, outreach, and education. Implementation of 
effective outreach programs to attract and retain YBS farmers and 
ranchers, which may include the use of advertising campaigns, 
educational programs, and advisory committees comprised of YBS farmers 
and ranchers and/or a YBS mentoring program to better serve and 
understand the needs of this lending segment.
    (2) Quantitative goals--(i) Annual quantitative goals. Annual 
quantitative goals for credit to YBS farmers and ranchers based on an 
understanding of reasonably reliable demographic data for the lending 
territory. Direct lender associations must identify the sources of data 
used to establish the goals. Such goals must include at least one of 
the following:
    (A) Loan volume and loan number goals for YBS farmers and ranchers 
in the territory;
    (B) Percentage goals representative of the demographics for YBS 
farmers and ranchers in the territory;

[[Page 36266]]

    (C) Percentage goals for loans made to new borrowers qualifying as 
YBS farmers and ranchers in the territory; or
    (D) Goals for capital committed to loans made YBS farmers and 
ranchers in the territory.
    (ii) Board of directors approval and review. Goals must be approved 
by the direct lender association's board of directors and reviewed 
quarterly with adjustments made as needed.

PART 620--DISCLOSURE TO SHAREHOLDERS

0
3. The authority citation for part 620 continues to read as follows:

    Authority: Secs. 4.3, 4.3A, 4.19, 5.9, 5.17, 5.19 of the Farm 
Credit Act (12 U.S.C. 2154, 2154a, 2207, 2243, 2252, 2254); sec. 424 
of Pub. L. 100-233, 101 Stat. 1568, 1656; sec. 514 of Pub. L. 102-
552, 106 Stat. 4102.

0
4. Revise Sec.  620.5(k)(2) to read as follows:


Sec.  620.5  Contents of the annual report to shareholders.

* * * * *
    (k) * * *
    (2) Each direct lender association must provide a description of 
its young, beginning, and small (YBS) farmers and ranchers program, 
including a status report on each program component as set forth in 
Sec.  614.4165(d) of this chapter and the definitions of ``young,'' 
``beginning,'' and ``small'' farmers and ranchers. The discussion must 
provide such other information necessary for a comprehensive 
understanding of the direct lender association's YBS program and its 
results.
* * * * *

    Dated: June 9, 2022.
Ashley Waldron,
Secretary, Farm Credit Administration Board.
[FR Doc. 2022-12803 Filed 6-15-22; 8:45 am]
BILLING CODE 6705-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>