Several types of lenders make loans to farmers. The one most controlled by the federal government is the Farm Service Agency (FSA) in the U.S. Department of Agriculture (USDA). It receives federal appropriations to make direct loans to farmers and to issue guarantees on loans made by commercial lenders to farmers who do not qualify for regular credit. The lender with the next-largest amount of government intervention is the Farm Credit System (FCS). It is a cooperatively owned and funded—but federally chartered—private lender with a statutory mandate to serve agriculture-related borrowers only. FCS makes loans to creditworthy farmers and is not a lender of last resort but is a government-sponsored enterprise (GSE). FSA provides about 2.6% of the debt through direct loans. FSA also guarantees about another 4%-5% of the market through loans that are made by commercial banks and the FCS. Commercial banks are the largest lender for non-real estate loans (49%), although FCS has gained share in recent years as the shares by others have decreased ( Figure 3 ). Delinquency Rates on Farm Loans

While the global financial crisis in 2008-2009 was slower to affect the balance sheets of farmers and agricultural lenders than the housing market, its presence was observed in agricultural lending. As the lender of last resort, the FSA experienced significantly higher demand for its direct loans and guarantees. But weakness in farm income since 2014 has increased pressure on some farmers' repayment capacity. In FY2017, an appropriation of $90 million in budget authority (plus $317 million for salaries and expenses) supported $8 billion of new direct loans and guarantees. Part of the FSA loan program is reserved for beginning farmers and ranchers (7 U.S.C. Funds are raised through the sale of bonds on Wall Street. The federal regulator is the Farm Credit Administration (FCA). Recent Congressional Issues for Agricultural Credit

		Competition Between Farm Credit System and Commercial Banks

The FCS is unique among the GSEs because it is a retail lender making loans directly to farmers and thus is in direct competition with commercial banks.
The federal government provides credit assistance to farmers to help assure adequate and reliable lending in rural areas, particularly for farmers who cannot obtain loans elsewhere. Federal farm loan programs also target credit to beginning farmers and socially disadvantaged groups.
The primary federal lender to farmers, though with a small share of the market, is the Farm Service Agency (FSA) in the U.S. Department of Agriculture (USDA). Congress funds FSA loans with annual discretionary appropriations—about $90 million of budget authority and $317 million for salaries—to support $8 billion of new direct loans and guarantees. FSA issues direct loans to farmers who cannot qualify for regular credit and guarantees the repayment of loans made by other lenders. FSA thus is called a lender of last resort. Of about $374 billion in total farm debt, FSA provides about 2.6% through direct loans and guarantees about another 4%-5% of loans.
Another federally related lender is the Farm Credit System (FCS)—cooperatively owned and funded by the sale of bonds in the financial markets. Congress sets the statutes that govern the FCS banks and lending associations, mandating that they serve agriculture-related borrowers. FCS makes loans to creditworthy farmers and is not a lender of last resort. FCS accounts for 41% of farm debt and is the largest lender for farm real estate.
Commercial banks are the other primary agricultural lender, holding slightly more than FCS with 42% of total farm debt. Commercial banks are the largest lender for farm production loans.
Generally speaking, the farm sector's balance sheet has remained strong in recent years. While delinquency rates on farm loans increased from 2008 into 2010 during the global financial crisis, farmers and agricultural lenders did not face credit problems as severe as those of other economic sectors. Since 2010, loan repayment rates have improved, but recent weakness in farm income has begun to put pressure on some farmers' loan repayment capacity.