Definition of Farm Credit System (FCS)

nationwide cooperative system of banks and associations providing credit to farmers, agricultural concerns, and related businesses. The system is comprised of the Banks for Cooperatives, which makes loans to farmer-owned marketing, supply, and service cooperatives, and rural utilities; the Farm Credit Banks, which make short and intermediate term farm loans secured by real estate; and the Federal Farm Credit Banks Funding Corp., which acts as a conduit through which the FCS issues debt in the credit markets. The Farm Credit Banks were created by merger of the old Federal Intermediate Credit Banks, making intermediate term farm loans, and the Federal Land Banks. A new agency, the Federal Agricultural Mortgage Corporation ( farmer mac) was established by the Agricultural Credit Act of 1987 to create a secondary market for farm credit. Bonds, notes, and other obligations issued by Farm System institutions, other than the FAC, are insured by the Farm Credit System Insurance Corporation. Another federal agency, the Farm Credit Financial Assistance Corporation, provides capital assistance by issuing government guaranteed bonds. The Farm Credit System, originally capitalized by the federal government, is now self-funding and owned by its member-borrowers.