Few historians dispute America’s sovereign position in the farming world, but the United States’ place as a world power might be different if not for legislation passed a century ago to provide farmers low-cost loans.
The Farm Loan Act of 1916 was created to support rural communities and provide reliable funding for farmers through the nationwide Farm Credit System, said Auburn University’s Deacue Fields, chair of the college's agricultural economics department.
“It was, and is, different from a typical bank because it’s a cooperative,” Fields said. “It’s owned by borrowers, and portions of proceeds from the cooperative are paid back to them through patronage refunds, giving them a sense of ownership.”
Before the early 1900s, settlers homesteaded land and created farms. But when homestead property became scarce, many farmers had to borrow money to buy land. That was considered risky by most traditional banks, Fields said.
“The Farm Credit System provided a way to help young and beginning farmers get started. It helped make agriculture sustainable in America,” he said. “History shows the Farm Credit System met its objective by keeping farmers on the land. It certainly had a positive impact on the lives of every American, whether they realize it or not. It laid the foundation for our country’s food security by ensuring farmland stayed in production.”
While first created to help farmers secure long-term property loans, the Farm Credit System evolved to include short-term loans for equipment purchases, crop production and more.
First South Farm Credit (FSFC), headquartered in Montgomery, operates statewide. It’s part of AgFirst Farm Credit Bank headquartered in South Carolina.
Mike Pigg, FSFC president of operations in Alabama, said it’s hard to imagine agriculture today without the U.S. Farm Credit System.
“Our forefathers were wise to make sure our country had a secure, sustainable food supply,” Pigg said. “The creation of the farm credit system was a key element in that security. I’m proud to work for a company that values farmers, agriculture and rural living. It’s what has made America the envy of the world.”
“We have the most efficient food production system in the world, and a large part of that is because of our Farm Credit System,” Fields said. “Farm credit lenders understand agriculture and the cash flow of commodities. They’re also involved in their communities. They attend cattle auctions and ag meetings to stay involved with the farmers they serve.”
Alabama Ag Credit and Alabama Farm Credit are part of the Farm Credit Bank of Texas. Alabama Ag Credit, with its home office in Montgomery, serves the southern part of the state. Alabama Farm Credit’s home office is in Cullman and serves north Alabama.
“People who have worked at Farm Credit discover it’s easy to develop a passion for customers who impact our food, fiber, shelter and other needs. But even as we reflect on a century of accomplishments, the need to support those in agriculture, forestry and rural communities has never been greater,” said Alabama Ag Credit Chief Executive Officer Doug Thiessen. “That’s what we do through the credit we provide, and now we’re focused on doing it well for the next 100 years.”
Alabama Farm Credit Chief Executive Officer Ben Gore shared similar comments.
“Alabama Farm Credit has evolved over the years to keep pace with our customers’ changing credit needs,” he said. “As Farm Credit begins its second century, we look forward to supporting our customers’ children and grandchildren, as well as the new farmers who will choose to enter the agricultural arena in years to come. Our cooperative stood the test of time, but we have not stood still. We will continue to change and grow along with agriculture and rural America.”
For a broader recap of the Farm Credit System history, visit http://tinyurl.com/FarmCreditSystem.