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Definition for

Farm Credit System (FCS)

A nationwide financial cooperative that lends to agricultural producers, rural homeowners, farm-related businesses, and agricultural, aquatic, and public utility cooperatives. Congress established FCS as a government sponsored enterprise when it enacted the Federal Farm Loan Act in 1916. Current authority is in the Farm Credit Act of 1971 (P.L. 92-181, as amended; 12 U.S.C. 1200 et seq.). The fundamental purpose is to provide a permanent, reliable source of credit at competitive interest rates, and related services to agricultural producers, their cooperatives, and related businesses in rural America. FCS is composed of six regional Farm Credit Banks (FCB) and one Agricultural Credit Bank. These banks provide funds and support services to Federal Land Bank Associations (FLBA), Federal Land Credit Associations (FLCA), Production Credit Associations (PCA), and Agricultural Credit Associations (ACA). These associations in turn, provide loans to eligible borrowers. Lending associations are governed by boards of directors elected from FCS borrowers. Funds are raised through the sale of bonds and notes. Federal oversight by the Farm Credit Administration is designed to provide for the safety and soundness of FCS institutions.

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