President Woodrow Wilson did something 100 years ago Sunday that, to this day, helps bring in the crops in Stanislaus County and beyond.
He signed the Federal Farm Loan Act on July 17, 1916, launching what is now known as the Farm Credit System. It came about because of a shortage of money for land, equipment and other needs. The advocates intended for it to stay strong when times got tough again.
Today, the system provides about 40 percent of the nation’s agricultural lending – about $217 billion of the total loan volume as of 2014. Commercial banks and other sources cover the rest.
The Farm Credit System sells bonds to investors to raise the money it lends through 74 regional entities. One of them is Yosemite Farm Credit, mainly serving Stanislaus and Merced counties. Another is American AgCredit, covering this and other California regions plus five other states.
The system lends money for cropland, livestock, tractors, barns, packing plants and other long-term endeavors. Farmers can get short-term loans to cover production costs before they sell the crops each year.
That’s exactly the time when the Farm Credit System shines — when things are difficult.
Leonard Van Elderen, Yosemite Farm Credit
The system recognizes that prices can fluctuate, said Leonard Van Elderen, president and chief executive officer at Yosemite, based in Turlock. Dairy farms make up 37 percent of its business, and they have been in yet another spell of low milk prices. It also deals with many almond and walnut growers, who have seen prices drop from recent spikes.
“That’s exactly the time when the Farm Credit System shines – when things are difficult,” Van Elderen said.
He provided numbers that underline the system’s strength: Just four of the 4,000-plus borrowers at Yosemite were more than 30 days past due on their repayments as of June 30. It reported a similar past-due rate in 2008, amid a home mortgage crisis that would lead to foreclosure for one in seven Stanislaus County homes.
Loan volume has grown from $1.53 billion in 2011 to $2.23 billion last year at Yosemite, which also serves Tuolumne and Mariposa counties and a small part of Fresno County. It employs 135 people, including branch offices in Modesto, Turlock, Oakdale, Patterson, Los Banos and Merced.
American AgCredit, based in Santa Rosa, serves California, Nevada, Colorado, New Mexico, Oklahoma and Kansas. It has branches in Turlock, Oakdale, Merced and Stockton.
American AgCredit’s loan volume rose from $4.39 billion in 2011 to $7.29 billion last year. Like Yosemite, it has a tiny number of troubled loans.
Both of these lenders are cooperatives owned by member-borrowers, who can earn dividends that effectively reduce their interest rates.
The centennial comes as farmers across the nation deal with another drop in the prices of many crops and livestock products. Agriculture Secretary Tom Vilsack noted the long-term strength in a speech last month in Washington, D.C.
“These services have helped meet the evolving needs of rural America and will play a vital role in shaping the future of American agriculture,” he said.