1. Who Finances America’s Family Farmers? USDA Agriculture Economics and Land Ownership Survey A Review of the Recent

2. The 1999 Agriculture Economics and Land Ownership Survey The Questionnaires Were Completed by Thousands of Farmers and Ranchers and Compiled by the USDA Provides the Most Current Data About U.S. Farmers and Ranchers Provides Insight into Where Farm Operators and Owners Get Their Financing Released by the USDA in August of 2001

3. Congress created the Farm Credit System (“FCS”) in 1916 as America’s first government-sponsored enterprise (“GSE”). The FCS competes with the private sector by lending directly to farmers, ranchers, rural businesses and rural homeowners. GSE status allows the FCS to borrow money from the public at rates comparable to the federal government. Its earnings are largely tax exempt. While the federal government does not explicitly guarantee bonds that the FCS issues, the government did provide a $4 billion line of credit to stave off the insolvency of the FCS in 1987. Today, the Farm Credit System has over $98 billion in assets and made over $1.4 billion in net income in 2000. The Farm Credit System 1

4. Banks are privately owned businesses which are capitalized by investors whose money is at risk. Banks fund their operations primarily by accepting deposits and making loans to farmers, ranchers, rural businesses, and individuals. Banks are the only financial institutions subject to the federal Community Reinvestment Act. Banks in Rural America 2

5. Source: 2001 USDA Agriculture Income and Finance Report Banks Have Steadily Increased Their Loans to Farmers Marketshare 3

6. The Average American Farm With Debt Has 615 Acres Source: USDA Agriculture Economics and Land Ownership Survey The Average Farm Acreage of: Bank Customers = 600 FCS Customers = 935 4

7. The Average Market Value of Farm Products Sold By All Farms With Debt: $168,000 The Average Market Value of Farm Products Sold By Bank Customers: $156,000 The Average Market Value of Farm Products Sold By FCS Customers: $311,000 Source: USDA Agriculture Economics and Land Ownership Survey The Average Family Farmer is a Bank Customer 5

8. Banks Serve Three-Quarters of the Youngest Farm Operators * *Defined as operators under the age of 35 Source: USDA Agriculture Economics and Land Ownership Survey 6

9. The Farm Credit System is Not Focused on Beginning Farmers Source: USDA Agriculture Economics and Land Ownership Survey Breakdown of FCS Loan Portfolio by Farmer Age 7

10. Source: USDA Agriculture Economics and Land Ownership Survey Banks Lend to More Family Farmers * Number of Family Farm Customers * Sole proprietorships, partnerships and family held farms 8

11. Source: USDA Agriculture Economics and Land Ownership Survey A Quarter of Farm Credit System Loans Are To Large Farms* * Farms with $250,000 or more in sales 9

12. Source: USDA Agriculture Economics and Land Ownership Survey Almost a Quarter of Farm Credit System Customers Operate America’s Largest Farms Very Small Farms (179 acres or less) Small Farms (180 to 1000 acres) Very Large Farms (Over 1000 acres) 10

13. Source: USDA Agriculture Economics and Land Ownership Survey Who Serves More Mega-Farms? * * Farms with $500,000 or more in sales Percentage of Customers 11

14. Farm Operators * : Banks Finance More Minorities and Women Than Anyone Source: USDA Agriculture Economics and Land Ownership Survey *A “farm operator” is defined as a person who operates a farm or ranch, either doing the work or making day-to-day decisions about such items as planting, harvesting, feeding, and marketing. See Appendix A of the AELOS 12

15. Farm Owners * : Banks Finance More Minorities and Women Than Anyone Source: USDA Agriculture Economics and Land Ownership Survey *A “farm owner” is defined as an individual, partnership, corporation, or other entity who owns land used for agricultural purposes. See Appendix A of the AELOS 13

16. The ABA brings together all categories of banking institutions to best represent the interests of this rapidly changing industry. Its membership - which includes community, regional and money center banks and holding companies, as well as savings associations, trust companies and savings banks - makes ABA the largest banking trade association in the country. ABA can be found on the world wide web at http://www.aba.com. This Review of the 1999 USDA Agriculture Economics and Land Ownership Survey was prepared by the Center for Agricultural and Rural Banking of the American Bankers Association. AELOS data may be found on the USDA website: http://www.nass.usda.gov/census/census97/aelos/aelos.htm 14

17. Center for Agricultural and Rural Banking