Alabama Ag Credit Celebrates 100 Years
Alabama Ag Credit supports agriculture and rural communities in South Alabama by providing reliable, consistent credit and financial services. And as a part of the Farm Credit System, we’ve been doing that for 100 years and we plan to do it for 100 more.
July 17, 2016 Farm Credit will celebrate its 100th birthday. In doing so, Alabama Ag Credit reflects on its history while looking to the future.
In the early 1900s, commercial lenders considered agriculture to be a large risk. Interest rates were high, and long-term financing for farmers and ranchers was scarce. President Theodore Roosevelt appointed a Country Life Commission in 1908 to address the problems facing a predominantly rural population.
After congressional and presidential studies, Congress passed the Federal Farm Loan Act in 1916, establishing the nationwide Farm Credit System — a network of credit cooperatives — to be a reliable source of funding for farmers, ranchers and aquatic producers. The legislation set up 12 district banks, known as Land Banks, across the country to provide funds to local mortgage lending cooperatives, which would be owned by farmers and ranchers.
Following World War I, which was a prosperous time for farmers, prices collapsed, resulting in a shortage of short-term credit for farmers and ranchers. Congress responded with the Agricultural Credit Act of 1923 which added 13 Federal Intermediate Credit Banks (FICBs) to the Farm Credit System.
The stock market crash of 1929 touched off the Great Depression, throwing thousands of farmers into bankruptcy and strangling the Farm Credit System's ability to finance agriculture. In 1933, Congress passed two laws affecting the future of Farm Credit. One piece of legislation re-capitalized the Land Banks with $189 million. The other revamped the FICBs and established a short-term credit delivery system through locally owned Production Credit Associations. In addition, President Franklin Roosevelt consolidated the supervision of all federal agricultural credit agencies under a new regulator, the Farm Credit Administration.