1This
is
a
major
difference
from
Engle
et
al.
2004
where
either
land
is
purchased
to
expand
operations
to
cover
increased
pollution
control
costs
or,
if
land
is
too
expensive
to
purchase,
production
facilities
are
destroyed
to
make
room
for
a
quiescent
zone.

2These
costs
are
well
below
the
$
90,000
investment
cap
used
in
the
Engle
et
al.,
2004
study.

1
MEMORANDUM
Date:
May
12,
2004
To:
Renée
Johnson,
EPA
From:
Maureen
Kaplan,
Eastern
Research
Group,
Inc.
Subject:
CAAP
Facilities:
Access
to
Credit
and
Limits
on
Borrowing
Capacity
1.
Introduction
EPA
received
comments
on
the
proposed
CAAP
regulations
pertaining
to
aquaculturists'
difficulty
in
obtaining
access
to
credit
and
limits
on
borrowing
capacity
given
high
absolute
debt
levels
at
these
facilities.
Furthermore,
commenters
state
that
lenders
are
typically
reluctant
to
issue
loans
to
implement
pollution
control
measures
since
pollution
control
capital
costs
are
considered
non­
productive
assets.
Finally,
EPA
received
comment
that
lenders
may
attach
a
"
risk
premium"
to
a
loan
for
"
specialty
crops"
that
effectively
raise
the
interest
rate.

Section
2
reviews
the
range
in
potential
land,
capital
and
operating
costs
associated
with
the
final
aquaculture
rule
based
on
August
2003
costs.
Section
3
reviews
the
debt­
to­
assets
ratios
for
the
in­
scope,
commercial
continuous
discharge
facilities.
Section
4
reviews
the
requirements
of
typical
agricultural
lending
programs.
Section
5
reports
USDA's
observations
on
credit
accessibility.
Section
6
is
a
summary
on
specific
issues
raised
by
Engle
et
al.
2004.

2.
Incremental
Pollution
Control
Costs
Potentially
Associated
with
the
Final
CAAP
Rule
The
barrier­
to­
entry
analysis
examined
the
costs
for
the
95
commercial
in­
scope
facilities.
Of
these,
none
are
anticipated
to
incur
land
costs.
1
In
the
EPA
analysis,
then,
land
costs
will
not
interfere
with
access
to
credit
or
affect
borrowing
capacity.

Of
the
95
commercial
facilities,
approximately
21
receive
capital
costs.
The
largest
estimated
capital
cost
under
Option
B
is
approximately
$
10,000.
Only
1.3
facilities
incur
a
cost
of
this
magnitude.
All
other
capital
costs
are
below
$
2,000
per
facility.
2
When
capital
costs
are
incurred
as
a
result
of
the
rule,
they
average
less
than
0.2
percent
of
existing
assets.
2
Under
the
final
rule,
incremental
O&
M
costs
are
estimated
to
be
incurred
by
66
of
the
95
facilities.
This
implies
that
operating
loan
capacity
would
be
unaffected
for
roughly
one
of
every
three
facilities.
EPA
evaluated
the
impact
on
debt
capacity
for
the
facilities
that
incurred
costs
and
found
that
facilities
which
were
viable
prior
to
the
incurrence
of
additional
pollution
control
costs
continued
to
meet
loan
repayment
qualifications.

3.
Debt­
Assets
Ratios
3.1
United
States
Department
of
Agriculture
(
USDA)
Data
Table
1
describes
the
USDA
farm
typology
(
Tables
are
presented
at
the
end
of
the
memorandum.).
Table
2
summarizes
the
financial
performance
by
farm
typology
group
based
on
Agricultural
Resource
Management
Survey
data
(
USDA,
2002).
These
data
represent
all
farms,
not
just
aquaculture
operations.
However,
debt
appears
to
be
concentrated
in
the
larger
operations
with
nearly
three
out
of
every
ten
large
facilities
(>$
1,000,000
in
annual
revenues)
having
a
debt­
asset
ratio
greater
than
40
percent.

3.2
URI
Financial
Ratio
Data
Comerford
and
Rice
(
2004)
presents
financial
ratios
for
aquaculture
businesses
in
the
Northeast
Region.
The
median
balance
sheet
indicated
a
debt­
assets
ratio
greater
than
100
percent,
that
is,
net
worth
is
negative.
The
businesses
that
responded
to
the
URI
questionnaire
are
primarily
shellfish,
a
crop
that
uses
a
grow­
out
production
system
not
in
the
scope
of
the
final
rule.

3.3
EPA
Detailed
Questionnaire
Data
The
commercial
in­
scope
population
is
represented
by
31
companies.
Of
these,
two
did
not
supply
balance
sheet
data
and
a
third
changed
ownership
and
did
not
supply
balance
sheet
data.
Of
the
remaining
companies,
15
have
debt­
asset
ratios
greater
than
40
percent.
That
is,
the
EPA
data
set
has
a
higher
proportion
of
companies
with
debt­
asset
ratios
greater
than
40
percent
than
is
seen
in
the
USDA
data
representing
all
farms,
but
a
lower
proportion
than
that
seen
in
the
URI
financial
data.

4.
Review
of
Agricultural
Lending
This
section
presents
the
findings
of
the
review
of
published
information
on
lending
institution
requirements
and
summarizes
the
results
of
a
review
of
debt
burden
among
farms.

4.1
Market
Share
of
Lenders
Stam,
et
al.
(
2003)
examine
the
USDA
data
and
report
on
the
characteristics
of
the
major
lender
types.
Section
4
of
this
memorandum
draws
heavily
on
their
report.
Figure
1
summarizes
their
findings.
Commercial
banks
had
nearly
40
percent
of
the
market
share
of
farm
operator
debt,
down
from
46.6
percent
in
1999
(
Ryan
and
Koenig,
2001).
3
39.4%

30.3%
20.7%
6.1%
3.5%

Commercial
Banks
(
39.4%)
Farm
Credit
System
(
30.3%)
Individuals
and
Others
(
20.7%)
Life
Insurance
Companies
(
6.1%)
Farm
Service
Agency
(
3.5%)

Figure
1.
Distribution
of
Farm
Business
Debt
by
Lender,
December
31,
2002
The
Farm
Credit
System
holds
another
30
percent
of
the
debt.
The
Farm
Credit
System
(
FCS)
 
is
part
of
the
Farm
Credit
Administration
(
FCA),
an
independent
agency
in
the
Executive
Branch.
Originally
created
by
Executive
Order
in
1933,
Congress
authorized
the
FCA
through
the
Farm
Credit
Act
of
1971
as
amended.
It
is
responsible
for
the
regulation
and
examination
of
the
banks,
associations,
and
related
entities
that
make
up
the
Farm
Credit
System
(
FCS)
and
the
Federal
Agricultural
Mortgage
Corporation
(
Farmer
Mac)
(
FCA,
2004a).

Individuals
and
others
(
a
group
that
contains
farmland
sellers,
merchants,
input
suppliers,
cooperatives,
contractors
and
others)
form
the
third
largest
holder
of
such
debt.
Because
the
conditions
and
qualifications
required
by
this
third
group
of
lenders
is
variable
and
not
known
at
this
time,
they
are
not
considered
further
in
this
analysis.

Life
insurance
companies
account
for
slightly
over
6
percent.
(
These
data
do
not
include
Commodity
Credit
Corporation
crop
loans
which
are
estimated
at
$
4.2
billion
at
the
end
of
calendar
2002
[
Stam,
et
al.,
2003,
p.
11,
footnote
2
to
Table
1]).

The
smallest
lender
 
the
Farm
Service
Agency
(
FSA)
 
is
part
of
the
United
States
Department
of
Agriculture
(
USDA).
The
direct
lending
program
of
the
Farm
Service
Agency
has
been
declining
over
the
past
15
years
and
now
holds
3.5
percent
of
the
market.
3AgFirst
FCB,
AgriBank
FCB,
FCB
of
Wichita,
FCB
of
Texas,
and
Western
FCB.

4
4.2
Background
on
Lenders
4.2.1
Agricultural
Banks
The
Federal
Reserve
System
Board
of
Governors
classifies
a
bank
as
agricultural
if
the
ratio
of
farm
loans
to
total
loans
exceeds
the
unweighted
average
of
all
banks
on
a
given
date.
In
contrast,
the
Federal
Deposit
Insurance
Corporation
criterion
is
a
25
percent
ratio
of
agricultural
loans
to
all
loans.
In
mid­
year
2002,
USDA
reports
2,644
agricultural
banks
by
the
Federal
Reserve
definition
and
1,896
by
the
FDIC
definition
(
Stam
et
al.,
2003,
p.
21).

4.2.2
Farm
Credit
Administration
Farm
Credit
System
The
Farm
Credit
System
(
FCS)
is
a
nationwide
network
of
borrower­
owned
lending
institutions
with
the
intent
to
provide
domestic
agriculture
with
a
source
of
sound,
dependable
credit
at
competitive
rates
of
interest.
Because
FCA
examines
each
institution
for
financial
soundness
and
compliance
with
applicable
laws
and
regulations,
membership
in
FCS
might
fluctuate
over
time.
Different
types
of
institutions
include:

#
Farm
Credit
Banks
(
FCBs)
formed
by
the
merger
of
Federal
Land
Banks
and
Federal
Intermediate
Credit
Banks
in
1988.
As
of
January
2003,
there
were
five
FCBs,
each
of
which
has
a
specified
lending
authorities
within
a
chartered
territory.
3
#
Agricultural
Credit
Bank
(
ACB)
formed
by
the
merger
of
a
Federal
Credit
Bank
and
a
Bank
for
Cooperatives.
As
of
1
January
2001,
there
was
one
ACB
which
has
FCBspecified
lending
authorities
within
a
chartered
territory
and
Bank
for
Cooperatives
lending
authorities
nationwide
(
CoBank).

Many
different
types
of
institutions
are
affiliated
with
the
FCBs
and
ACB:
Agricultural
Credit
Association
(
ACA),
Agricultural
Credit
Bank
(
ACB),
Federal
Land
Bank
Association
(
FLBA),
Federal
Land
Credit
Association
(
FLCA),
Production
Credit
Associations
(
PCAs),
and
Agricultural
Credit
Association
with
PCA
and
FLCA
subsidiaries.

Federal
Agricultural
Mortgage
Corporation
The
Federal
Agricultural
Mortgage
Corporation
("
Farmer
Mac")
is
a
stockholder­
owned
for­
profit
corporation
created
by
Congress
to
establish
a
secondary
market
for
agricultural
real
estate
mortgages
and
USDA
guaranteed
farmer
program
and
rural
development
loans.
Congress
authorized
Farmer
Mac
by
the
Agricultural
Credit
Act
of
1987,
created
it
in
1988,
and
amended
the
Act
in
1990
to
create
the
Farmer
Mac
II
program
at
the
request
of
USDA
(
USC,
2004).
Farmer
Mac
has
never
received
government
funding,
but
is
backed
by
a
$
1.5
billion
line
of
credit
with
the
U.
S.
Treasury.
By
purchasing
loans
from
lenders,
Farmer
4FSA
emergency
loans
to
cover
physical
and
production
losses
in
declared
disaster
areas
are
not
considered
in
this
review.

5
Mac
enables
the
lenders
to
make
new
loans
with
the
replenished
capital.
Under
"
Farmer
Mac
I,"
the
corporation
guarantees
mortgage
loans
secured
by
first
liens
on
agricultural
real
estate
while
under
"
Farmer
Mac
II"
the
corporation
guarantees
securities
backed
by
portions
of
farm
ownership
and
farm
operating
loans,
rural
business
and
commodity
development
loans,
and
certain
other
loans
guaranteed
by
USDA
(
Farmer
Mac,
2004).

4.2.3
Farm
Service
Agency
The
USDA's
Farm
Service
Agency
(
FSA)
operates
two
types
of
farm
loan
programs
 
(
1)
a
guaranteed
loan
program
wherein
FSA
guarantees
up
to
95
percent
of
the
principal
loan
amount
made
by
a
conventional
agricultural
lender
and
(
2)
a
direct
loan
program.
4
FSA
is
often
known
as
a
"
lender
of
last
resort"
whose
participants
are
beginning
farmers
who
can't
qualify
for
a
conventional
loan
(
FSA,
2004).
The
volume
of
delinquent
loan
payments
has
declined
every
year
from
1989
($
3.2
billion)
to
2001
($
333
million).
The
slight
uptick,
to
$
446
million
is
seen
for
2002,
but
this
is
very
similar
to
the
value
for
2000.
USDA
mentions
that
supplemental
aid,
disaster
insurance,
crop
insurance
subsidies,
and
the
2002
Farm
Act
enable
farmers
to
repay
their
loans
(
Stam
et
al.,
2003,
p.
12).

4.3
Loan
and
Loan
Guarantee
Characteristics
Table
3
summarizes
characteristics
of
agricultural
loan
and
loan
guarantees.
No
one
identifies
the
ability
to
cover
100
percent
of
the
investment;
FSA
will
guarantee
up
to
95
percent
of
the
loan
amount,
not
the
amount
of
the
investment.
The
United
States
Code
establishes
a
standard
for
a
guaranteed
loan
as
requiring
no
less
than
a
20
percent
down
payment
(
80
percent
loan
to
value
ratio;
USC,
2004,
§
2279aa­
8).
The
prequalification
questions
for
Farmer
Mac
requests
a
30
percent
down
payment
(
Farmer
Mac,
2004).

Title
12,
Code
of
Federal
Regulations,
§
614.4000­
§
614.4050
summarizes
loan
maturities
for
long­
term
lending
authority
by
type
of
institution,
see
Table
4.
The
10­
year
period
used
in
the
CAAP
effluent
guideline
appears
well­
grounded.

4.4
Are
There
Obstacles
to
Using
Agricultural
Loans
for
"
Non­
productive"
Assets?

Table
3
lists
some
of
the
purposes
to
which
the
loans
may
be
put.
Where
purposes
are
identified,
they
include
the
construction
and
repair
of
buildings
and
other
fixtures
used
in
farm­
related
business.
Because
water
pollution
control
is
associated
with,
not
in
lieu
of,
agricultural
production,
the
effluent
guideline
is
not
inconsistent
with
the
intent
and
purposes
of
the
loans.

The
lenders'
interest
is
that
the
borrower
have
sufficient
cash
flow
to
repay
the
loan
and
that,
after
the
loan
is
in
place,
the
debt­
to­
assets
ratio
not
exceed
50
percent.
Based
on
this
review
of
the
published
information
available
on
the
major
lenders,
EPA's
approach
appears
to
be
consistent
with
that
used
by
the
lenders
to
evaluate
whether
a
facility
qualifies
for
a
loan.
6
In
summary,
the
review
of
agricultural
lending
programs
and
debt
shows
that
most
of
the
widely
used
programs
such
as
Farm
Credit
System,
Farm
Service
Agency,
Farmer
Mac,
and
12
United
States
Code
(
Chapter
23,
section
2279aa­
8)
require
at
a
minimum
approximately
20
percent
to
30
percent
as
down
payments.
Other
information
from
Farmer
Mac
regarding
prequalification
information
lists
a
30
percent
down
payment
(
Farmer
Mac,
2004).
For
the
final
CAAP
rule,
this
means
that
nearly
all
commercial
in­
scope
facilities
would
have
to
raise
less
than
$
600
to
meet
the
requirement
for
the
loan.

5.
Observations
on
Credit
Accessibility
USDA
observes
that
the
demand
for
farm
credits
increased
in
2003
but
that
the
supply
remained
adequate
(
Stam
et
al.,
2003)
.
In
particular,

"
Creditworthy
farmers
are
expected
to
have
adequate
access
to
loans,
mostly
from
the
largest
suppliers
 
commercial
banks,
the
FCS,
and
trade
credit
(
merchants
and
dealers)."
(
p.
2)

Farm
lenders
are
in
a
stronger
financial
position
with
the
FSA
direct
loan
portfolio
showing
$
1.6
billion
in
delinquent
loans
at
the
end
of
2002
compared
to
$
8.1
billion
in
1990.
In
addition,

"
Farm
lenders
also
learned
the
risks
of
lending
on
the
basis
of
collateral
in
the
1980s
and
have
instituted
better
loan
analysis
tools
based
on
cash
flow
and
other
criteria."
(
p.
12)

EPA
follows
USDA
methodology
in
calculating
a
maximum
feasible
loan
payment
and
then
limiting
the
test
to
80
percent
of
that
value.
No
adverse
impacts
were
seen
as
a
result
of
the
rule
on
facilities
that
were
viable
before
the
rule.
As
noted
in
Tables
3
and
4,
aquatic
production
qualifies
for
agricultural
loans.

Potential
aquaculturists
might
also
apply
to
a
commercial
bank
for
real
estate
and
operating
loans.
However,
aquaculture,
per
se,
is
not
represented
in
popular
sources
of
"
typical"
business
financial
data
such
as
Risk
Management
Associates'
Annual
Statement
Studies
or
Dun
&
Bradstreet's
key
business
ratios.
Comerford
and
Rice,
2004,
marks
an
initial
step
in
filling
this
need
for
the
aquaculture
industry.
Having
such
data
available
to
banks
will
assist
in
making
credit
more
accessible
to
the
industry.

6.
Responses
to
Individual
Issues
Raised
6.1
High
Debt
Levels
Johnson,
2004
reports
a
claim
that
aquaculture
facilities
would
have
difficulty
obtaining
access
to
credit
and
limits
on
borrowing
capacity
given
high
absolute
debt
levels
at
these
facilities.
First,
while
some
loans
have
ceiling
limits
or
limits
based
on
a
percentage
of
the
real
estate
value,
none
of
them
mention
a
limit
on
absolute
debt
levels.
The
requirement
is
that
either
a
debt­
asset
ratio
remain
below
a
certain
percentage
and/
or
that
the
cash
flow
is
adequate
to
cover
all
debt
payments
and
other
expenses.
EPA
uses
the
USDA
basis
for
calculating
the
maximum
feasible
loan
payment
and
found
no
impacts
on
viable
facilities
as
a
result
of
the
rule.
7
6.2
Reticence
to
Loan
for
"
Nonproductive
Assets"

Section
4.4
and
Table
3
document
the
acceptability
of
using
agricultural
loans
for
soil
and
water
conservation,
one
form
of
a
"
nonproductive
asset."

6.3
Risk
Premium
Johnson,
2004
reports
a
claims
that
lenders
may
attach
a
"
risk
premium"
to
the
loan
for
specialty
crops
that
effectively
raises
the
interest
rate.
The
EPA
model
uses
a
real
discount
rate
of
7
percent.
Stam
et
al.,
2004
reports
nominal
2002
interest
rates
of
5.0
percent
to
7.3
percent
for
long­
term
loans
and
4.5
to
7.2
percent
for
short
and
intermediate
term
loans.
Given
that
inflation
for
2002,
as
measured
by
CPI,
was
2.8
percent,
the
use
of
a
7
percent
real
rate
addresses
any
"
risk
premium"
that
might
be
considered
(
CEA,
2004,
Table
60).

7.
References
CEA.
2004.
Council
of
Economic
Advisors.
Economic
Report
to
the
President:
2004.
Washington,
DC.
February.

Comerford,
Robert
A.
and
Michael
A.
Rice.
2004.
Northeast
Region
Aquaculture
Business
2003
Financial
Benchmark
Data.
The
University
of
Rhode
Island.

Engle
et
alia.
2004.
Carole
R.
Engle,
Steve
Pomerleau,
Fary
Fornshell,
Jeffery
M.
Hinshaw,
Debra
Sloan,
and
Skip
Thompson.
The
Economic
Impact
of
Proposed
Effluent
Treatment
Options
for
Production
of
Trout
Onchorhynchus
mykiss
in
Flow­
through
Tanks.
Submitted
to
USDA.
March
2004.

Farmer
Mac,
2004.
http://
www.
farmermac.
com/
Non­
flash/
doc/
bow/
prequalfull.
htm.

FCA.
2004a.
Farm
Credit
Administration
web
site.
<
http://
www.
fca.
gov/
About­
FCA.
htm.
Downloaded
10
May
2004.

FCA.
2004b.
Farm
Credit
Administration
web
site.
<
http://
www.
fca.
gov/
handbook.
nsf/.
Downloaded
10
May
2004.

FSA.
2004.
Farm
Service
Agency
website.
<
http://
www.
fsa.
usda.
gov/
dafl/
default.
htm>
and
subsidiary
pages.
Downloaded
12
May
2001.

Johnson,
Renèe.
2004.
Memo
to
record
documenting
EPA's
meeting
to
discuss
an
economic
analysis
of
EPA's
CAAP
regulation
on
the
U.
S.
trout
industry.
May
7.

Ryan,
James
T.,
and
Steven
R.
Koenig,
2001.
"
Farm
Lender
Portfolios
and
the
Financial
Condition
of
Indebted
Farm
Operators."
In:
USDA,
2001.
Agricultural
Income
and
Finance:
Situation
and
Outlook.
AIS­
76,
February.
8
Stam,
Jerome,
Daniel
Milkove,
Steven
Koenig,
James
Ryan,
Ted
Covey,
Robert
Hoppe,
and
Paul
Sundell.
2003.
Agricultural
Income
and
Finance:
Annual
Lender
Issue.
United
States
Department
of
Agriculture.
Economic
Research
Service.
AIS­
80.
Washington,
DC.
March
2003.

USC.
2004.
United
States
Code.
Title
12­
Banks
and
Banking.
Chapter
23­
Farm
Credit
System.
Subchapter
VIII­
Agricultural
Mortgage
Secondary
Market.
§
2279aa.
<
http://
uscode.
house.
gov/
download/
12ch23.
doc>
Downloaded
12
May
2004.

USDA,
2001.
United
States
Department
of
Agriculture.
Economic
Research
Service.
Agricultural
Income
and
Finance:
Situation
and
Outlook
Report.
AIS­
76.
Washington,
DC.
February
2001.

USDA,
2002.
United
States
Department
of
Agriculture.
Economic
Research
Service.
Agricultural
Resource
Management
Survey.
Debt/
asset
ratios.
Http://
www.
ers.
usda.
gov/
data/
farmfinancialmgmt/
GRAPHS/
PDFS/
DARAT_
ALL.
pdf
and
http://
www.
ers.
usda.
gov/
data/
farmfinancialmgmt/
GRAPHS/
PDFS/
DARAT_
SAL.
pdf.
Downloaded
11
May
2004.
9
Table
1
USDA
Farm
Typology
Main
Type
Subtype
Description
Small
Family
Farms
(
Sales
less
than
$
250,000)
Limited­
resource
farms
Sales
less
than
$
100,000;
Farm
assets
less
than
$
150,000;
Total
operator
household
income
less
than
$
20,000;
Operators
may
report
any
major
occupation
except
hired
manager.

Retirement
farms
Small
farms
whose
operators
report
that
they
are
retired
(
excludes
limited­
resource
farms
whose
operators
report
that
they
are
retired)

Residential/
lifestyle
farms
Small
farms
whose
operators
report
a
major
occupation
other
than
farming
(
excludes
limited­
resource
farms
whose
operators
report
farming
as
their
major
occupation)

Low
sales
farming­
occupation
farms
Sales
less
than
$
100,000;
Small
farms
whose
operators
report
farming
as
their
major
occupation
(
excludes
limited­
resource
farms
whose
operators
report
farming
as
their
major
occupation)

High
sales
farming­
occupation
farms
Sales
between
$
100,000
and
$
249,999;
Small
farms
whose
operators
report
farming
as
their
major
occupation
(
excludes
limited­
resource
farms
whose
operators
report
farming
as
their
major
occupation)

Large
Family
Farms
Sales
between
$
250,000
and
$
499,999.

Very
Large
Family
Farms
Sales
of
$
500,000
or
more.

Nonfamily
Farms
Farms
organized
as
nonfamily
corporations
or
cooperatives,
as
well
as
farms
operated
by
hired
managers.

Source:
Stam
et
al.,
2003,
p.
51.
10
Table
2
Percentage
of
Farms
with
Debt­
Asset
Ratios
>
40
Percent,
By
Farm
Sales
Volume
Year
$
100,000­
$
250,000
$
250,000­
$
500,000
$
500,000­
$
1,000,000
>
$
1,000,000
All
1996
13.9
23.6
20.4
25.6
9.5
1997
17.1
19.4
24.4
26.5
13.1
1998
14.4
16.7
25.4
29.6
10.7
1999
13.6
15.3
22.0
30.7
9.9
2000
15.6
20.2
24.7
27.8
11.5
2001
14.5
17.8
19.5
30.5
9.5
Sources:
USDA,
2002.
11
Table
3
Summary
of
Loan
Requirements
Institution
Maximum
Percent
Covered
Maximum
Amount
Term
(
yrs)
Purpose
Other
Reference
Farmer
Mac
80
percent
loan
to
value
$
2,500,000
Agricultural
production.
Sufficient
cash
flow
USC,
2004
Farmer
Mac
70
percent
loan
to
value
$
3,750,000
None
specified.
Will
repay
loan
with
proceeds
from
agricultural
production
on
property.
After
loan
is
in
place,
market
value
of
total
assets
will
be
at
least
twice
total
debt.
Sufficient
cash
flow.
Farmer
Mac,

2004
Farm
Credit
Administration
Real
Estate
loans
up
to
75
per
cent
of
appraised
property;
97
percent
if
guaranteed
Includes
"
producers...
of
aquatic
products."
FCA,
2004b
(
12
U.
S.
C.
2017
Section
1.
and
12
U.
S.
C.
2018
Section
1.10)

Farm
Service
Agency
Loan
guarantees
95
percent
of
principal
loan
amount
$
782,000
up
to
40
1
to
7
Purchase
farmland,
construct
or
repair
buildings
and
other
fixtures,
or
refinance
debt.

Operating
loan
purposes
include
land
and
water
development.
Farmer
must
obtain
loan
from
conventional
lender
and
lender
arranges
for
FSA
guarantee.

Operating
loans
typically
repaid
within
7
years;
farm
ownership
loans
cannot
exceed
40
years.
FSA,
2004
Farm
Service
Agency
Direct
Loans
$
200,000
up
to
40
1
to
7
Ownership:
Purchase
farmland,
construct/
repair
buildings
and
other
fixtures,

soil
and
water
conservation.

Operating:
purchase
livestock,
feed,
chemicals;

soil
and
water
conservation.
Farmer
must
be
unable
to
obtain
credit
elsewhere
FSA,
2004
12
Table
B­
4
Loan
Maturities
12
CFR
614.
Type
of
Institution
Maturities
for
Long­
Term
Real
Estate
Loans
4000(
a)
Farm
Credit
Bank
5
to
40
years
4010(
a)
Agricultural
Credit
Bank
5
to
40
years
4030(
a)
Federal
Land
Credit
Assn.
5
to
40
years
4040(
a)
Production
Credit
Assn.
(
1)
not
more
than
7
years;
(
2)
more
than
7
years
but
not
more
than
10
years,
subject
to
authorization
in
policies
approved
by
the
funding
bank;
(
3)
not
more
than
15
years
to
producers
or
harvesters
of
aquatic
products
for
major
capital
expenditures...[
emphasis
added]

4050(
a)
Agricultural
Credit
Assn.
5
to
40
years.
Short­
and
intermediate­
term
loans:
up
to
10
years
(
15
years
for
aquatic
producers
and
harvesters)
[
emphasis
added].

Source:
12
CFR
614.
