have had small gains in market share. Market share for Farm Service agency (FSA) direct lending has declined, while the market share for insurance companies and individuals and others has remained stable. During 2000, the market share held by commercial banks grew somewhat faster than the System, adding nearly a full percentage point to reach 41.6 percent. Market share held by FSA and individuals and others declined slightly while insurance company market share stayed level. As of year-end 2000, the System held 32.5 percent of the market in real estate secured farm debt, up 0.3 percent during the year. In the non-real-estate market, the System held 19.4 percent, which was unchanged from the previous year. Year-end 2001 loan volume and market share estimates were not available as this report was being compiled, but FCS information through the third quarter showed strong growth in volume of loans to farmers, suggesting the System is gaining market share in both the long- and short-term markets in 2001. 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Note. "Individuals & Others' includes trade credit, seller financing of real estate, and Farmer Mac. Source USDA, Economic Research Service: Agricultural Income and Finance Situation and Outlook Report, AIS-77, September 2001 Oversight of Farmer Mac Farmer Mac is regulated by FCA through its Office of Secondary Market Oversight (OSMO), which was established in 1992, as required by Public Law 102-237. The statute prescribes that OSMO be a separate office, reporting to the FCA Board, and that its activities, to the extent practicable, be carried out by individuals not responsible for the supervision of the banks and associations of the FCS. In FY 2001, OSMO presented for the FCA Board's consideration a final Farmer Mac risk-based capital rule. Approved by the FCA Board on February 21, 2001, the final rule became effective on May 23, 2001. However, because of a one-year period to allow for the rule's orderly implementation, Farmer Mac will not be required to comply with all aspects of the rule until May 23, 2002. OSMO also provided for the annual examination of Farmer Mac conducted as of June 30, 2001, and the ongoing monitoring of its operations and condition throughout the year. Farmer Mac conducts its business through two programs Farmer Mac I and Farmer Mac II. Under the former, Farmer Mac purchases, or commits to purchase, qualified loans that are not guaranteed by any instrumentality or agency of the U.S., or obligations backed by qualified loans. Under the latter, Farmer Mac purchases the guaranteed portions of farm ownership and farm operating loans, rural business and community development loans, and certain other loans guaranteed by USDA. At September 30, 2001, Farmer Mac's net worth was $129.7 million, and its core capital remained above the minimum prescribed by section 8.33 of the Farm Credit Act. For the ninemonth period ended September 30, 2001, net income was $10.8 million, up $3.2 million from the same period in 2000. Net income continued the increasing trend begun when the Farm Credit System Reform Act of 1996 (1996 Act) was signed into law on February 10, 1996. This legislation made positive revisions to Farmer Mac's operating authorities. Farmer Mac's on- and off-balance-sheet program activity continued to increase, reaching just over $4 billion at September 30, 2001, up $1.05 billion from a year earlier. Farmer Mac's ability to achieve this growth and its statutory mission was enhanced by the new operating authorities under the 1996 Act. At September 30, 2001, Farmer Mac I loans purchased or guaranteed after the enactment of the 1996 changes to Farmer Mac's statutory charter (post-1996 Act loans) that were 90 days or more past due, in foreclosure, or in bankruptcy represented 2.16 percent of the principal amount of all post-1996 Act loans, compared with 1.80 percent at September 30, 2000. (Farmer Mac assumes 100 percent of the credit risk on post-1996 Act loans; pre-1996 Act loans are supported by at least a 10 percent subordinated interest that mitigates credit risk.) Higher delinquency rates are likely during the first and third quarters of each year, as most Farmer Mac loans are paid semiannually. At September 30, 2001, 97 percent of all post-1996 Act loans that were 90 days or more past due, in foreclosure, or in bankruptcy had an original loan-to-value (LTV) ratio of 70 percent or less. No such loans had an original LTV in excess of 80 percent, and the weighted average original LTV for all post-1996 Act loans was 49.4 percent. At September 30, 2001, Farmer Mac's reserve for losses totaled $14.7 million, compared with $10.0 million at September 30, 2000. 1 Introduction The Farm Credit Administration (FCA or agency) Annual Performance Plan (Plan) for fiscal years (FY or FYs) 2002 and 2003 addresses how we will carry out the goals and objectives in FCA's FY 2000-2005 Strategic Plan. The Plan contains performance measures that describe what we intend to do over the next two years and how we will measure our performance. FCA's Mission The Farm Credit Administration will promote a safe and sound, competitive Farm Credit System to finance agriculture and rural America as authorized We believe the Farm Credit System (FCS or System)' will continue to be important to agriculture in the 21st century. Thus, within the authorities of the Farm Credit Act of 1971, as amended (Act), we will issue policy and regulations that help the System meet rural America's changing demands for credit and other related services. Through our examination and oversight of the System, we will continue to ensure that System activities remain lawful and safe and sound. We commit to excellent products, performance, customer service, and communication. These goals are consistent with the Government Performance and Results Act of 1993 (Results Act), which encourages agencies to manage for results and hold managers accountable for achieving needed outcomes. Intent of Plan-Although the System continues to enjoy solid financial performance, changes in global markets subject the System to new risks. The intent of the Plan is to ensure FCA'S continued success as a safety and soundness regulator while helping the System best meet the new challenges of, and opportunities for, providing credit in a changing agricultural world. Agency Tasks The agency performs two basic tasks to fulfill its mission: (1) issuing regulations and implementing public policy and (2) identifying risk and taking corrective action. To accomplish these tasks, the agency also: Manages its budget and its human and information resources, Provides legal counsel, Develops and provides economic and financial analyses, and FCA's offices are organized to best help the agency fulfill its mission quickly and effectively. Although the agency's offices have different responsibilities, they work as a team to carry out the mission. The System is a government-sponsored enterprise (GSE) that provides credit and related services to agriculture, rural homeowners, and aquatic producers, their cooperatives, and related businesses. It is a cooperative system with borrowers who are also members and shareholders of the System. |