Buzby: Farmer Mac Can Benefit Producers and Banks

Farmers and ranchers looking for real estate loans may directly, or indirectly work with Farmer Mac.

"We're a secondary market with respect to community bankers, we largely buy loans from them, they originate loans either into our farm and ranch program, or our USDA guaranteed loan program," said Tim Buzby, Farmer Mac President and CEO.

He added while producers don’t borrow directly from Farmer Mac, the bank's relationship with Farm Mac may make it more likely that the bank can make loans they otherwise might not be able to.

"They don't have any credit risk, that loan is sold to Farmer Mac, they also don't have to hold any capital against that loan.  They are able to add a strip of income to the loan that they keep for themselves so they have an ongoing stream of fee income for which they don't have to hold any capital.  And it keeps their power dry, the next time that farmer may come back to them and want additional financing to buy another farm etc., they can look at that scenario and sell the second loan to Farmer Mac or keep it themselves if it's not a long-term fixed loan."

Buzby said they don't expect all of the loans to come to Farmer Mac, but having it is an option that benefits both the bank and the producer.​

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