|Legal Opinion Summary|
|Topic:||Related Services: May a Farm Credit System association contract with a buying service that enables its farmer members to buy material farm inputs such as fuel, fertilizer, and herbicide at a discount?|
An association asked whether it could contract with a buying service that enables its farmer members to buy material farm inputs such as fuel, fertilizer, and herbicide at a discount. The association would receive compensation based on the quantity of goods purchased. OGC concluded that a contractual arrangement with a buying service that helps the association’s farmer members reduce their farm expenses is within the authorized consulting services that FCA permits as related services under sections 2.5 and 2.12 of the Farm Credit Act (Act) (12 U.S.C. §§ 2076 and 2093) and 12 C.F.R. §§ 618.8000 – 618.8030.
FCA’s related services list authorizes direct lender associations to engage in “farm business consulting,” which includes “assisting individuals in defining business goals, identifying management problems, and formulating or analyzing alternative strategies for achieving goals.” A buying service that is able to negotiate volume discounts for farmer members can be offered as a part of a business consulting service. Similarly, recommending various strategies and arranging a buying service to enable farm business consulting clients to obtain low cost group health insurance for themselves, their on-farm employees, and their families can be a part of a farm business consulting service.
(December 23, 1999)