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Legal Opinion Summary
Topic:Eligibility: Is a trucking firm that hauls farmer-owned and elevator-owned grain under a contract with a grain elevator a “farm-related business” eligible to receive financing from a Farm Credit System association?
ID Number:99-12
Issue Date:10/12/1999


An association asked if a trucking firm that hauls farmer-owned and elevator-owned grain under a contract with a grain elevator is a “farm-related business” eligible to receive financing from the association. OGC concluded that an otherwise eligible farm-related business that furnishes a direct service or provides a direct benefit to farmers and ranchers is eligible for financing by Farm Credit System (FCS) institutions even if that business has no direct contractual link to farmers or does not serve farmers and ranchers exclusively.

Section 2.4(a)(3) of the Act (12 U.S.C. 2075(a)(3)) allows production credit associations to make short- and intermediate-term loans to “persons furnishing to farmers and ranchers farm-related services directly related to their on-farm operating needs.” 12 C.F.R.
613.3020 authorizes FCS institutions to finance individuals or legal entities that furnish farm-related services to farmers and ranchers that are directly related to their agricultural production.

FCA previously recognized eligible farm-related services to include “hauling agricultural commodities to grain elevators, livestock markets, and other processing centers.” OGC found nothing in the Act, its legislative history or applicable regulations requiring a direct contractual link between the farm-related business and the farmer. The trucking firm, by hauling farmers’ grain, provides a necessary, beneficial service directly related to the farmers’ agricultural production.

(October 12, 1999)