NEW YORK -- The Farm Credit System yesterday reported combined net income of $2.916 billion for the year ended Dec. 31, 2008, an increase of $213 million, as compared with combined net income of $2.703 billion for the prior year. Combined net income decreased $136 million to $546 million for the fourth quarter of 2008, as compared with $682 million for the fourth quarter of 2007.

"The System's 2008 financial results were strong, despite the unprecedented instability in the global financial markets and the general slowdown in the overall economy," remarked Jamie B. Stewart, Jr., President and CEO of the Federal Farm Credit Banks Funding Corporation. "Even in these uncertain times, the System has maintained the ability to access the debt capital markets and has built liquidity levels as protection in the current volatile economic environment. In short, while credit and funding challenges exist, we believe we are well positioned to continue to meet our mission of being a reliable source of debt capital for eligible borrowers."

Agricultural Outlook

Overall, agricultural borrowers' financial conditions remained favorable due to the high levels of farmers' net cash income over the past several years. The February 2009 United States Department of Agriculture forecast estimates 2008 farmers' net cash income (a measure of the cash income after payment of business expenses) at $93.4 billion, up $6.0 billion from 2007 and up $21.6 billion from its 10-year average.

The USDA's February 2009 outlook for the farm economy, as a whole, forecasts 2009 farmers' net cash income to decline to $77.3 billion, a $16.1 billion decrease from 2008, but $5.5 billion above the 10-year average. Contributing to this decrease in farmers' net cash income are decreases in cash receipts for crops of $18.7 billion and livestock of $10.9 billion and a decrease in direct government payments of $1.0 billion, offset, in part, by a decrease in cash expenses of $14.1 billion and an increase in farm-related income of $400 million.

The Farm Credit System is a federally chartered network of borrower-owned lending institutions and related service organizations. The System specializes in providing financing and related services to borrowers in the agricultural and rural sectors through the five System Banks and 90 affiliated Associations. Unlike commercial banks, the Banks are not authorized to take deposits and they principally obtain their funds through the issuance of Systemwide Debt Securities.

SOURCE: Farm Credit System via Business Wire.