Farm Cash Management
The Newest Way to Maximize Your Agricultural Income!
Farm Cash Management (FCM) is a convenient way to earn significant income from cash-on-hand. It combines the high return of a short-term investment account with the convenience of your FCS revolving line-of-credit.
Farms and other qualifying businesses that experience periods when cash accumulates should find FCM beneficial. Self-funding operations that maintain an open line of credit just for emergencies or special opportunities may also find FCM valuable.
Benefits of Farm Cash Management
- Pays a good interest rate for a liquid investment
- Earnings are exempt from state and local income taxes.
- The cost of borrowing is reduced because investment earnings both delay and reduce the need to draw on your line-of-credit.
- Provides automatic funds management for maximum convenience and simplicity.
Investing in an FCM account is as simple as making a payment on a loan. In fact, you have the same choice of methods: in person, by mail, or electronic.
Whenever a payment is greater than the balance in your revolving line-of-credit, FCM automatically invests your surplus in short-term, AgriBank Investment Bonds. Interest accrues on these bonds daily and is added to your investment at months end.
You have access to your money at all times and can draw on your investment account the same way you would draw on your line-of-credit -- just complete a draft or transfer funds electronically. If you draw out more funds than your investment and earnings total, FCM will automatically access your line-of-credit. This means youll delay incurring any interest expense until after all your invested funds and earnings have been used!
Frequently Asked Questions:
Can an FCM or Investment Bond Account Be Set Up for Anyone?
No. FCM and Investment Bond accounts are available only to members. Investment Bond accounts are also available to employees, and retirees of United FCS and the other associations served by AgriBank plus employees and retirees of AgriBank.
How are FCM Transactions Documented?
Although FCM appears to be a single account, it actually involves two separate accounts: one, a line-of-credit from FCS and the other, an AgriBank investment account. Each month you will receive a statement from each organization detailing the transactions that they have recorded.
Can an FCM Account Be Set Up Without a Revolving Line-Of-Credit?
Yes. Stand-alone Investment Bond accounts can be established. Employee and retiree accounts are almost always exclusively stand-alone Investment Bond accounts.
How do I enroll in FCM?
Just call or stop by your nearest FCS office.
How do FCM and Funds Held Compare?
With FCM there is no limit to how much you can put into your investment account. Funds Held is an advance payment on your loan and is therefore limited to the amount owed on the loan. FCM lets you move money in and out of your account at will, but there are some restrictions with Funds Held. The interest rate paid to you by FCM is generally related to the cost of money in the U.S. economy while the interest rate earned in Funds Held is based on the rate being charged for your loan. Both FCM and Funds Held can be very good tools to reduce the cost of your borrowing. Ask your United FCS loan officer to show you how either -or both - might be of value to you!
Why Are AgriBank Bonds Exempt From State and Local Income Taxes?
Because it·s the law. The federal Farm Credit Act provides that bonds issued by AgriBank are exempt from state and local taxation. AgriBank will send you a 1099 INT each year reporting your Investment Bond earnings in box 3 -which is where interest that need not be claimed on state and local income tax returns is shown. See your qualified tax preparer for more information.
About AgriBank and its Investment Bonds
AgriBank, FCB, is a financial institution that provides various services to FCS plus the funds needed to make loans. In the same way that member-borrowers cooperatively own FCS, AgriBank is owned by FCS and the other associations AgriBank serves.
Most of the funds AgriBank provides are obtained through the Federal Farm Credit Banks Funding Corporation. It sells bonds through brokers on Wall Street. But AgriBank can also issue its own bonds and offer them to the members, employees, and retirees of the associations it serves. Selling these bonds reduces AgriBanks dependence on the funding corporation and funds that are invested in AgriBank Investment Bonds are used to fund loans made by the associations served by AgriBank.
About Investment Risk
AgriBank Investment Bonds are backed solely by AgriBank, FCB. They are not insured or guaranteed by any government body or the Farm Credit System.
About Investment Return
AgriBank Investment Bonds pay very attractive rates and the earnings are not subject to state or local income taxes. Rates vary with changing economic conditions.
FCM® - Farm Cash Management®
Marketing Disclosure
This is not an offer for the sale of Farm Cash Management® (FCM®) investment accounts or AgriBank Money Market investments. Such investments are not insured by or a direct obligation of the United States government. FCM investments can only be purchased directly from AgriBank, FCB. Carefully review the disclosure information provided to all prospective purchasers prior to purchasing. Farm Credit associations are not authorized to represent AgriBank regarding such investment accounts. You should not rely on any statement or opinion of our associations or personnel in deciding upon the safety and soundness of FCM accounts or their suitability for your particular situation. Certain terms and conditions apply to FCM accounts.
November 2007