Interest rates within an association (which usually serves several counties) are the same to all farmers, although some associations charge graduated fees, which make the cost per dollar of credit higher for smaller loans.

Funds for lending by the associations are obtained from central discount banks (Federal Intermediate Credit Banks). These banks, in turn, obtain funds from the investing public by issuing short-term bonds secured by farmers' notes. Thus the system provides a means of tapping the money market for funds for farm uses.

The associations are locally owned and managed. You usually get in touch with the secretary-treasurer or field-man in his area if you are interested in getting a loan. Their interest rates are usually competitive with those of other lenders. Budgeted loans are tailored to the farmer's expected needs over the period involved. Borrowers buy stock in their local association equal to 5 percent of the sum borrowed. Some hold this stock after their loan is repaid, but that is optional with the borrower.

Cooperatives other than Production Credit Associations may also be important sources of short-term credit in some localities. For the Nation as a whole, however, they supply a minor part of the short-term credit.

Individuals businessmen, farmers, professional men lend more long-term funds to farmers than does any single lending group.

Individuals also are a source of short-term credit, especially when families help relatives to become established in farming. Landlords, retired farmers, and farmers who have surplus funds often prefer to make agricultural loans rather than invest elsewhere.

Interest rates, length of term, and conditions of repayment vary widely among individuals who furnish farm credit. A possible disadvantage in borrowing from individuals is that their supply of funds for lending is limited. If additional funds are needed, the borrower may have to use some other source. It is important to remember that credit obtained from individuals, even from close friends or relatives, should be handled in a businesslike way. Interest rate, repayment plan, length of term, and security should be spelled out in a proper, written credit instrument.

INSURANCE COMPANIES are a major source of long-term credit for farmers. Insurance companies have concentrated their operations in areas that have large farms and stable production, but this source of credit is available in most areas. One should get in touch with representatives of an insurance company only if he is interested in financing or refinancing a loan secured by a real-estate mortgage. Local real-estate brokers often are contact points between interested borrowers and appraisers for insurance firms.

Competition in the farm mortgage lending field has kept interest rates rather uniform among insurance companies. Interest rates do vary, of course, even in a given company, because of location, size of loan, and risks.

National Farm Loan Associations are local cooperative agencies that service farm mortgage loans made by the Federal Land Banks. The Federal Land Bank system was started with the use of Government capital, all of which has been repaid by farmer borrowers.

Funds for Federal Land Bank loans are obtained by issuing bonds, which are bought by the investing public. Farmers' mortgages are security. Cost of this credit to the farmer may vary slightly among the 12 banks in the Nation, but the same rate applies to all farmers in a given locality.

The contact point for loans through the Federal Land Bank is the local National Farm Loan Association secretary-treasurer. He will discuss terms, take loan applications, and have the farm appraised by a Federal Land Bank appraiser who knows the area. Repayment plans are specified in the loan. Interest rates are competitive. Borrowers buy stock in the local National Farm Loan Association equal to 5 percent of their loan. Dividends may be paid on National Farm Loan Association stock in line with the earnings of the cooperative.

The Farmers Home Administration is a Government agency created to lend funds to eligible farmers. For the most part, borrowers must show that they cannot obtain credit on reasonable terms elsewhere. Local offices are available in only some of the counties. It may be necessary to write the State Farmers Home Administration office to make initial contact with this agency. Farmers Home Administration makes short-, intermediate-, and long-term loans to farmers. Its funds are obtained both from direct Government appropriations and from other sources by means of Government-insured mortgages. The amount of money Farmers Home Administration has available to lend in any year may be limited.

This agency can make loans for most soil-improvement needs. The length of the loan can be fitted to the borrower's needs. Close supervision and assistance in planning, using, and repaying the loan are provided. Interest rates are low. This source of funds, it must be remembered, is available only to those whose needs cannot be provided for by other lending agencies.

SOME FURTHER suggestions:

One should evaluate his financial position and determine whether the project can be financed with his own funds. A financial statement should be prepared showing items owned, their value, and outstanding debts. This statement plus an estimate of expenses and income can guide one in determining whether soil improvements should be self-financed or credit should be used.

In addition to the interest rate, other charges in obtaining a loan should be considered as a part of the cost of credit. The method of figuring interest also affects the cost of loans. Interest is sometimes taken out in advance, thus increasing the cost per dollar of credit used. In other cases, interest is paid for a stated time whether or not funds are actually used.

Terms and conditions of the loan should be clearly spelled out. This includes costs, repayment dates, and collateral for securing the loan. Renewal provisions should be stated.

The lender should be kept informed about progress of the project and the whole farming operation. Many lenders welcome an annual financial statement from borrowers. If payments cannot be made as scheduled, the lender should be informed in advance of the date payment is due. In a sense, lender and borrower are partners. Mutually beneficial decisions can be made only if both parties know the important facts about changes in soil management.