Patronage Program

Belong. Benefit. Thrive.

As a member-borrower of Farm Credit, one of the most important financial benefits is sharing in the profits of the Association through our patronage program. Patronage reduces your overall cost of borrowing by returning a portion of our net income to our members, based on the proportion of interest paid on their loan and the total interest earned by the Association.

Here's how patronage works:

• When you take out a loan with Farm Credit, you purchase stock in the Association, making you a member-owner.
• Each year, our Board of Directors determines how much of the prior year's profits can be returned to our member-owners, while retaining enough capital to fund future growth.
• Eligible members receive patronage via check or direct deposit. The amount of patronage distributed to each member is based upon the volume of business they conducted with Farm Credit during the previous year.

Frequently Asked Patronage Questions

What is patronage?

Patronage is a way of distributing the Association’s net income to its member-borrowers. A member’s distribution is based on the portion of interest earned on their loan and the eligible interest earned by the Association.

How do I qualify?

When you receive a loan from Farm Credit, you purchase stock in the Association, making you a member-owner, qualifying you for patronage.

While we are committed to the cooperative principle of distributing patronage, we cannot guarantee distributions. If a loan or other obligation is in default (or otherwise considered in non-accruing status), any part of the patronage distribution due to the member may be applied to that member’s indebtedness to the Association.

How does patronage benefit Farm Credit borrowers?

Patronage makes a significant reduction in your effective interest cost, saving you money. In 2024, our Board of Directors approved a capital and patronage plan, to create a more consistent patronage environment. You can expect a 100-basis point patronage distribution, effectively lowering your rate by 1%, barring any unforeseen circumstances.

How does patronage benefit your Farm Credit Association?

Reduce tax expenses – The cooperative’s profits are only NON-taxable when distributed among member-borrowers as a patronage return. Horizon Farm Credit has an allowable tax deduction based on the total amount of its net income. Profit is then distributed in a qualified form called a patronage return.

Maintain a strong capital position – Effectively managing the Association’s taxes helps to manage the Association’s capital position. This ensures the Association can offer competitive rates, with a dependable supply of credit.

How will I receive my patronage?

Your patronage distribution may be issued to you via direct deposit, check, or recorded on the Association's books in a special account. Each time a patronage distribution is issued, Farm Credit will notify eligible members of their patronage distributions. This notification will include a breakdown of the amount paid in cash and the amount paid in allocated surplus.

If you'd like to sign-up to receive your patronage via direct deposit, please call our Customer Care team at 888.339.3334 to begin the process. You'll still receive a statement in the mail, but you will receive your distribution the same day it is issued.

When will I get my first distribution?

Based upon Farm Credit’s operating results, you may be eligible to receive your first distribution the year after you take out a loan.

What if I chose to receive patronage via direct deposit and the checking account information on file for me is out of date?

If the direct deposit can't be received by the account on file, a check will be issued to you and sent via mail.

I have signed up for direct deposit and am seeing an empty deposit of zero dollars. What is this?

Members who have elected to receive patronage through ACH deposit will often notice a test of the system, which appears as a zero deposit and occurs several days prior to the actual deposit. Please don’t worry if you see this activity; it’s an indication that your deposit is on its way!

What types of transactions do not qualify for patronage distributions?

These include leases, consumer-purpose loans, insurance sales, and loans with unique pricing or risk characteristics that the Association designates, in advance, as not eligible. Please contact us to learn more about your eligibility.

Patronage is a great benefit of being a Farm Credit member, but are future distributions guaranteed?

Patronage is awesome, but it's important to remember that past distributions do not guarantee future distributions. All patronage distributions are at the discretion of the Board of Directors, whose objectives are to ensure financial stability, fund future growth, and maximize patronage for our members.

Many factors, including market conditions and interest rates, play a significant role in earnings by both the Association and our funding bank, which may impact patronage distributions.