When will the flurry of Farm Credit System (FCS) association mergers end?
South Carolina’s Newberry Observer recently reported that Carolina Farm Credit and AgSouth Farm Credit have announced their decision to pursue a merger. If the merger is successful, the new association will be named AgSouth Farm Credit, and it will cover more than 147 counties in western North Carolina, most of South Carolina and Georgia’s coast.
With AgSouth holding roughly $2 billion in assets, and Carolina Farm Credit holding about $1.8 billion in assets, this merger is hardly one-sided. As for why it’s supposedly beneficial, the Newberry Observer notes “there should be more access to specialized lenders available to provide the needs and expertise for our diverse market along with more efficiencies through access to increased resources in technology and capital. These additional strengths should also allow for further support and new opportunities to assist the young, beginning and small farmers in the three states.”
Whether this will actually provide more opportunities to help young, beginning and small farmers (YBS farmers) remains to be seen, and if either association is making that claim, it ought to explain further, in much greater detail, how it intends to increase efficiency and use that surplus to assist YBS farmers.
This merger on its own isn’t cause for worry, even if the reason for it is lacking in detail. It’s worrisome because it’s part of a larger trend that is picking up speed: Farm Credit consolidation. This is the second intent to merge this year in North Carolina, cutting the number of associations in North Carolina to only two.
This is happening across the country. Just this year, associations in Pennsylvania [LINK] have announced an intent to merge, associations in New Mexico have done the same, and Farm Credit West and Northwest Farm Credit Services intend to merge too. Earlier this year,
Those are just from this year. If these prospective mergers are approved, then there will be only 60 associations across the country. The fewer associations there are, the fewer board members there are representing roughly the same number of overall farmers. That means less direct representation for the average farmer.
That’s not right. If recent history is anything to go by, the Farm Credit Administration (FCA), Farm Credit’s regulator, will grant this merger its approval. Mergers are accelerating, and the FCA should not stand by and let it happen without a thorough, public accounting and review of the merits of each merger. The FCA needs to review whether each merger is truly in the interests of the farmers and producers living in the associations’ districts. And Congress, for its part, needs to begin investigating why so many mergers are taking place, whether they’re in farmers’ interests and how it can empower the FCA to make sure Farm Credit is putting farmers first.