Full Steam Ahead: AgChoice and MidAtlantic Farm Credit Announce Intent to Merge

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The Farm Credit System’s (FCS) associations, its retail lenders, are merging at an alarming pace, and this runaway train is showing no signs of slowing down.

In just the past month, Farm Credit of New Mexico announced that it intends to merge into American AgCredit. And now, AgChoice Farm Credit and MidAtlantic Farm Credit have announced that they will merge to form Horizon Farm Credit

AgChoice currently serves western Pennsylvania and some of West Virginia, and MidAtlantic Farm Credit serves eastern Pennsylvania, Delaware and most of Maryland. The new entity, Horizon Farm Credit, will serve producers at the tip of Maryland at the mouth of the Chesapeake Bay to farmers on the shores of Lake Erie. Horizon Farm Credit, with MidAtlantic’s $3 billion in total assets and AgChoice’s $2.7 billion in total assets,  will hold about $5.7 billion. 

As far as Farm Credit mergers go, this one isn’t the worst. It’s not an outright absorption, where one much larger association absorbs a smaller association, as was the case with Farm Credit East and the now-defunct Yankee Farm Credit

But it should still raise eyebrows.

The reasons given for the merger aren’t exactly clear; the respective board chairs of MidAtlantic and AgChoice offer milquetoast, broad comments about providing value. Nestled in the announcement are some claims worthy of scrutiny: “No office closures or staffing changes are anticipated as a result of the merger. Members will receive the same local, personalized service from the same trusted experts.”

This certainly may be the case, and interested parties, including the Farm Credit Administration (FCA), the FCS’s regulator, should make sure of it. What’s most interesting about this announcement is a piece of information that’s left out: whether the composition of Horizon Farm Credit’s Board will provide the same access to representation that member-customers of MidAtlantic and AgChoice currently have. Will Horizon Farm Credit’s new board combine the current boards of the preceding associations? If not, then how will Horizon ensure that it can provide the same level of representation for small, local farmers?

Whether Farm Credit associations are being absorbed or are merging, this question persists: how will this process ensure that small, local farmers are given a voice? 

The creation of Horizon stands before a background of increasing consolidation of Farm Credit institutions. Just this year, Farm Credit East absorbed Yankee Farm CreditAgCountry Farm Credit Services and Farm Credit Services of North Dakota mergedNorth Carolina’s Cape Fear Farm Credit and AgCarolina Farm Credit will soon mergeFarm Credit West will merge with Northwest Farm Credit Services, and Farm Credit of New Mexico announced that it intends to merge into American AgCredit. Should all of these mergers be approved, there will only be 61 Farm Credit associations. There were about 200 associations just 25 years ago

Fewer associations will likely mean that the average farmer will have less direct representation on an association’s board. Though Farm Credit does not have any apparent requirement to represent individual customer-members as much as possible, it should. The FCA, as part of its review and approval of any merger, should study the effects that it will have on representation. Congress, for its part, should set clear standards on the extent to which farmers should have direct representation on the boards of these Farm Credit institutions sprawling over many states. At the very least, we owe our farmers that much.