New Farm Credit Consolidation Could Leave North Carolina Farmers Without Local Control

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Farm Credit System (FCS) institutions are consolidating at an alarming pace. 

And now, North Carolina’s Cape Fear Farm Credit and AgCarolina Farm Credit have recently announced the “pursuit of a merger.”

According to North Carolina’s The Enterprise, the boards of both institutions approved the merger, which, if approved, will result in AgCarolina Farm Credit’s absorption of Cape Fear Farm Credit’s assets, bringing its total assets to more than $2.4 billion

What will this mean for the region’s farmers, especially its young, beginning and small farmers (YBS)? 

According to the institutions, not much will change: “No branch office closures or branch staffing changes are anticipated as part of the merger, so members would receive the same local, personalized service from the same experts with local loan decisions and delivery of financial services.”

Can we be so sure of this? Often companies merge to streamline operations, and that can mean reductions in staffing and in branches. If that isn’t the case, then what’s the rationale for the merger? The chair of Cape Fear Farm Credit says that it could “position the new entity to be big enough to continue to meet the evolving and diverse needs of our members, while remaining small enough to maintain our local focus.” 

If the purpose of the merger is to be more responsive to the needs of existing members, then what services exactly does the chair have in mind? Are these members the YBS farmers in the institution’s jurisdiction, or are they the larger entities that require larger loans for larger operations? Is it possible that the primary reason the institutions are merging is so that they can offer larger loans to larger operations? Is that in the best interest of YBS farmers?

Fortunately, the Farm Credit Administration’s executive board must approve this merger before it is finalized. Unfortunately, the FCA’s board seems to rubber stamp these mergers regularly – one need only to consider Farm Credit West’s merger with Northwest Farm Credit ServicesFarm Credit Services Southwest’s merger with Farm Credit WestAmerican AgCredit’s absorption of Farm Credit Services of HawaiiNorth Dakota’s AgCountry Farm Credit Services and Farm Credit Services of North Dakota merger, and Farm Credit East’s absorption of Yankee Farm Credit

When this merger, or any merger, comes before the FCA board for approval, the board needs to confirm that it is in the best interests of the YBS farmers in the jurisdiction, that the number of directors of the institution’s new board is not fewer than the current number of direct between both boards, and that there will be no reductions in staffing or branch closures. These considerations are basic and foremost—the FCA must guarantee them. And if the FCA won’t then Congress should.