Rising Trend of Farm Credit Mergers Sounds Alarm for Greater FCA Scrutiny

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Hold onto your hats — yet another Farm Credit merger is going through, seemingly at a breakneck pace.

This past month, the Minot Daily News of Minot, North Dakota reported that shareholders have approved the merger of AgCountry Farm Credit Services and Farm Credit Services of North Dakota, and that the new association will operate “under the name AgCountry Farm Credit Services, beginning Jan. 1, 2022.”

The new AgCountry Farm Credit Services will be based in Fargo, and will hold more than $10 billion in assets. That’s not uncommon, but the ratio of assets should raise eyebrows: the old AgCountry Farm Credit Services will be bringing more than $9 billion in assets to the table, while Farm Credit Services of North Dakota will bring just under $1.5 billion. This is less a merger and more of an absorption.

You won’t hear the firms’ chairmen describe it that way though. Their statements are nebulous at best, invoking “long-term benefits” and “best interests of our members.” Prior coverage of this merger was more direct in its description of the effects: “expanded service offerings, ongoing strong commitment to local communities, increased innovation, improved long-term operating efficiencies, and ultimately, increased value and customer experience for our combined customers/member-owners.”

Reform Farm Credit took these claims at face value back when they were made, and they didn’t stand up to scrutiny. One possibility is that this merger (read: absorption) will result in economies of scale and streamlining which removes redundancies. That could mean changes in staffing or branch locations that may make it harder for farmers to access credit as easily as they might otherwise. 

It remains to be seen whether the Farm Credit Administration’s (FCA) Board, which regulates Farm Credit, will approve the merger. If it does, it will join in a string of proposed and completed mergers in recent years: Yankee Farm Credit and Farm Credit East, Farm Credit Services of Hawaii and American AgCredit, and Compeer Financial, formed from three FCS associations in Illinois, Wisconsin, and Minnesota. Now, there are 67 associations. With this merger, there may only be 66, down from around 200 in 1998

The FCA’s Board needs to take a hard look at this merger and figure out whether it’s in the best interest of North Dakota’s farmers, ranchers, and producers. This trend of mergers and consolidations should not continue without much more scrutiny. If the FCA won’t take a look at it, then Congress should.