Six months ago, on July 1, 2019, Farm Credit Services of Hawaii disappeared.
What could have happened? In the immediate term, FCA corrections to the FCS of Hawaii profile tell us that it was absorbed by American AgCredit, based out of Santa Rosa, California. American AgCredit’s area of service includes Oklahoma, Kansas, Colorado, Nevada, California, and now Hawaii. But the American farmer and the public have the right to know the whole story.
Surely it doesn’t make sense for an association – let alone one separated by thousands of miles of ocean – to voluntarily fold into another association without there being some reason. And the reason must have been compelling. Perhaps FCS of Hawaii was a failed institution. Perhaps it folded into American AgCredit for a more benign reason. All that we know now is that one year ago there were 68 Farm Credit associations, and now there are 67.
Consolidations are not usually the first option for an institution. This is for good reason: farmer-customers are used to working with their local retail Farm Credit operation, where they might have established a working relationship with their lender. With consolidation comes the likelihood that the central office is more removed from the everyday needs of their farmer-customers, and the possibility that the customers have fewer choices in lenders. Consolidation is a measure often avoided unless for good reason. And over the years, Farm Credit must have found plenty of good reasons. Take, for example, Farm Credit Services Southwest, which entered into a shotgun marriage with Farm Credit West in 2015, due to “a sudden significant increase in the level of delinquent loans affecting an identifiable portion of the Association’s loan portfolio.”
But Farm Credit Services of Southwest was just one association. What happened to the 30 associations which have disappeared since the mid-2000s? Between then and now, the total number of FCS associations has shrunk from 97 to 67. Nearly a third of associations have disappeared, either through mergers or failures. Amid the consolidation, Farm Credit just grows bigger and bigger, now at $354 billion in total assets.
But no matter the reason for consolidation, the Farm Credit Administration (FCA), the FCS’s regulator, has done little to nothing to make the public aware of this newsworthy development. Apart from some edits to the profile pages of American AgCredit and of FCS of Hawaii, the FCA has done little to acknowledge and publicize this. AgriMarketing, a minor news outlet and seemingly the only one covering this story, cites a “Farm Credit Administration news release.” The cited news release buries this important development at the end, as an afterthought: “On May 29, the board approved a proposed plan to combine Farm Credit Services of Hawaii and American AgCredit.” This news rises to the level of a published and widely-disseminated memorandum, not an afterthought.
What happened to FCS of Hawaii isn’t exactly clear, but it’s part of a trend that should be troubling to anyone paying attention. Unfortunately, the FCA hasn’t been forthcoming with this information. Why did FCS of Hawaii merge with American AgCredit, and why was the public not given more notice? The FCA answers to Congress, and Congress should demand answers.