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Why Are We Here?

Helping our Borrowers Succeed: Farm Credit's Important Purpose

Landscapes Summer 2012
FARM CREDIT COMMENTARY

As a former FFA member, I recall participating in official meetings where participants were asked: “Why are we here?” In response, members would stand and recite a statement about the basic purpose of the organization. We don’t do that at Farm Credit — but perhaps we should.

It’s easy for businesses today to fall into a pattern of talking about what they do and how they do it, and forget about the “why.”

For Farm Credit, our “what” is lending money at competitive rates to creditworthy borrowers throughout the agricultural industry. Our “how” is the stuff that distinguishes us from other lenders. For example, because we are structured as a cooperative, our borrowers are also our owners — serving as board members and receiving patronage dividends from corporate earnings. As a cooperative, a Farm Credit lender is really just an extension of the producer’s personal operation, designed so individual borrowers can leverage economies of scale and efficiency for their benefit, not the benefit of the local banker.

Farm Credit cooperatives also have a different source of capital. We don’t take deposits like other lenders do; instead, we sell our highly rated bonds to investors throughout the world, so that your locally owned Farm Credit cooperative, regardless of its size, has the $230 billion federated Farm Credit System behind it.

It’s natural to tell others what we do and how we do it — but don’t forget to tell them why.

But what about our “why”? Most people would say that the purpose of business is to make money or, stated another way, to maximize profit for stockholders. And, just like any other business, Farm Credit is all about maximizing value to stockholders. In fact, our structure is uniquely designed for that purpose. But our “why” runs deeper than that.

Farm Credit’s “why” is about playing a critical role in our country’s system of food and fiber production, which is important to our nation’s economy, standard of living and overall health and well-being. Most of the world’s population only dreams about living with such abundance and variety of products. (Has there ever been a time in history when there were so many choices for consumers?) And although input costs put pressure on food prices, U.S. consumers spend less than 12 percent of their disposable income on food — among the lowest in the world.

In business school, students are taught about maximizing profits; but that’s only half the equation. Profit is not an end unto itself, but a means to an end. For Farm Credit, our end game is about solving problems and improving the world we live in. Providing competitive and reliable access to credit for the agriculture industry is what we do to accomplish that; and how we do it gives us a unique value proposition and competitive advantage in the marketplace. Why we provide credit is to help our borrowers be successful.

Agriculture is a diverse industry. Those who work in agriculture represent a range of operating sizes, commodities, geographic locations, races, genders and ethnic backgrounds. They range from high-tech to low-tech, from part-time to full-time, from locally focused producers to multinational corporations. It’s a broad, important and successful spectrum, and Farm Credit is proud to be a part of it.

As a member-borrower of the Farm Credit System, you’re part of a diverse and unique network that serves the breadth of the agriculture industry. It’s natural to tell others what we do and how we do it — but don’t forget to tell them why.

– Stan Ray


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