BUSINESS & AG LIFE
B2 — THE OBSERVER & BAKER CITY HERALD
THURSDAY, AUGUST 25, 2022
Farm Credit West, NW Farm Credit Services pursue merger
Once merger is
complete, new
company would
have more than
23,000 customers
By SIERRA DAWN McCLAIN
Capital Press
SALEM — Farm Credit
West and Northwest Farm
Credit Services, agricul-
tural lending associations
within the Farm Credit
System, are pursuing a
potential merger.
Experts say a merger —
part of a broader consoli-
dation trend within agri-
cultural lending — comes
with pros and cons for
borrowers.
Combined, the asso-
ciations would have a
mammoth footprint, with
merged assets of more than
$28 billion and serving
23,000 customers.
Farm Credit West, with
14 offi ces, works with
farmers in Arizona and
California’s Central Coast,
Imperial Valley, Southern
San Joaquin Valley and
Sacramento Valley.
Northwest Farm Credit
Services, with 44 offi ces,
provides fi nancing and
related services in Montana,
Idaho, Oregon, Washington
and Alaska.
“By joining our asso-
ciations, we can be better
positioned to strategi-
cally address marketplace
changes and provide even
greater value for our cus-
tomer-members,” Sureena
Bains Thiara, chair of
Farm Credit West’s board
of directors, said in a state-
ment earlier this year.
Nate Riggers, chair of
Northwest Farm Credit
Services’ board, said the
merger is a “strategic move
Ian Crawford/EO Media Group
The Northwest Farm Credit Services, which includes the Baker City branch on 10th Street, is seeking a potential merger with Farm Credit West.
Combined, the associations would have a mammoth footprint, with merged assets of more than $28 billion and serving 23,000 customers.
for both cooperatives.”
Since February, the
organizations have been
assessing merger benefi ts
for stockholders and fi nal-
izing agreement terms.
Linda Hendricksen, chief
marketing and learning
offi cer at Northwest Farm
Credit Services, said the
proposal is pending reg-
ulatory review. Approval
is expected in October, at
which time the association
will share more details.
Customer-owners will
then vote on the merger in
late 2022.
The merged association
plans to begin operations
Jan. 1 under the leadership
of Farm Credit West’s pres-
ident and CEO, Mark Lit-
tlefi eld. The management
team will include leaders
from both associations.
Headquarters will be in
Spokane, Washington, with
regional operating centers
in each state. The agricul-
tural lenders do not antic-
ipate offi ce closures or
branch staffi ng changes.
The possible merger is
part of a decades-long trend
toward consolidation within
the Farm Credit System, or
FCS.
The FCS traces its ori-
gins to 1916, when Pres-
ident Woodrow Wilson
established the Federal
Land Bank System.
The system’s purpose
is to provide a permanent,
reliable source of credit to
U.S. agriculture.
FCS lenders are regu-
lated by the Farm Credit
Administration, an inde-
pendent federal agency. The
FCS is organized as a bor-
rower-cooperative, meaning
borrowers own the asso-
ciations and vote on board
members.
The FCS has four
regional banks that pro-
vide funds and support to
smaller lending associa-
tions, which in turn give
loans to eligible borrowers.
The past two decades,
mergers and acquisitions
have shrunk the number of
lenders by 41%.
In her book, “Food,
Farming and Sustain-
ability,” Susan Schneider, a
law professor at the Univer-
sity of Arkansas School of
Law, writes that in the mid-
1940s there were more than
2,000 lending associations
in the Farm Credit System.
That fell to about 900 in
1983, 200 in 1998 and 74 in
2016.
In 2022, 69 lenders
remain.
The typical FCS associ-
ation used to cover several
counties, wrote Schneider.
Now, the typical association
covers a much larger region.
Many factors have
driven consolidation, said
Erik Hanson, assistant pro-
fessor of agribusiness and
applied economics at North
Dakota University and
author of the 2020 paper,
“Consolidation in the Farm
Credit System.”
“The Farm Credit
System is following some
(consolidation) trends you
see in ag generally and in
fi nance generally,” Hanson
told the Capital Press.
As the number of farms
has decreased and the size
of farms has increased,
lenders have often viewed
it as more economical
to cover a wider region
with more customers, said
Hanson.
He said technology and
customers’ comfort with
doing business remotely
have also made consolida-
tion more workable.
The smaller number of
lenders, however, comes
with pros and cons.
Experts say one benefi t
of mergers is that by com-
bining capital, lenders can
provide larger loans.
According to Hanson,
lenders that join forces may
also become more effi cient
and profi table by broad-
ening the consumer base,
commingling talent pools
and diversifying risk.
By off ering the best of
both organizations, Hanson
said, the merger should
benefi t borrowers.
Schneider, the law pro-
fessor, wrote that “cus-
tomers may benefi t if
greater institutional effi -
cacy is passed along
through lower interest
rates.”
But there are also
downsides.
Although a larger asso-
ciation may provide larger
loans, critics say this incen-
tivizes lenders to focus
on serving big operations
at the expense of smaller
farms.
Another downside,
Hanson said, is that a bor-
rower may experience “loss
of local control” because as
the customer pool expands,
the individual farmer may
have less infl uence.
“As the business gets
bigger, the individual
farmer maybe has less and
less of a say, less and less
of a connection to the way
that decisions are being
made for that business,”
said Hanson.
Experts predict farmers
will experience both the
positive and negative
impacts of consolidation as
the number of agricultural
lenders continues to shrink.
Budgeting can be a challenge. Here are 5 tips to get started
By ADRIANA MORGA
The Associated Press
NEW YORK — Bud-
geting is key to managing
your fi nances, whether
you’re trying to pay off
debt, start a rainy day fund
or deal with the conse-
quences of infl ation.
Creating a budget is
much like trying to eat
better or exercise more —
everyone tells you it’s good
for you, but it’s hard to get
into the habit, said Col-
leen McCreary, consumer
fi nancial advocate at Credit
Karma.
“A lot of people think it’s
over-complicated and a hard
thing to do,” McCreary
said. “Much like going to
the gym, the hardest part
is showing up, so you just
have to decide that you’re
going to try it out.”
Even with prices high
due to infl ation, Elena
Pelayo, educator at How
Money Works, a fi nan-
cial literacy organization,
said there are small steps
you can take to manage
your money. These include
looking at how many online
subscriptions you pay for
or how often you eat in
restaurants and cutting back
where you can.
Here are fi ve important
steps when you’re ready to
create a budget:
Write it down
Writing down all of
your expenses is crucial,
said Pelayo. She suggests
recording every penny that
you spend rather than trying
to approximate, which can
lead to errors.
Pelayo recommends using
whatever method fi ts you
best, whether that’s writing
it down on paper, creating an
Excel spreadsheet or using a
website.
Next, she recommends
categorizing where your
income should be spent.
Always start off with cov-
ering your basic needs.
A well-known budgeting
system is the 50/30/20 rule,
where 50% of your income is
allocated for necessities like
food and rent, 30% for things
you want, and 20% for sav-
Elise Amendola/The Associated Press, File
Whether you want to pay off debt, start a rainy day fund or save for a
family trip, budgeting is the fi rst step toward reaching your fi nancial
goals. Colleen McCreary, of Credit Karma, says creating a budget is a
lot like trying to eat better or exercise more. Everyone tells you it’s
good for you, but it’s hard to get into the habit.
ings and debt repayment.
Wiltrice Rogers of Allen
Park, Michigan, has used
this system for more than 30
years.
“It helped me to see how
benefi cial it is, and that we
have more discretionary
funds when I follow this
method,” said Rogers, an
intake coordinator for a non-
profi t organization.
Websites such as Nerd-
Wallet or Money Fit off er
50/30/20 calculators to help.
This method works for
many people, but it might not
be right for you if necessities
eat up more than 50 percent,
in which case you’ll need to
allocate less for savings or
things you want to do or buy.
Budget format
Writing down your
after-tax salary and then
adding your expenses in a
notebook or a blank spread-
sheet might be enough to
make a plan. But if you
need help visualizing what’s
coming in and going out,
there are resources available.
“There are lots of online
templates that’ll help you
look at spending catego-
ries and expense catego-
ries for personal fi nance.
And they’re really helpful,”
Pelayo said.
The Federal Trade Com-
mission off ers a budget tem-
plate in a PDF format that
can be printed, and Micro-
soft off ers Excel templates
for special occasions such
as saving for a wedding or
home construction. If you
prefer apps, Mint, Pocket-
Guard, and EveryDollar are
among Bankrate’s top fi ve
budgeting apps.
Make a realistic plan
If 50/30/20 isn’t realistic
for you, there are still ways
to save and tackle debt. Start
setting aside small quanti-
ties of money every month
or set small goals, such as
choosing a restaurant where
you won’t spend more than
$40, McCreary said.
“Small steps lead to
progress,” she said. “It’s
really about progress, not
perfection.”
McCreary recommends
starting with one goal each
week, whether that’s saving
a certain amount or reducing
the amount you spend on
non-necessities.
“Don’t overcomplicate
it, don’t make it too hard for
yourself,” she said.
Rogers, for example, usu-
ally tries to save as much
money as possible when
buying groceries.
“I get the sales papers and
mark what we need and if it’s
on sale. I try to do a triangle
of the stores to save time and
gas,” she said. She also buys
in bulk, sticks to her grocery
list, and goes shopping by
herself to avoid her son and
husband convincing her to
buy extra items.
Websites such as Flipp,
which shows digital fl yers
from major retailers around
you, and Groupon, where
you can fi nd coupons for
products and services, can
make it easier to save money.
But keep in mind that this
only works when you use
coupons for items that you
really need or were planning
to buy anyway.
If your income just covers
your necessities, reducing
credit card debt can be chal-
lenging. Pelayo recommends
that even if you live paycheck
to paycheck, you might want
to add at least $10 above the
minimum payment of your
credit card with the highest
interest rate. And if you can
aff ord it, she recommends
paying 10% more than the
minimum payment per
month.
Make it a habit
To achieve your fi nancial
goals through a budget, you
have to change your mindset,
Pelayo said.
“You have to look deep
inside yourself and say, am I
willing to change my habits?”
she said.
Once you are mentally
ready, you can start setting
goals.
— Set a time goal
Building new habits can
be hard, and it’s even more
daunting to think about
having to maintain them for
the rest of your life.
McCreary recommends
that your fi rst goal can be two
weeks of keeping a budget.
After achieving that, you can
set a longer timeline, such as
30 days or six months, until it
is embedded in your routine.
— Gamify your budget
If you’re still struggling,
McCreary recommends that
you gamify your budget and
turn it into a challenge.
“Maybe there’s an out-
come involved. Like ‘Hey, if
we save enough money, we
can get a new TV or go on
vacation,’” she said.
Examples of gamifi ca-
tion include giving yourself
a small reward after a certain
amount of time or money that
you have saved.
Apps such as Mint, which
rewards the number of times
you check your budget, and
Acorns, which allows users
to invest with their spare
change, can help. Yotta and
Save to Win allow users to
create saving bank accounts
that rewards them for the
amount that they save.
For accountant Tiff ona
Stewart, gamifying her sav-
ings meant using the enve-
lope system, where you put
cash in envelopes for specifi c
expenses.
“This is tailored to your
life and what you want to
save for, so that’s what I like
about it,” Stewart said.
Stewart also started a
business selling envelopes
and budget binders on Etsy as
Are you running an
outdated Windows
Operating System?
We’ll help you
avoid critical
issues by installing
Windows 11!
a way to encourage and pro-
mote fi nancial literacy. She
sells “one month challenge”
packages meant to help save
$1,000 in cash.
“You play those games
and you make these things
your own. You’re trying
something new, there’s
nothing wrong and right, you
might get it wrong one month
and then get better the next
one,” she said.
Involve your family
or friends
As with any lifestyle
change, having people
around you to support your
decisions and encourage
healthy habits is crucial,
McCreary said. That could
include talking with your
signifi cant other about your
fi nances, telling your friends
that you will start budgeting,
or explaining to your chil-
dren how the family is now
spending money.
Rogers’ 11-year-old son
now knows that if there is
not a coupon for the item,
they don’t get it.
In Stewart’s case, using
cash when going out with
friends helped. If you only
take $100 out with you to
the bar and don’t bring your
credit card, and you want to
pay for another round but
you only have $20 left, you
simply can’t spend any more,
she said.
“You need everybody
who’s involved in those
decisions, to commit with
you to be supportive of it,”
McCreary said.
Computer not
running as
fast as when
it was new?
Let us install
lightning-fast
solid state drive!