Good Things in Difficult Times
Last week we wrapped up our five annual stockholder meetings. I really enjoyed visiting with our membership and talking to them about all the ways Farm Credit has opened doors for many over its more than 95 years.
For those that couldn’t make it, I thought I’d share my remarks at the meeting. If you’d like to see the powerpoint presentation, which includes some financial highlights, click here for our website.
I don’t know about the rest of you, but I’ve had it with negativity. It makes me want to close a door instead of opening it! It’s hard to escape the daily news feed with its stories of unemployment, defaults on debt, politicians fighting, problems looking for solutions. For the few minutes we have together tonight, I’d like to shift that focus and tone and talk about some good things that have come from difficult times and to talk specifically about some of the good things MidAtlantic is doing.
Let me start by sharing two examples in the history of our country where we’ve risen above the stresses of the moment and have done things that have had a deep and lasting impact. 150 years ago, Senator Justin Morrill of Vermont opened a door for agriculture and rural America. His vision and leadership led to Congress passing the Morrill Act in 1862. This Act created the nationwide land grant college system and ushered in a major strategic shift in our system of higher education. Before its establishment, higher education was limited to the study of the classics and liberal arts by people of privilege. Morrill believed that there was a need for advanced research and training in highly practical subjects like agriculture and that education should be made more accessible and affordable.
Senator Morrill’s groundbreaking legislation directed the establishment and a means of funding the establishment of a new higher education system. No other country in the world had ever done anything like this. With this law, each state was granted federally owned lands which they in turn could sell and use the proceeds to fund the creation of schools for the purpose of education in the practical arts. Agriculture and the mechanical arts were the first programs to be established with efforts focused not only on learning, but also research and sharing the results of that research with the general public.
This strategic federal effort to advance agricultural research and education was a major contributor to the advancement of our agriculture from one of subsistence to one that today leads the world. Every one of you and your farms are where you are today because of the important research that continues to come out of these universities. Schools like the University of Maryland, University of Maryland Eastern Shore, University of Delaware, Delaware State College, Penn State, Virginia Tech, Virginia State, West Virginia University.
95 years ago, the first institutions of what is today’s Farm Credit System opened a door for agriculture and rural America. For the first time in the history of this country, farmers were granted access to a source of reliable and affordable credit. Many of you know that story….a story of farmers coming together, with the help of the government, to help themselves create their own sustainable source of credit and financial services.
What’s striking to me is that both of these game changing institutions were created during times of great adversity. Imagine yourself in the year 1862. Our country was engaged in a war that gravely threatened its very survival when President Lincoln signed the Morrill Act. Imagine yourself in the year 1916. The world was engaged in what to that point was the largest, most widespread conflict in human history, World War I, the war to end all wars, when the Farm Credit System was created. That our citizens and our leaders were able to come to agreement, in the midst of major upheaval is a testament to our collective capacity to focus on the future and to take bold actions to enable us to be better. It’s about what we can be and can do.
It’s true that we have experienced the greatest economic downturn since the Great Depression. Nobody working today has been through anything like this. We see evidence of it in our credit quality. We see evidence of it at the human level with our customers who’ve lost jobs or have had their farms and businesses decline or fail because of the economy. Regrettably, the statesman like leadership that led to the creation of our land grant colleges and the Farm Credit System has gone dormant in a political environment that rewards rancor over collaboration. It is a time of great adversity.
Seemingly, there are no landmark initiatives of the magnitude of the Morrill Act or the Farm Credit Act on our national agenda. I might be naive but I believe there are still Americans who are thinking creatively about how to address our country’s challenges. I believe it because I see it in the people I work with and work for. These times are precipitating significant public policy dialogue.
The developing Farm Bill discussions wrestle with how shrinking federal dollars should be allocated to support the strategic needs of agriculture. Federal and state budget constraints beget questions like what should land grant colleges and universities be doing that will enable them to have the impact on the next 150 years that they had on the past 150 years? A global financial system that’s in the process of reengineering and rebuilding stimulates strategic thought about our role in the financial community and our agricultural and rural customers.
What does the Farm Credit System, collectively and as individual institutions, need to do to be as relevant 95 years from now as we have been for the past 95? That’s what we’re thinking about. These adverse times bring challenges, but can also help us sharpen our focus. We are nudged from the inertia of our conventional thinking to by necessity thinking differently, thinking creatively.
How are we thinking differently, creatively? We start by acknowledging these are challenging times. We didn’t create them, but we have to deal with them. We recognize that we have a strong history and a solid financial foundation, but we’re not being complacent. As an example, we’re working to sharpen our focus on anticipating and managing the risks to your association. We’ve made a major commitment of time and money to establishing a program that’s known in the financial services industry as Enterprise Risk Management. This approach stimulates us to think about what our major risks are, how they might be connected and what we might do to manage those risks.
We’re also looking for ways to improve the quality of our service to you. Sometimes that happens in ways that you don’t see, such as a major investment with our partner associations in the AgFirst Farm Credit District in a new technology platform that will position us to improve the reliability of our services as well as efficiency. In other words, all the stuff that goes on behind the scenes that helps us generate loan documents, account for your loan activity, generate bills, calculate your patronage…we’re working on systems to do that stuff better.
We’re also expanding our service offerings where we see that others in the market place may be pulling back. Crop insurance is a good example of that. With the uncertainty around crop insurance that looms as the next Farm Bill is contemplated, we’ve seen evidence that some providers want to get out of the business. Crop insurance is important to you and to us in managing risk. We’re increasing our staff to make sure there are no gaps in the market place.
We have benefitted from the doors that have been opened for us. From the vision of Justin Morrill that led to the creation of the land grant system to the commitment of the farmers and policy makers who established our Farm Credit System, we are better off. But, there’s no way to open a door that isn’t connected to something. Doors are connected to frames, which are connected to walls, which are connected to floors and roofs…and a foundation. Doors won’t open if they’re not maintained and if the structures on which they depend are not maintained. What I want you to know is that we’re continuing to work to maintain the foundation, floors, walls and roofs of MidAtlantic so that we can deliver on our mission promise and open doors for you, but also to have the vision to create new doors for those who depend on us for the future.