We recorded this prior to the COVID-19 pandemic. We’ve been working remotely for the past several weeks to be able to share them with you while you have a little more time at home. These uncertain times have altered the way we’re all doing business right now, but that isn’t keep us from doing whatever we can to support our membership and communities. Head to mafc.com/update for resources related to your cooperative and the pandemic. From all of your friends at MAFC, stay healthy and safe. Thank you.
Listen to Tom's episode here or find us on your favorite podcast listening app!
Welcome to the first-ever episode of the Farm Credit AgVocate podcast. My name is Jenny Kreisher, the Director of Communications at MidAtlantic Farm Credit, and one of a few different hosts you’ll hear as we record this series, but I’m thrilled to have the honor to introduce our new project to you.
We created this podcast with one goal in mind – agvocacy. Yes, Farm Credit is a financial lender, supporting thousands of farmers and ranchers across the country with consistent a reliable credit, but we’re also storytellers. We’re promoters of ag. And we hope to use this podcast as another channel to tell the story of our industry and those who live and work within it, while connecting our audience with one another. We’ll touch on a variety of topics – some larger than others – but tying all back with a little local flare.
To kick off this new venture, our first guest is Tom Truitt, CEO of MidAtlantic Farm Credit.
Could you tell us a little about yourself and your background in the industry?
So how did I end up being an agricultural banker? Like a lot of our employees, I am the first generation off the farm. I grew up on the Eastern Shore on a very traditional Eastern Shore farm from the 70s and 80s. A two story white farm house in the middle of a corn field with two chicken houses out back. I grew up 10 miles from Ocean City (MD), so I had the best of both worlds, or the worst of both worlds depending on your perspective.
I went away to school with the goal of becoming a stockbroker. I was going to work on Wall Street and wear the big suits, you know stuff like that. I was fortunate enough to get an internship my senior year of college at a stockbrokerage firm in Salisbury, MD when I realized I hated it.
At that point, I had four to five years of financial training and was heading back to the farm. I was fortunate enough to find a job in the ag industry for a few years selling seed, fertilizer, lime, that kinda deal. At that time, job searches were done in the newspaper versus online. My wife opened the Baltimore Sun and found a company hiring somebody with an ag background and a finance degree. And that’s what got me in with Farm Credit.
I started in 1993 and have been doing it for about 27 years. I came up through credit, operations, technology, sales, and have been fortunate to be CEO for the last four years.
For those who might not know what Farm Credit is, what is your elevator pitch?
Explaining Farm Credit in 25 words or less is difficult, but I’ll try. The best way to look at it is to start with why Farm Credit exists. Farm Credit has been around for more than 100 years; started at 1916. At that time, the U.S. was preparing to enter WWI and was coming out of the difficulties of the depression era. Congress saw a need for a stable food supply for the population.
According to the last Census, there’s less than 1% of population that is dedicated to ag and farming. Even 100 years ago, it was more than 1% but urbanization was still occurring. So [Congress] was looking at what the big hurdles were for farmers. At that time it was getting access to capital; financing for operations, property needs, real estate needs. A lot of traditional banks were more interested in more commercial type operations. [Ultimately,] Farm Credit was created by an act of congress.
What that means is Congress provided seed money for Farm Credit and they modeled it after the German system of cooperatives. That’s where the tie to the government ends. We are not a government agency. We are for profit; private enterprise. The unique piece is that we’re a cooperative and our members own us. We don’t have a shareholder to tie to. But if you look back 100 years ago, and over the last 100 years, it’s morphed and changed with our customers and agriculture. The reason we exist is really to serve that membership. To make sure we are a stable and reliable source of capital for ag and rural America.
How does MAFC fit in the national system?
We are a nationwide system; there is a Farm Credit that serves every county of all 50 states [and Puerto Rico]. If you threw us all together, we’d be the 7th or 8th largest commercial bank in the US. That’s the beauty of Farm Credit.
As MidAtlantic Farm Credit, we represent about 50 counties in five states: Southeast Pennsylvania, Delaware, the Eastern Shore and Central Maryland, into the Shenandoah Valley in the Virginias. We have about 11,000 members and that’s who I focus on as CEO. What are we doing for those 11,000 members? We’re able to get hyper-local and hyper-focused on the local needs.
But, we are part of a larger $300 billion financial institution and this gives us the scale and scope to deal with any type of credit that comes in. Of our 11,000 customers [no one] is typical. We do anything from large agribusiness all the way down to the $5,000-$6,000 starter loans that get people involved in agriculture and everything in the middle. That’s what beautiful about the five states we operate in. If you can eat, grow, bake, boil, grill it, we probably finance it.
As CEO, what is your view of the industry today?
If you look at the area that we service, we’re kinda the point of the spear with the changes happening in agriculture. We’re not like the Midwest in the sense that [our region is] a lot more diverse with urban areas and we started seeing this shift: people are very aware of where their food comes from and a lot more interest in [than just asking] what’s the cheapest price. That is what our customer base, and ag in general, is evolving into.
The traditional poultry industry or corn and soybeans; those are commodity based businesses. Ag is transitioning or splitting. We’re seeing our customers staying with the commodity model and getting larger to get costs of production down. By 2050 there will be 9 billion people and somehow we have to figure out how to feed that. And you need commodity based ag to do that.
There’s also another market evolving that is more specialized or more margins based. Whatever label you want to put on it, from organic, local, non-gmo; there’s a customer out there that is willing to pay more to know where their food came from. Many of these producers are finding was to combine this by also selling directly to restaurants or to consumers. I think that’s going to continue in all industries. There will always be a need for a product based on price, but there will be that other market that we’re uniquely positioned for in metro areas.
How is Farm Credit adapting to these industry trends?
That is where we’re spending the majority of our time pondering. We’re doing two things: looking at staff composition and delivery channels. Historically, we’ve delivered our services through brick and mortar structures and we service X amount of counties out of that building. What we’re looking at now is how we deliver on different channels like online, on farm, and point of sale. There’s all kinds of ways customers can get their financing now and we want to make sure we’re there to be the most practical and convenient option for them.
We are also looking at our staff skillset to see how they can service specific types of customers. We want our agribusiness customers to have sales staff that have business knowledge. On the opposite end, customers that are just getting started need a loan officer with the knowledge and relationship to guide them through the process. Staff that have similar life experience can be that trusted resource and that’s the secret sauce and the reason why we’ve come this far. We want to make sure we’re keeping up with our customers from staffing to delivery.
What would you recommend producers do to position themselves as we see that consumer changing?
I would recommend to our customers to keep reading. Some of the best advice I got early in my career is that “change creates opportunity” and that’s what we’re seeing in ag now. It feels like the old is new again – this change in consumer mindset and industry splitting has been happening for a long time. When that change occurs, the opportunity presents itself via things like farm stands, or agritourism; doing more than ever before. There’s a lot of opportunity out there and it’s really just getting educated and aware of what’s happening. It’s an exciting time to be involved in ag.
Do you have a story that’s resonated with you as you go about your day to day work?
One of the things that I love about our industry is the history of it. Our traditional customers are multi-generational operations. [Some] can tie their farm back 10 generations. What has been really rewarding is to see the operations evolve to take advantage of the opportunities in the industry. One orchard in the Shenandoah Valley that I think about, you could put the three owners at one table and see the stereotype by generation. But what they’ve done is expanded to serve all three markets, direct to consumer, online sales and commodity sales. To see that family migrate and evolve their business to take advantage of the talent in their organization and location is very refreshing to see; operations evolve and take advantage of the opportunities presented.
There are stories of people that haven’t adapted also, but the one thing I love about our customer base is that they’re open minded and want to try new things.
What do you advocate for in agriculture?
One thing I spend a lot of time with outside of ag industry is advocating for the perception for agriculture. In late February, Michael Bloomberg’s offhanded comment about agriculture and farmers in general and even throughout my social network, there’s still a perception of agriculture being the American gothic with coveralls and a pitchfork. In general, who cares? But that perception gets turned into a reality at the legislative level.
Being here in the MidAtlantic, our legislators are not tied to agriculture. They’re probably three generations removed from the farm but they’re making laws and regulations that directly impact agriculture. If their perception is of “the dumb farmer”, than they’re not looking at an industry that is up to speed on currency, policy, politics, and immigration. And that leads to bad policy.
One of the things I’m proud of, is that we have a dedicated Government Affairs Officer that spends all his time with state legislators advocating for our members and the industry.
I spend a lot of my time advocating for understanding the industry before you start regulating it. Ag used to be keep your head down, stay out of the headlines, and I’ve seen a significant change where ag is telling the story and that’s one of the best things that has happened in ag. Get out and tell your story, educate the public and help answer the question of how we’re going to feed 9 billion people.