Just the Facts

Readers of this column probably have been surprised that I haven’t commented on the Rabobank and FCSAmerica purchase offers in the Midwest. Having worked with all of the organizations involved over the years, it is my position to provide information and let the public decide.

That being said, I took a written vote of agricultural bankers from Nebraska on their opinion of the Rabobank/FCSAmerica offer. This was done in a private written vote before my address at the conference. The following were the results of the 140 agricultural bankers who participated.

Twenty-eight percent of the group was in favor of the offer. In written responses, they indicated that FCSAmerica would lose its tax advantage, it would level the playing field and the new entity would be required to pay taxes. Others stated that it would improve the competitive position of family-owned banks and it would be better if the Farm Credit Administration were dissolved.

Thirty-seven percent were undecided. They indicated they needed more information. Others wanted to know more about Rabobank and the specifics of the deal at all levels. Some in this category don’t expect the deal to go through in the long run because of the hoops both entities will be required to jump through.

Thirty-five percent were opposed. Their reasoning was that they know Farm Credit and not Rabobank. Others were concerned about a foreign bank controlling U.S. agriculture. Some felt it was an opportunity in the short run, but that Rabobank would be too big and strong to compete with in the long run. Others felt it would be a new competitor, but they would have to still compete with Farm Credit that comes into the territory.

Keep in mind this was not a random sample of bankers from the state. These results should be used with caution. However, I think that any good organization or producer should use this issue as a flash point to strategically plan for the future. Use your energy in a positive rather than negative fashion to think how the landscape will change and how you and your organization are positioned to take advantage of the opportunities.

My e-mail address is:sullylab@vt.edu

Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.

To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.

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