The 10,000 Pound Gorilla in the Midwest

The Rabobank/FCSAmerica pending deal was certainly creating headlines in the Midwest several weeks ago. I was in Omaha to speak at the ECI Lending Technology Conference in mid-October and had seven interviews with newspaper and radio media regarding the issue.

First, I did not take a position on this situation. We need to use this as an opportunity to examine the future of agriculture in a global economy. Some agriculture, particularly in the Midwest, is operating within an unsustainable cocoon of government supports and other policies designed to preserve 1950s to 1980s agriculture.

While a certain reduced level of government support is vital to long term sustainability of agriculture, the national deficits, pension and medical issues of the next decade are going to require leaders to carefully examine the future landscape and support systems for rural America.

Energy needs to be directed toward these initiatives rather than focused on a protectionist bias. The Rabobank and FCSAmerica deal was just the beginning of many shots from global partners at America’s foundation industry of agriculture.

At the ECI conference, I took a secret ballot vote concerning two proposals that were presented to FCSAmerica. The conference was attended by 125 plus agrilenders, 80 percent being Midwest bankers.

Rabobank/FCSAmerica deal AgStar buyout of FCSAmerica
Support 34% 24%
Oppose 46% 44%
Undecided 20% 32%


The bottom line is the majority was less inclined to support the AgStar buyout with more being undecided. Approximately 50 percent opposed either change.

Even though this issue is no longer headline news, I would predict that this would not be the last of merger situations involving ag lenders and foreign banks. Consider this a wake-up call to develop strategic plans that will prepare your business to compete in a global environment.

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.

This online exclusive is brought to you by The Corn and Soybean Digest