Credit union for Maine farmers, other food producers a big step closer
A Maine-based project to create a new credit union for farmers and food entrepreneurs has reached an important milestone with the formation of an expert panel that includes one member with a famous grandfather who helped create the modern credit union system.
On March 6, Maine Harvest Credit Project hosted its “organizer event,” a critical part of obtaining a charter and achieving recognition as Maine’s 59th credit union. State and federal law requires a new credit union to form a group of organizers to review and adopt its by-laws and appoint the first board of directors.
- 8,174 farms: Maine has more than in any other New England state.
- Since 2006, the number of small farms has increased by 13 percent.
- Nearly 40 percent of Maine’s farmers are under age 34.
- Agricultural sales have risen by 24 percent since 2007.
- Maine has 71 licensed artisan cheese producers, second only to New York.
- More than 1 million pounds of cheese are produced annually.
Maine Harvest has recruited 15 organizers, including Goodwill Industries of Northern New England’s president and CEO, Anna Eleanor Roosevelt, whose grandfather Franklin Delano Roosevelt’s administration was responsible for passing the Federal Credit Union Act of 1934. The act created the Bureau of Federal Credit Unions to charter and regulate federal credit unions. The bureau was replaced in 1970 with the current National Credit Union Administration.
Roosevelt said that when her name was floated as a possible organizer for the unusual credit union, she jumped at the chance. The Somerset County resident said she has friends and neighbors who are farmers, and that they have described to her their struggles obtaining needed financing.
“They talk about the need for choice and the ability to borrow money to run their operations,” Roosevelt said.
Other organizers include Maine Farmland Trust President and CEO Amanda Beal, Misty Brook Farms owner Katia Holmes and cPort Credit Union Vice President Chris Van Dyck.
Maine Harvest’s goal is to establish a credit union that its backers believe would fill a gap in available financing for the state’s food producers by offering land-backed mortgages in the $100,000 to $400,000 range, small-business loans of $60,000 to $125,000 and equipment loans of $20,000 to $40,000.
Roosevelt said she is looking forward to lending her common sense and eye for detail to the project. The fact that her grandfather played a critical role in creating the modern U.S. credit union system also adds a bit of pedigree.
“I think that my major contribution here is my link to the past,” she said. “I think that what I bring is a sense of continuity.”
Project co-founder Scott Budde, who would serve as CEO of the credit union, said farmers and other food producers are underserved by financial institutions because few banks are likely to have loan officers who understand the food economy and unique nature of a farm’s business operations. Larger banks in particular don’t see farmers as a profitable market segment, he said.
Investment with social impact
Budde used to work at TIAA-CREF, the huge pension and investment firm that started out managing retirement funds for teachers. While there, he created the firm’s first division focusing on strategies to make investments that could have a social impact.
Budde identified food producers as an underserved market and obtained a grant for a yearlong study of the needs of farmers and small food-producers in New England. The findings led him to launch the Maine Harvest project in May 2015.
Since then, Maine Harvest’s founders have raised $1.4 million in donations to help capitalize the credit union. Once chartered, it would be the country’s first credit union to lend specifically to entities working within the food economy. The credit union aims to increase Maine’s food production, keep legacy farmers on their land and make it easier for food entrepreneurs and farmers to grow their businesses.
The project’s other co-founder is Sam May, a former equity research analyst and managing director with US Bancorp Piper Jaffray. May said the gathering of organizers was an important step toward filing Maine Harvest’s charter application, as well as figuring out how the nonprofit financial institution will operate.
“We need to show regulators that a lot of people are interested in this, that it’s not just a pet project of two guys,” he said.
May said Roosevelt was a great addition to the diverse group of organizers, not only because of her family history, but because she has experience running a large, socially conscious business.
“I wanted people where there’s some resonance with what we’re doing,” he said. “It’s not too difficult to realize she’s a good fit.”
The credit union, to be named Maine Harvest Credit Union, would serve business, farm and consumer members of the Maine Organic Farmer and Gardeners Association, Maine Farmland Trust and other organizations within the agriculture and fishing industries and those working within the food economy.
In addition to working through the application process to establish a credit union, Maine Harvest must raise $2.4 million in donations. The project is still $1 million short of that goal.
Eventually, three-quarters of that money would be used to support lending once the credit union is established, and 25 percent would support expenses. Budde and May envision the credit union operating only electronically with no cash transactions, because the setup process would be simpler and regulations are not quite as stringent.
Once the credit union is established, the founders expect to raise about seven times the amount of initial donations in deposits, providing the funding for more loans to farms and small food-related businesses. The credit union initially would be a small operation, with Budde, a loan officer and an operations manager.
Organizing credit union not easy
Like all credit unions, Maine Harvest would be a tax-exempt, nonprofit and member-owned financial institution, democratically controlled by its members and governed by an independent, unpaid, member-elected board of directors. It would be part of the Maine Credit Union League, the state’s trade association representing Maine’s credit unions.
League President and CEO John Murphy, who attended the organizer event, described it as a key step toward making the credit union a reality.
“This milestone is required for all new credit unions,” he said. “It is not an easy process to organize a credit union, and everyone involved with the Maine Harvest Credit Project should be very proud of their many accomplishments to date.”