SAFSF Member Policy in Action: Self-Help Credit Union

We are excited to bring back the SAFSF Member Spotlight in our monthly Policy Connection Newsletter, highlighting SAFSF members who are funding food and agriculture policy advocacy at the federal, state, tribal, and/or local levels. Please fill out this Google Form or email SAFSF Policy Associate Maggie Mascarenhas at [email protected] if you are interested in featuring your policy work here. 

Mandating Reinvestment by the Farm Credit System, Ag’s GSE

by David Beck, Policy Director, Self-Help Credit Union 

Self-Help, a national CDFI and credit union headquartered in Durham, North Carolina, has supported the sustainable food system ecosystem since our beginnings, when we were making loans to NC food co-ops in the early 1980s. Our business, real estate, and non-profit lending continue to support food systems today. In total, Self-Help has provided over $250 million in food-related loans. 

Yet, the majority of our lending is in affordable homeownership, and for decades we’ve worked with the housing Government Sponsored Enterprises (GSEs) Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, partnering and pushing them to help make homeownership more attainable. Congress requires all three housing GSEs to grant back – or tithe – some annual profits to support more affordable housing via down payment assistance and other measures. As we more holistically engaged in the equitable food lending space, we learned that agriculture has its own GSE, the Farm Credit System, that is highly profitable (clearing $7.3 billion in 2022) but – unlike the housing GSEs – has no grant back mandating. 

Given the equity and capital needs facing our food and ag system, that should change. Congress provides Farm Credit explicit tax advantages and implicit guarantees. In return for this taxpayer support, Congress should require a Farm Credit grant mandate of at least 10% of annual profits, which would amount to $730 million a year in grant funds. NSAC’s Farm Bill Platform recommends 15%, which would be over $1 billion a year. 

As a GSE, Farm Credit has an inherent public mission.  The simple fact is that they are not doing enough to support our nation’s diverse food and ag system needs and Congress should require Farm Credit to do much more. A Farm Credit grant mandate is a logical step and would have a profound impact. Grants could support land purchases for small farmers, support heirs property title work and help build local, regional, and urban food system infrastructure enterprises. It could be the game changing annual equity injection so needed to build a better food system. 

Given the potential impact of the policy change, Self-Help has been working to build partnerships with progressive food and ag groups, as well as with conventional banking associations, to both educate about Farm Credit and build support for a grant set aside. One area this has been particularly impactful is coalescing to support Farm Credit’s inclusion under the CFPB’s 1071 rule requiring demographic reporting of business loan applicants, which Farm Credit has vehemently opposed. This 6.5.23 Civil Eats article, Farm Credit Can Make or Break Farms. Should It Be More Equitable? describes that well.   

Of course, Farm Credit has been working the halls of Congress since its creation over 100 years ago. So, while there is interest in a grant program on Capitol Hill, many are reluctant to support an initiative that Farm Credit opposes.  The antidote is more sunlight, meaning more education and understanding about Farm Credit’s mission, profitability and potential impact.  

Philanthropy can play a key role in helping increase public awareness about Farm Credit. Funding to help focus media and thought leader attention on Farm Credit can go a long way in helping socialize understanding that, yes, Ag has a GSE that should be doing more to grow our sustainable ag and food systems. If you’re interested in helping work on this or just to learn more, please reach out to me at [email protected]