By Matt Reese and Dale Minyo
Celebrated by cooperatives nationwide during the month of October, National Co-op Month is an annual opportunity to raise awareness of a proven way to do business and build resilient, inclusive communities. The 2022 theme is “Co-ops Build Economic Power,” this year’s Co-op Month was chance to highlight the cooperative business model as a way to build an economy that empowers everyone.
While the benefits of cooperatives are showcased all year long, Farm Credit Mid-America (FCMA) took some extra time in October to highlight the value to their members of being part of a cooperative.
“We do celebrate Co-Op Month because it is something very unique to us in our market,” said Rudi Pitzer-Perry, FCMA Regional VP of Ag Lending. “Most of the other lenders out there are, of course, not cooperatives and it sets us apart as far as what we offer our customers because they are also our owners. Our customers set the direction for us. Our board is completely made up of customers. It’s not just local businessmen appointed or anything like that. Our customers own voting stock, participate in the election of those directors and they set the direction for us.”
As a cooperative, FCMA is able to offer a wide array of programs and services.
“We are able to offer more than just lending. We’re very committed to adding value to our owners and solving problems they may have in addition to financial needs like educational needs and we’ve even started working on the mental health front and offering some services from that respect as well,” Pitzer-Perry said. “We cover four states currently so it gives us a breadth of ag knowledge from across the country and an amazing amount of resources.”
A particularly valuable perk of being a cooperative member is the potential for annual patronage payments, said FCMA financial officer Matt West.
“Celebrating Co-Op Month is kind of new to me, being formerly from a regional bank. I think one of the biggest differences of being a member of a co-op, if you compare it to other businesses, is that it’s more transactional. You’re trading goods for a service in other businesses, whereas in a co-op you’re actually a customer owner so your voice is heard. It gives you a little bit more of an impact with what’s going on where you’re putting your money,” West said. “And the best thing about working at the co-op is in March when we pay out patronage. That is an exceptionally great time to be out on the farm. Patronage, for those that may not know, is the name for capital that a co-op returns to its customers. In 2022, our patronage program returned over $210 million to our eligible customers across Indiana, Ohio, Kentucky, and Tennessee and, of that, $57 million went to our Ohio customers. This will be the sixth year in a row that we’ve paid out patronage and we’re up to over $858 million paid out over the past 6 years. It’s definitely something that’s changed the way our customers plan and think about how they borrow money. it’s been a game changer for us as well as far as competition with our local competitors. They do not like to hear the fact that we’re paying out patronage to our customers.”
Patronage payments depend upon a number of factors.
“It is determined by how much each person pays in on interest and other things. It is a decision the board considers and makes each year. It’s not a guaranteed payment — we’re very clear with customers about that on the front end. It is a return on our earnings that’s paid to our eligible customers according to board resolution they vote on every December. It is part of our ongoing plan. We are in a very strong financial position so we feel confident we’ll be able to continue to offer that,” Pitzer-Perry said. “Our customers usually do not use those checks for anything flashy. They mostly just use it to pay off their loans. For us it is always fun when customers tell us this is going to make their loan payment for the year, especially in a tight year. It’s good to know that we can give that back and give them a little bit more peace of mind — even if it’s just helping with one of their loans.”
For more on FCMA, visit e-farmcredit.com.