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Maine Harvest Federal Credit Union, the first in the nation to focus solely on agriculture, opened for business Tuesday in Unity.
The credit union, more than eight years in the making, addresses a growing need in Maine, given the prominence of local food and the increasing number of farmers and agricultural products, those at the ribbon-cutting ceremony Tuesday said.
The credit union will address the financing needs of the state's revitalized food economy "from Fort Kent to Kittery, from Fryeburg to Lubec," Board Chairman Sam May told those gathered.
"Let's see what we can do to create a food system that works for you, and works for the Maine economy," he said.
Maine farmers and food producers report a $180 million gap in access to financing for land and equipment, and it's one of their biggest obstacles to growth, according to Maine Farmland Trust. Closing the gap will keep farmers on their land, strengthen Maine’s food economy and increase the availability of fresh local food, founders of the credit union said.
The credit union has a specialized underwriter with agricultural expertise which "will enable Maine Harvest to lend when traditional institutions often don’t," founders said.
Maine Harvest expects to loan $12 million to 100 farmers and food producers in its first six years, financed by 1,000 members. Products will include equipment loans up to $45,000 and land mortgages up to $225,000.
“The days when the local farmer knew their local banker have been over for a while — but we plan to change that,” cofounder and CEO Scott Budde said. “We will be able to meet farmers’ needs because we intimately understand the nuances of agricultural lending.”
Maine is among the Top 5 on the Locavore Index, and is one of the strongest producers and consumers of local food. There were 7,600 farms in Maine in 2017, more than in any other New England state. The farms have $3.8 billion in sales and create 24,000 jobs statewide.
Food sold directly from farmer to consumer increased 53% between 2012 and 2017, and organic food sales increased 65%.
Yet many farmers, as well as those whose businesses depend on farming or support farming, have trouble getting financing from traditional banks.
One focus of the credit union, which is starting with four full-time employees, will be on producers who aren't considered traditional farmers under U.S. Department of Agriculture rules, and therefor have trouble getting loans.
Cheese-making, for instance, isn't considered farming by the U.S. Department of Agriculture, so government grants for farmers aren't available to cheese producers, said Jessie Dowling of Fuzzy Udder Creamery, of Whitefield and president of the Maine Cheese Guild.
According to the Maine Farm Bureau, in 2017, the last year statistics were available, there were 87 licensed artisan cheese producers in Maine, up 12% from the previous year.
"I can't emphasize enough that small value-added producers ... are an integral part of what keeps farms alive," said Dowling, who helped with the creation of the credit union and is a member. The lack of capital makes it hard for those producing food to ramp up production, expand, and more.
"That's where Maine Harvest is going to come in," she said. "It will close that gap."
"[Maine songwriter] Dave Mallett says all you need is a piece of fertile ground," U.S. Sen. Angus King, I-Maine, told the dozens gathered in Unity Tuesday. "But you also need other things. You need information and you need financing. And financing is where we are today."
He said the credit union will be a building block for the state's economy, which was by others who spoke Tuesday.
U.S. Rep. Jared Golden, D-Maine 2nd District, said he's talked to a lot of young farmers who are starting out in the business. "Access to loans and capital always comes up," Golden said. He said it's also tough for them to get capital for things like solar installations, which will make their farms more efficient and less expensive.
"That will be part of the important work Maine Harvest Credit Union will be doing," he said.
U.S. Rep. Chellie Pingree, D-Maine 1st District, said the perception of small organic farms has changed in Maine over the years as they become a bigger pieces of the economy.
"I have been [a part of the farming community] since 1971, when people thought we were just a bunch of hippies in Birkenstocks," she said. "There's been a tremendous change" that embraces the local food movement and the increase in young and new Mainer farmers in the state.
"People want to buy food from someone they can look in the eye," she said.
Gov. Janet Mills, who cut the ribbon at Tuesday's event, began discussing the agriculture credit union with May when she was attorney general. She said her legacy as the granddaughter of Aroostook County potato farmers, who logged in the winter, gives her perspective.
"Farmers are hard, hard workers," she said. "It's a risky business and it's hard."
She said the state's natural resources make it ideal for agriculture, and that more can be done to boost the industry, from small organic farms to agritourism.
The credit union's work will "keep legacy farms on the land and attract new farmers," Mills said.
Mills quoted President Franklin Roosevelt, who signed the Federal Credit Union Act in 1934: "Prosperous farmers mean more employment, more prosperity for the workers and the business men of every industrial area in the whole country."
The credit union's first deposit Tuesday was made by Anna Roosevelt, FDR's granddaughter.
Credit unions are member-owned and must raise money to get a charter. Maine Harvest reached it's $2.4 million fundraising goal last fall.
The founders told Mainebiz earlier this year that the intention is not to replace customers' banks, but to provide an added tool for farmers and food producers.
"We're not doing anything with consumer lending," Budde said. "There are so many [financial institutions] available there's no need. What there is a need for is funding to operate small farms."
May said the focus is to supply loans for farmland access, including everything from land to equipment to solar installations. He also said most of the credit union's business will be online, and anyone who is a member of the Maine Farmland Trust or Maine Organic Farmers and Gardeners Association can become a member.
Maine Harvest is the state's 55th credit union and the first to be chartered in 25 years. It's also the first in the nation focused on food entrepreneurs and farmers, according to the National Federal Credit Union Administration. It was one of two to be charged by the NCUA in 2019.
“How appropriate that this credit union is located in a town named Unity,” NCUA Chairman Rodney E. Hood said in a news release. “Credit unions are organized through, and operate on, the principle of people working together to support one another.”
Unity is in northwestern Waldo County, about 15 miles east of Waterville, and is surrounded by rolling farmland. The credit union is at 69 School St., in a renovated schoolhouse that's on the National Register of Historic Places. The hallway walls are lined with life-size photos of farmers.
The building is home to the Maine Farmland Trust, and the Unity Food Hub, which has cold storage, a commercial kitchen and meeting space for the farming community.