Farm Credit West and Northwest Farm Credit Services, agricultural lending associations within the Farm Credit System, have merged to form a new association called AgWest Farm Credit.

The merger became effective on Jan. 1 after stockholders voted overwhelmingly in favor of the merger in November and a lengthy regulatory review concluded in December.

The newly formed organization, AgWest Farm Credit, has assets of nearly $30 billion and serves more than 22,000 customers at 59 locations across seven western states.

Farm Credit West worked with farmers in Arizona and California. Northwest Farm Credit Services provided services in Montana, Idaho, Oregon, Washington and Alaska.

Nate Riggers, chair of AgWest Farm Credit’s board and an Idaho wheat grower, said the “strategic merger” will benefit farms of all sizes.

The new association will be led by Farm Credit West’s past president and CEO Mark Littlefield. The management team will include leaders from both legacy associations.

“Merging allows us to bring the best of each association together to form an even more effective cooperative and offer increased value to our members,” said Littlefield.

The headquarters is in Spokane, Wash., with regional operating centers across the West. The agricultural lenders do not anticipate local branch closures or staffing changes.

The merger reflects a decades-long trend of consolidation within the Farm Credit System, or FCS, which exists to provide a reliable, permanent source of credit to U.S. agriculture.

The Farm Credit Administration, an independent federal agency, regulates FCS lenders. The FCS is a borrower cooperative, meaning borrowers own the associations.

In recent decades, mergers and acquisitions have shrunk the number of lenders.

In her book, “Food, Farming and Sustainability,” Susan Schneider, a professor at the University of Arkansas School of Law, wrote that in the mid-1940s there were more than 2,000 FCS lending associations. That fell to 900 in 1983, 200 in 1998 and 74 in 2016.

In 2023, 68 lenders remain.

“The Farm Credit System is following some (consolidation) trends you see in ag generally and in finance generally,” Erik Hanson, assistant professor of agribusiness and applied economics at North Dakota University, told the Capital Press last year.

Experts say lenders that join forces may be able to provide larger loans, diversify risk and become more efficient and profitable, benefiting customers.

A merger may also have downsides. According to economists, a larger association may be incentivized to focus on serving big operations at the expense of smaller farms and borrowers may experience a “loss of local control.”

Riggers, the board chair, said customers should not be concerned about small farms getting overlooked. On the contrary, he said, the organization now has more resources to dedicate to its Young, Beginning and Small Farm, or YBS, programs.

“We think we’ll be able to target even more people and more resources to find those producers and offer them these great (YBS) programs we have,” said Riggers.

Riggers also said customers should not worry about a loss of local control. AgWest Farm Credit runs a local advisory committee program in which producers provide feedback to the board and leadership. Riggers said the association plans to “enhance” this program.