Beginning on the family farm, COBANK CEO Douglas D. (Doug) Sims, has maintained strong ties to agriculture and rural America, and both his family and that of his wife, Nancy, continue to run farm operations today. As a career, Doug has spent nearly four decades in the Farm Credit System, serving in various lending and general management positions since 1969.  

Doug has been an active leader in the System. He just completed two terms as chairman of the System’s Presidents Planning Committee, has served as chairman of the Legislative and Regulatory Committee and as chairman of the Risk Management Committee. At critical times, he has served as the System’s principal spokesperson on legislative and regulatory issues. He is past chairman of the Federal Farm Credit Banks Funding Corporation, Jersey City, N.J.  

In addition, Doug is chairman of the Washington, D.C.-based trade association, the National Council of Farmer Cooperatives, and a frequent participant in global trade meetings. He is a former member of the Finance Governors of the World Economic Forum, Geneva, Switzerland.  

As CEO of COBANK since 1994, Doug has been responsible for implementing the bank’s strategic and business direction set by the board of directors. During his tenure with COBANK, he has overseen 15 mergers and reaffiliations and has led the growth of the bank from a $12 billion financial institution to a $32 billion internationally recognized cooperative bank. As of June 30, Doug will retire from COBANK. He is currently transitioning his responsibilities to Robert B. (Bob) Engel, COBANK’S president and chief operating officer, who Doug brought into the Farm Credit System five years ago and who will succeed him on July 1 as COBANK’S next CEO.  

1)      You started your Farm Credit career in 1969, lending to farmers in your native Illinois. Have the fundamentals for successful farming changed during the past 37 years?

3)      Clearly, yes. We have gone from an agriculture that’s highly production-driven to one today that is more marketing, finance and management-driven. By that, I mean that farming has become much more of a business than a way of life. Successful farmers today are implementing all the management techniques of a small business owner or entrepreneur to make their businesses more successful. These could include the application of technology, of research and development from universities, or techniques from other vendors to the farmer. The one thing that I’d add is you’re now seeing those same farmers invest off the farm, whether in value-added businesses that directly relate to the farm, or in diversified investments with other, rural businesses.

2)   Comparing what you could do for your customers in 1969 to what Farm Credit associations can do for customers today, how do you rate the evolution of Farm Credit’s value to farmers and other rural borrowers?

      In terms of comparing the value of Farm Credit from early in my career to now, again it has evolved and changed rather dramatically. Before, the customer often would come to you, and all they were looking for was either a long-term or short-term loan. Today, Farm Credit has evolved to a “trusted adviser” status, where Doug’s View: New Opportunities for Farmers and Farm Credit (continued) not only are we providing financial solutions on the farm, but oftentimes other services — such as leasing, consulting, tax preparation, farm records and cash management — in other words, services that help them solve problems in farming operations.

3)   Has the emergence of national and super-regional commercial banks, deregulation of the financial services industry, Internet banking and other changes in the financial system eroded the Farm Credit System’s public policy benefit?

I can’t see that anywhere in the nation. In fact, I think that Farm Credit, with its unique mission, is as important — or more — than when it was first started at the turn of the century. Today, farming and agribusiness are much more sophisticated. The good news about Farm Credit is that it stayed focused on its customers and has grown with those customers in a way that many other financial institutions haven’t. It’s fairly easy for our competitors to make loans on equipment or on land, but when it comes to making a loan based on a more sophisticated agricultural enterprise, many of our competitors have not kept up with the skill sets they need to serve our industry.

4)      As the co-chair of the national Farm Credit HORIZONS project for the past two years, what outcomes would you like to see from this initiative?

6)      The charter that Farm Credit currently operates under was largely written in 1971, and it was the agriculture of the late ’60s that drove those changes. I believe the Farm Credit System has done a magnificent job of operating under and utilizing that charter. But agriculture, as I’ve just said, has changed so dramatically that today we are very limited in terms of what we can do for some of our core customers — the small, young, beginning farmers, and the part-time farmers who have significant off-farm income — as well as the role that Farm Credit plays in rural communities. And so, I think we need to continue to educate our stakeholders — those constituents who depend on Farm Credit — on these changes and limitations. For us to adapt to a rapidly changing environment in our rural communities, we need our stakeholders to be prepared to support us as a financial institution. We need to build this base to support changes in regulations and our charters.

5)   HORIZONS found that a healthy agriculture needs vibrant rural communities more than those communities need agriculture. This finding reflects agriculture’s declining share of economic activity in most rural communities across the country. Please discuss the implications of this finding for the Farm Credit System. And please tell us if you envision an expanded System role in supporting rural entrepreneurship and rural communities.

9)      This ties to my last answer. I believe as you’ve watched farm populations drop from nearly 39 percent following WWII to nearly 1 percent today, clearly the role of agriculture in rural communities has changed. It has not been diminished in terms of importance, but what used to be largely agriculture communities, today is a rural community that may be more important to the farmer than the farmer is to the rural community. We also find that many of our core customer-owners are investing in rural America in ways we cannot help them. We need to be able to follow our customers. We don’t need to change our mission to do that. But where our customers are investing in rural America, is where we ought to be able to help them as a financial services provider. The bottom line is that we can’t do this all by ourselves. We must have farm organizations, rural community organizations — all of the stakeholders who think Farm Credit is important to agriculture and the rural community — understand this need and help us get the laws changed that would allow us to serve a broader sector of rural America.

6)   Over the past 30 years, the pattern of farm and rural land ownership has changed dramatically. What changes do you anticipate in land ownership and how will those changes affect the businesses that depend on it? What is Farm Credit’s role in facilitating these changes?                                                

12)  Land ownership has been changing my whole career. There’s much more absentee land ownership today as a result of farm families passing their land along to their children, and I think we’re going to continue to see that. What this means, is that often these absentee landowners may rely more heavily on Farm Credit for counsel and advice, in terms of who ought to operate their lands, or who are the best people to manage that for them. In the future, I think Farm Credit, as a financial solutions provider, will be in a position to help absentee landowners, and should be given the opportunity to help them decide who best to operate their land and what kind of management techniques are needed.

7)   Much of your career focused on financing farmer cooperatives. How have the fundamentals of successful cooperatives changed over the past 25 years? Is the cooperative model still relevant today? Should the next generation of Northeast producers look to marketing cooperatives as a tool for effective marketing?

15)  Just as farmers have changed over the years, so have cooperatives. Factors such as globalization, consolidation and competition — these are favoring fewer and larger farmers. Today, 7 percent of farmers are providing 75 percent of our food supply. The same trend is true today for cooperatives as well. The role of cooperatives, however, has not lessened. They may be more important. For as long as cooperatives continue to provide value to their customer-owners, there will be a need for these organizations. To continue to be successful, however, cooperatives must be run as a business first, and with leadership from a board and management that continually finds ways to provide added value. As such, I see a bright future for cooperatives. With the right board and management providing leadership, the cooperative model continues to be relevant today. Our future generations can rely on this model, or a modified version of it. Remember, the Farm Credit System is also a cooperative, and the same principles apply to it as well.

8)   In 1994, you were a leader in the “first-ever” merger of the Springfield Farm Credit Bank into COBANK, forming the first — and still only — Agricultural Credit Bank in the nation. What did we learn from this business model and does it present opportunities for other parts of the Farm Credit System? What do you think the System will accomplish in the next 5 to 10 years?

18)  I take great pride in being the CEO of COBANK, the first ever and only Agricultural Credit Bank. It combines the benefit of a Farm Credit bank and a Bank for Cooperatives into an organization called an Agricultural Credit Bank, the only bank financing both cooperatives and Farm Credit associations in the System today. It wouldn’t have happened without a strong board and management commitment. Because of the leadership of Bill Lipinski, Dean Moreau, Ray Nowak and Mike Gerber, this business model is a sustainable and successful partnership.

20)  Eleven years ago, a strategic study projected flat or no growth for the Northeast Farm Credit associations. Today, you’ve had steady growth and doubled the size of Farm Credit’s presence in the Northeast.

22)  We believe this special business model has played a role in your success. But we can’t stop here. We must continue to challenge and enhance the model to meet the changing needs of our customers in better and more efficient ways.

24)  Fortunately, we believe the combined financial and human resources of COBANK and our affiliated associations in the Northeast, as well as at Northwest Farm Credit Services, position us to provide the highest level of service and value to the market. If we were to reorganize the Farm Credit System today, you would not organize it under three different charters. The challenge today is to make sure that we maximize the market opportunities that we started 10 years ago with Springfield.

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