The Greenlining Institute, best known for holding banks’ feet to the fire on issues such as mortgage lending to minorities, has recently taken up a new cause in California: turning minority farmworkers into farm owners.
It is asking the $600 billion-asset Rabobank Group, one of the world’s largest agricultural lenders, to develop lending programs that would give farmworkers more opportunity to run their own farms.
The Dutch banking giant, which is in the midst of a major California expansion, seems receptive.
Guillermo Bilbao, its deputy regional manager for the Americas, said that though it has not developed a plan, it has promised to work with Greenlining to find ways to serve the low-income market, particularly in rural areas.
“We will explore at length what opportunities there are here for us to run programs and participate in programs to develop the financial services to rural areas,” he said.
Greenlining has mainly concerned itself with causes such as fair mortgage lending for minorities, campaign-finance reform, and affirmative action. Waiching Wong, a Greenlining banking specialist, said that though it worked with banks eight years ago on a project to help Hmong farmworkers in California organize a cooperative, it has never before asked a bank to create an ongoing farm-ownership program.
Greenlining took up the cause now because Rabobank is expanding its retail presence in California, the nation’s largest agricultural state, and has the size and expertise to make such a program work, Ms. Wong said.
“We believe that ownership of a farm gives people power. Being your own boss is part of the American Dream,” Ms. Wong said. “We think that Rabobank is well positioned to do this. We don’t think it is impossible.”
Rabobank announced in October that it would buy the $1.3 billion-asset Central Coast Bancorp, in Salinas, Calif., for $371 million. The purchase would boost its California assets to more than $4 billion and add 14 branches to its 23 in the state (it has none elsewhere in the country), creating a branch network from the Mexican border to the central coast.
Rabobank entered California — and U.S. retail banking — in 2002 when it bought VIB Corp. of El Centro, Calif. Since then it has nearly tripled its assets there.
Last year it also tried to buy a Farm Credit System lender, Farm Credit Services of America in Omaha, but the seller, facing stiff opposition from shareholders and lawmakers, eventually called off the deal.
Greenlining wrote letters to regulators opposing both deals. It said that VIB did not adequately serve low-income and Spanish-speaking farmers and Rabobank might not either. In the Farm Credit deal Greenlining expressed concern that Rabobank would also ignore the needs of low-income people in the Midwest.
Reacting to Rabobank’s most recent deal, Greenlining sent a letter to the Office of the Comptroller of the Currency, whose approval the deal requires. It asked the OCC to pay special attention during Community Reinvestment Act exams to Rabobank’s efforts to help farmworkers.
“Greenlining expects, based upon its not filing a protest, that Rabobank will honor its commitment to serve the farmworker as well as the wealthy farm, and to do so with vision, leadership, and appropriate capital,” Greenlining said in its letter.
Robert L. Gnaizda, the group’s general counsel, said it is Rabobank’s job, not Greenlining’s, to come up with a plan to help low-income farmworkers in California.
“What we stress with them is we prefer a vision by them, including the resources they are willing to commit, and we will work within that vision to make it successful, as long as the vision is turning farmworkers into farm owners,” Mr. Gnaizda said.
Still, Mr. Gnaidza had some specific suggestions for things Rabobank could do to help low-income farmworkers. He said he would like to see it help small farmers get access to farmers markets. Also, it could help them make connections with high-end restaurants to sell their produce locally.
Greenlining acknowledges that Rabo has been a good corporate citizen. It notes in its letter to the OCC that Rabobank has committed to giving 1% of its California deposits in cash philanthropy to underserved communities.
Mr. Bilbao said Rabobank is willing to work with Greenlining to find ways to improve financial services in rural communities, but does not want to rush into any commitments.
“We’re going to do this in a way that is comfortable and that we think can be sustained in the long run,” he said.
Even though Rabobank has an outstanding CRA rating, it has been seeking ways to help low-income populations in California, Mr. Bilbao said. For example, it is exploring a debit card remittance program so immigrant farmworkers can send money to family members in their home countries.
Mr. Gnaidza said he is optimistic that Rabobank will present Greenlining with a plan within months; the organization plans to meet with Rabobank in January to continue discussions, he said.
It is in Rabobank’s interest to help create farm owners and develop a good reputation in the community, Mr. Gnaidza said.
“There are going to be other acquisitions they want to make,” he said, “and they are going to want to have a community that believes in them.”
