And recently, UMassFive College FCU did just that.
I was driving about Western Massachusetts, when I heard a news story on our local NPR affiliate, WFCR, about UMassFive College FCU and their new CSA loan. Here’s the one-minute radio segment about it: Credit Union loans for farm shares
This statement may raise some or all of the following questions from you:
1.) What does CSA stand for, and what is it?
2.) What is a CSA loan?
3.) Why is it a perfect match that a Credit Union should offer a CSA loan?
4.) Why is this a brilliant business strategy on the part of UMassFive College FCU?
5.) What could UMassFive do to promote their CSA loans even further?
6.) Why do I care?
Q. What does CSA stand for, and what is it?
A. CSA stands for Community Supported Agriculture. Basically it’s a cooperative farm, in a similar way that a credit union is a cooperative financial institution. Customers each purchase a share of the food that is made by the farm. For example, one share might cost $700 for the year. During the spring, summer, and fall, you come to the farm and grab that week’s share of food, the contents and amount of which will vary during the harvest season. Typically, you get a box full of fantastic fresh produce each week. Here’s an example of what Simple Gifts Farm’s produce share consists of. The photo on the right is a typical summer week’s share from Doe Run Farm, a CSA in Tennessee.
What is the advantage of a CSA? Terrifically fresh and local food. Savings over what it would cost if purchased from a grocery store. Half-shares are also often available from a CSA, which get you half the amount of a full share of the farm harvest each week, usually at somewhat more than half the cost of a full share. Often times, membership in a CSA also requires a few hours per month helping to box up the week’s harvest.
Q. What is a CSA loan?
A. A CSA loan is a loan for the cost of one year’s share. While many people might be interested in buying local, and supporting local agriculture for a variety of reasons, many of the people interested in doing it can’t afford a lump sum payment of $600-$700. So in this case, UMassFive College Federal Credit Union is offering their members a NO-INTEREST loan, payable over 6 months, to finance buying a share in the CSA. So instead of $700 in one payment, the consumer would be able to pay $117 a month for six months. For many families, they may lower their total grocery bills while receiving a plentiful amount of fresh fruits and veggies.
Q. 3.) Why is it a perfect match that a Credit Union should offer a CSA loan?
A. The sixth of the Seven Cooperative Principles states that cooperatives should cooperate with each other. Both credit unions and CSAs are cooperatives. Both are (usually) dedicated to local cooperative principles. It’s a perfect fit.
Q.) Why is this a brilliant business strategy on the part of UMassFive College FCU?
A.) Because great businesses differentiate themselves, which creates a brand unique to that business. Credit unions are the only type of financial institution which can partner with CSAs in this way, authentically. (Banks could do it, but they’d be seen as copycats. Realistically, offering these types of loans is not on any bank’s radar screen.) This loan does many things at once: Strengthens the credit union’s brand as a local cooperative, actively doing things to strengthen the community which they serve. It also helps the CSA by making it possible for more people to afford to buy shares in it. It helps the member by spreading the payments for a CSA share out over several months.
There are other benefits of of buying local food, (belonging to a CSA is one way to do it), from which the Credit Union’s brand image is enhanced by association: CSAs help reduce the nation’s overall energy consumption and greenhouse gas emissions by reducing the fuel needed to package and transport food through the wholesaler to supermarket supply chain.
Offering interest-free CSA loans is not going to add significant dollars to the CU’s bottom line, nor is it going to cost them a significant amount. But their reputation is enhanced immeasurably, and management and the board must be taking the position that the PR gained, and thus future business, will more than offset the small amount of the cost of the program. Already, being interviewed by the local NPR affiliate is fantastic marketing, which had no cost.
Q. What could UMassFive do to promote their CSA loans even further?
A. Right now, their CSA loan page has a link to a local food site. I’m not sure if UMassFive is promoting this in their lobbies and teller lines too, but if not, they should. Also, they could provide a more direct link to the CSAs that are in the same area as the majority of their members. And of course, they should get in touch with all of these area CSAs and make them explicitly aware of their interest-free loans. UMassFive could also create a CU/CSA-day event, inviting representatives of the CSA to bring samples to the CU, and make it a festive occasion, bringing both more awareness to the CSAs themselves, and to the fact that UMassFive supports them. Also, UMassFive could publicize the WFCR story about their CSA loans nationally, which if successful, will increase the pride that its members have in it.
Q. Why do I care?
A. Long before I knew what a credit union was, as a child, my mother belonged to a food coop. Now that I’ve made a profession helping credit unions, it’s great to see a credit union that is doing something that makes a lot of sense from a business and community-enhancement standpoint. And by so doing makes the world a better place.
Oh yeah, and my mother is a not only a member of UMassFive College FCU, she’s also a member of CSA Simple Gifts Farm in North Amherst. And on Thursdays in the fall, she often brings my son there to help gather the week’s share.