It's a long way from the Delta to South Dakota, but a takeover attempt at Farm Credit Services of America, the Farm Credit Bank that serves South Dakota, Iowa, Nebraska and Wyoming, could have repercussions for Mid-South farmers.

Last month, the Dutch banking conglomerate Rabobank said it would purchase the shares of the Omaha, Neb.-based Farm Credit Services for $600 million. Rabobank would also pay an $800 million “exit fee” to the Farm Credit System.

The merger, which must be approved by the Farm Credit Administration, the government agency overseeing the Farm Credit System, prompted a flurry of press releases.

The Farm Credit Council, concerned that the sale could be the first crack in the system since its formation in 1916, threw its support behind a counter-proposal by AgStar, which operates Farm Credit institutions in Minnesota and Wisconsin.

Senate Minority Leader Tom Daschle and fellow South Dakota Sen. Tim Johnson called for joint hearings by the Senate agriculture and banking committees to insure that Farm Credit Service members “fully understand the implications of the proposed transaction.”

The American Bankers Association, which for years has lobbied for ending the Farm Credit System's use of low-interest-rate government bonds, called the acquisition proposal a “milestone.”

“For many years the American Bankers Association has argued that the Farm Credit System no longer needs federal sponsorship, is misdirecting its GSE interest rate subsidy status, and that its continued tie to the U.S. Treasury creates distortions in the agricultural credit market,” the ABA said. “This shows the rest of the Farm Credit System no longer needs to depend on federal GSE status.”

Farm Credit Council officials would say the latter was a big leap considering other Farm Credit System institutions still have to compete with commercial banks with access to millions of borrowers who receive 1 percent to 1.5 percent on their savings.

Rabobank has launched a response effort similar to the presidential campaigns that tries to answer any criticism of the merger proposal within 24 hours.

A short time after the first article on the merger appeared on the Farm Press Daily e-newsletter, a Rabobank spokesman e-mailed a point-by-point response to the objections raised by the Farm Credit Council.

The first point was that Rabobank will put $600 million in cash into the hands of the Farm Credit Services' stockholders. Many of those had a poor crop last year and low prices for the preceding two or three years.

But a group of stockholders has written the chairman of Farm Credit Services, citing their concerns about the proposed sale to a foreign entity, relinquishing of farmer control and the loss of more than $1 billion of farmer capital if the merger is completed.

Farm Credit System leaders in the Mid-South will be watching this drama unfold in the Northland for clues as to how they should react if a big bank, foreign or domestic, comes knocking on their door.