By Angela Merkert, Alliance for Local Prosperity

The Alliance for Local Economic Prosperity (AFLEP) is advocating for a state public bank in New Mexico that will add focus, efficiency, and effectiveness to the state’s financial system. Legislation proposing the creation of a state public bank (Public Banking Act HB 130) has been pre-filed in the 2025 legislative session.
A state public bank in New Mexico (PBNM) could provide significant benefits to the agricultural sector by offering financial services that address their unique challenges. Here are several ways it could help:
1. Access to Low-Interest Loans: Farmers and ranchers often face high-interest rates when borrowing from private banks, which can make it harder to invest in infrastructure, equipment, or land. A state-run public bank could partner with local and regional banks to offer loans with lower interest rates and more favorable terms. This could reduce the financial burden on agricultural businesses and make it easier for them to expand, modernize, or weather tough economic periods.
2. Targeted Agricultural Lending Programs: Working in partnership with local and regional banks, PBNM could develop lending programs specifically tailored to agricultural needs, such as funding for seasonal planting, livestock purchases, or drought resilience projects. These programs could be designed to reflect the cyclical nature of farming and ranching, with repayment terms aligned with harvest or market schedules.
3. Financial Support for Sustainability: New Mexico farmers and ranchers often face environmental challenges, such as water scarcity and climate change. PBNM, with local and regional banks, could offer specialized financing for sustainable farming practices, such as water-efficient irrigation systems, renewable energy adoption (e.g., solar for irrigation pumps), and soil conservation practices. This would help farmers and ranchers transition to more resilient and eco-friendly operations, while providing financial stability.
4. Encourage Local Agriculture and Food Systems: PBNM could incentivize investments in local food systems, including local markets, processing facilities, and infrastructure that benefits New Mexico’s agricultural sector. This would help farmers and ranchers find new markets and diversify their income streams, keeping the economic benefits within the state.
5. Support During Economic Shocks: Agriculture is highly susceptible to economic fluctuations, natural disasters, and market volatility. PBNM could act as a stabilizing force by helping partner banks offer emergency credit or low-interest loans during times of crisis, such as droughts, floods, or market disruptions.
6. Helping Farmers Transition or Scale: New Mexico has a significant number of small and family-owned farms. PBNM bank could find sources that would be willing to provide access to capital for transitioning to larger, more efficient operations or for succession planning (e.g., passing farms to the next generation).
7. Improved Access to Financial Services: Currently, there are federal USDA loans available that often require about 10% collateral that the farmers may not have and don’t want to risk putting their farm land up as collateral. The PBNM can work with them to cover that 10% requirement enabling them to access this federal funding. The USDA has a number of great programs now–encouraging new/young farmers, developing eco-friendly practices, and sustainability procedures.
8. Regional Development: Through regional investment strategies, the PBNM could target specific areas with economic potential for agriculture. For example, if a region has a high concentration of specialty crops or livestock, the PBNM could develop a focus on providing financing for value-added agriculture (e.g., processing plants) to keep more of the agricultural value within the state. With more food processing capacity, the state can distribute more food products locally and regionally and import less than 955 of our food products–a huge plus for all of us.
9. Supporting Cooperative Models: The state bank could help support the creation of agricultural cooperatives, which could help small farmers and ranchers pool resources for collective purchasing, marketing, and processing. This cooperative model can reduce costs and increase bargaining power, improving the financial outcomes for farmers and ranchers.
10. Building Financial Literacy: The state public bank could also play a role in providing financial education and resources to help farmers and ranchers better manage their finances, access available subsidies, and understand lending terms. This could help ensure that they make informed decisions about borrowing, investing, and saving.

In summary, a state public bank in New Mexico could offer tailored financial products and services that address the specific needs of farmers and ranchers, provide stability during economic downturns, and help promote sustainability and local economic development in the agriculture sector. This would not only benefit individual farmers and ranchers but also help build a more resilient agricultural economy in the state which would benefit all of us.
Learn more at https://aflep.org/
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