President Roosevelt signed the Federal Credit Union Act into law in 1934, which led to the industry's expansion for decades.

Roosevelt said she jumped at the chance of becoming an organizer of the Maine Harvest Credit Project despite her many professional duties as president/CEO of the Goodwill Industries of Northern New England and other civic and community commitments.

Last month, the Maine Harvest Credit Project hosted its organizer event, a critical part of obtaining its state charter and achieving recognition as the 59th credit union of the Pine Tree State. Regulators require a developing credit union to form a group of organizers to review and adopt its bylaws and appoint the first board of directors, according to John Murphy, president/CEO of the Maine Credit Union League, who attended the organizer event.

While the Maine Harvest Credit Union Project has come a long way by raising $1.4 million of the $2.4 million in grant capital it needs to officially open the proposed Maine Harvest Credit Union, there is still much more work to be done. Organizers hope to reach the grant capital goal this year.

"We spent a lot of time just trying to qualify our business model and trying to understand the regulatory framework and all of that stuff that used to give us a lot of pause for concern," Sam May, who chairs the project's advisory board, said. "I don't want to underestimate any of those things, but we're feeling a whole lot more sanguine about all the minutia and the regulatory stuff. We've made great progress in raising the money, and that's our final hurdle now."

May and Scott Budde, the director of the Maine Harvest Credit Project, have been laboring over the long, detailed and arduous work that set the foundation of building the proposed credit union's business model.

What brought the two men together in 2013 is their passion and belief in the new food economy, which is generally known as a growing national movement of consumers who want unadulterated, minimally processed and allergen-free food from local farmers and food producers.

"People want food they can trust," Budde said. "Organic is one part of that, but food coming from people you know and from areas that you live in is very valuable to people."

What's more, the consumer demand for locally produced food is expected to keep growing.

The University of Maine has committed to purchase 20% of food served on its campuses from local farmers and food producers by 2020. And a 2016 survey of Maine consumers found that 80% of survey respondents said they would buy locally produced food over food from other areas when given a choice.

Before they got involved in the project, Budde worked for 20 years in the financial services and investment management with a focus on bringing social and impact investing strategies to a wider range of investors. He was a senior executive with TIAA-CREF, where he created the company's first department focused on socially responsible investing strategies and implemented a new impact investing program in microfinance and financial inclusion, green building technology and community bank deposits.

May, a Maine native, ran a retail and construction business and then received his MBA in international business after which he launched a 20-year career as a Wall Street stock analyst, consultant and international banker.

Five years ago, May and John Sharood, CFO of Farming Fungi LLC, a family-owned producer of organic specialty mushrooms, hatched the idea of establishing a credit union. While there are organizations that provide financing for farmers and food producers, they have limitations in their ability to meet certain larger and longer term financial needs such as small farm mortgages that could be fulfilled by a credit union.

Budde and May met through Maine farm organizations they were involved with and began talking about the market opportunity of creating a specialized financial institution that could support the growth of small farms. Maine's existing banks and credit unions do not typically finance small farms because of perceived risks, lack of standardized business models within the sector and the lack of critical mass of farms or food producers within a geographic area.

Nevertheless, small farms in Maine are growing because the consumer demand for locally produced food keeps increasing.

According to 2015 research from the University of Maine, the number of farmers age 34 and under increased 40% from 2007 to 2012. The state is also bucking the national long-term trend of farms declining in number but getting bigger in size. In Maine, however, the number of farms is increasing but they are staying small.

What's more, Maine added the most organic farms — approximately 138 — of any state in the nation from 2008 to 2014, according to the U.S. Department of Agriculture. In 2014, Maine had nearly 520 organic farms.

"While government programs can help, many attribute the growth — especially in the ranks of young farmers — to innovative, private-sector programs such as an apprenticeship program run by the Maine Organic Farmers and Gardeners Association; conservation programs such as those run by the Maine Farmland Trust, which lower the cost of farmland; and cooperatives that make it easier for growers to get their products to large buyers," the Bagnor Daily News reported in 2015.

Budde and May conducted a nine-month feasibility study to explore the creation of a specialized credit union and/or loan fund to promote the continued growth in Maine's local food economy. The 59-page report focused on two tasks: Understanding the specific lending needs of diversified and specialized small farms and related food businesses such as cheese manufacturers, beer brewers and tortilla makers, and tying these needs to a possible credit union model.

Budde and May drove more than 15,000 miles crisscrossing the state to conduct 36 in-depth financial interviews with farm and business owners who are members of the Maine Organic Farmers and Gardeners Association, the Maine Farmland Trust and three smaller and related membership organizations.

The interviews revealed farmers need land access (mortgage) related financing in the estimated $100,000 to $500,0000 range, equipment lending in the range of $25,000 to $50,000, and seasonal lines of credit of up to $50,000.

The interviews also indicated a potential loan market of approximately $180 million in Maine with about half of this loan demand related to land financing, according to the report.

The research report also revealed farmers and food producers would value technical assistance related to production and distribution issues, general management and financial management.

"We believe that coupling professional, personalized TA in these areas with the proposed land access mortgage product will both reduce the risk of borrower default and create a competitive advantage for establishing (the proposed credit union) as a lender of choice among members," the report stated.

The new credit union would also offer three deposit products for savings, checking and CDs.

Budde acknowledged the default risks of farm loans are generally higher than small business loans because weather conditions, pests, diseases and other issues can ruin crops or lower crop productivity, affecting the farmers' ability to repay their loans.

To offset this additional risk, the proposed credit union plans to target core equity and reserves/assets of 20%. This figure is based on the capital levels of other established farm commercial banks in the Northeast that have a long track record of surviving deep agricultural recessions.

Using measured and reasonable growth goals, Budde estimated that after eight years, he anticipates that the credit union will be serving 50 to 100 land borrowers, 100 to 200 land borrowers and 500 to 1000 depositors.

"It's not huge, but our goal is not to take over the world," Budde said. "Our goal really is to build a specialized credit union model that gets to scale quickly and can stay there without permanent grant support."

If the proposed credit union succeeds, Budde envisions that it can serve as a business model to be used in other states where there is a vibrant new food economy.