Change the Lending Paradigm: A Model of Success in Native Ag Finance

Akiptan transforms Native agriculture and food economies by delivering creative capital, leading paradigm changes and enhancing producer prosperity across Indian Country. Akiptan (AH-KEEP-TAHN) is the Lakota word for together, in a joint effort, cooperatively. Above photo courtesy of Akiptan

Imagine it is Thanksgiving, and you’re running late. You walk into your grandparents’ house and your cousins, who have been playing Monopoly for a few hours already, invite you to play. From the first pass of “Go”, the game is a struggle for you. Sure, you pass “Go” and collect $200, like the rest of the players. You have the same “opportunities” since you are playing on the same board, but you’re at a severe disadvantage because this game was not designed for your late arrival. To you, success is just getting around the game board without going bankrupt. To them, success looks like earning rental income from the houses and hotels on the good properties. 

This is what it is like working in Native economic development. Sure, we have the same “opportunities” as other governments or non-Natives, but the economy and financial institutions were not designed with the realities of Indian Country in mind. Indian Country was not “playing” in these systems until colonization. Before that time, concepts like sole ownership (rather than communal ownership), succession, and financial gain to the exclusion of other values were foreign. The results of having to play Monopoly hundreds of years after it started are still affecting the Native agriculture industry.

Akiptan’s mission is to transform Native agriculture and food economies by delivering creative capital, leading paradigm changes, and enhancing producer prosperity across Indian Country. Akiptan, being a Native CDFI, has the unique ability to develop loan programs that can truly benefit Natives in Agriculture.

The National Agriculture Statistic Service recently released the findings from its 2022 census. Overall, agriculture producers all across the United States had a net cash farm income of $79,790 on an average of 463 acres. When you break that down to farms with American Indian and Alaska Native producers, the net cash farm income was only $22,906 on an average of 1,085 acres.

The stark and undeniable difference in income shows the potential that Native agriculture could have on local economies if properly invested. The Native American Agriculture Fund’s Reimagining Native Food Economies Report estimated that if Native agriculture had the same level of investment as Indian Gaming, the agriculture industry would surpass the gaming industry in revenue, solidifying the fact that agriculture is an underutilized economic driver in Indian Country. 

Additionally, there is an innate belief in Indian Country that if you take care of the land, the land will take care of you.

The concept of extreme extraction is, again, a foreign concept. Tribal governments and producers take precautions to make sure that conservation is practiced on the land. This means a vast majority of Native agriculture is innately climate smart, in addition to the extra steps producers choose to implement conservation as the original stewards of the land. 

Because traditional financial institutions do not serve Native agriculture in the way it needs to be served, CDFIs have been stepping up to fill in the gap. Most CDFIs lend in multiple areas such as housing, credit building, consumer loans, small business, and more. Akiptan is unique in that we only finance the Native agriculture industry.

Akiptan came from the Intertribal Agriculture Council (IAC). IAC formed 1987 and the overarching goal of the organization is to connect producers with the resources they need to succeed. After 30 years of trying to connect Native producers with access to capital with little success, they decided to launch a CDFI so that we, as Native producers, could do it right. This is how Akiptan came to be. Created by Native producers for Native producers. 

We at Akiptan spent all of 2018 going to conferences, trainings, and working with our Board of Directors to nail down our lending philosophy. We created new lending wheels, greasing the squeaky ones, and taking opportunities where we saw potential. How would we make lending Indigenous and transformative? 

The pillars of our lending philosophy are patient capital vs. extractive capital and a partnership approach to lending that allows us to focus just as much on the relational side of lending as the transactional side. These pillars are the foundation of what has made Akiptan so successful.

Another example is the innovation of our Risk Rating. We are required to risk rate to show that we are making “risky investments” per the CDFI premise. However, traditionally, the higher one rates risk, the riskier the entrepreneur is, which then triggers a higher interest rate and sometimes shorter repayment periods, thus increasing the payment. When analyzing this, we realized that this would be penalizing some of the people who needed help the most. Picture a beginning producer with no credit score, with little equity and tight money but he has all the heart, determination and sweat equity in the world. This traditional risk rating system would give him a higher payment, which would be the financial institution imposing a higher barrier to success on their client. While common, this seemed counter-productive and extractive. Instead Akiptan has flat interest rates across the board, regardless of how entrepreneurs are ranked. 

Akiptan began lending in 2019 and has since committed over $31M in loans to producers and nearly $1M in grants. Additionally, we have created several financial literacy books, tools and resources. Our programmatic side curates programs and initiatives that enhance the impact our direct financing does. Our pipeline of applications is constantly oversubscribed, which speaks to the true testament and value of our products and how we deliver our services. The staff at Akiptan has an impact that goes a mile deep with each producer. The focus on the relational side of lending is crucial to the transformative impact of our capital. It allows us to be proactive rather than reactive, educational, thoughtful and goal oriented. 

A core piece of our mission is to change the lending paradigm. We know that this innovative style of financing can be applied to other areas for equally deep success. Our model has been applied to production, processing/value added, and retail and has been extremely successful. We are eager to share our best practices and model with other financial institutions to help carry forward the work. 

When it comes to investors working in this space, it is critical to also show up in a partnership role, not a transactional role. Relationships are the core of Native culture. Take time to get to know each other. Be a thought partner who is collaborative, not prescriptive. Indian Country has had “solutions” prescribed to it since colonization; none of that panned out well. It is time for us to have a seat at the table so we can bring our own solutions and dictate what our success story looks like. Just like with the Monopoly board, success looks different to everyone who is playing the game, but with collaboration, innovation and patient capital, we can all succeed. 

 

Article by Skya Ducheneaux, the Executive Director of Akiptan and is an enrolled member of the Cheyenne River Sioux Tribe. She spent her first 18 years of life on a cattle ranch on the CRST Reservation in South Dakota. She then pursued a Bachelor’s and Master’s Degree in Business Administration while working at a county FSA office and buffalo meat processing plant. After returning home to work for the Intertribal Agriculture Council, she was tasked with creating the first Native CDFI dedicated to serving Native Agriculture producers all across Indian Country. Akiptan began lending in January of 2019 and has grown rapidly over the years.

In addition to Akiptan, Skya has served on many advisory committees and Boards. In her role as Executive Director, she is a part of several CDFI coalitions, advocates locally and federally and presents at conferences to share the mission of Akiptan.