The Illinois Farm Bureau has filed suit against the American Farm Bureau Federation in an escalating dispute over membership requirements for people who buy insurance from the state organization's affiliate.
AFBF's board of directors voted Nov. 7 to terminate the membership of Illinois Farm Bureau in the national organization, effective Dec. 20, after IFB informed AFBF that affiliate Country Financial Insurance Co. was changing its underwriting rules to no longer require policyholders to be Farm Bureau members.
The state farm bureau said in its lawsuit filed in McLean County, Illinois, that the termination violated a settlement agreement between the two organizations that IFB said allowed it to keep using the name, Illinois Farm Bureau.
The lawsuit comes after the two parties met in Chicago on Monday for a mediation session but failed to resolve the dispute, which stems from the decision by Country Financial to no longer require membership in the organization to buy non-agricultural insurance.
The decision to vote out Illinois Farm Bureau hinges around “farmer control” of organizational decisions, AFBF President Zippy Duvall told reporters Wednesday at an agricultural bankers meeting in Milwaukee.
“This is about reassuring that this organization stays in farmer control, whether it be policy, whether it be our affiliate companies, member benefits,” Duvall said. "Farmers are supposed to be in control of those things."
The Illinois Farm Bureau complaint says: “AFBF’s termination … does exactly what AFBF promised not to do in the settlement agreement — that is, based on the business activities of Illinois Farm Bureau’s affiliates, AFBF is removing Illinois Farm Bureau’s contractual right to use the ‘Farm Bureau’ name and depriving Illinois Farm Bureau of other important AFBF membership rights and benefits, including a voice in national farm policy issues. At the same time, AFBF seeks to maintain all of the benefits it received as part of the negotiated and agreed-to settlement,” which was reached in 1990.
The state farm bureau said an Oct. 19 letter sent by AFBF to county farm bureau presidents in Illinois and subsequently shared with other state farm bureau officials and committee chairs, “falsely states that there has been a decision by ‘Country Financial management to voluntarily and unilaterally drop hundreds of thousands of Farm Bureau members.’ AFBF further references ‘Illinois Farm Bureau’s decision to drop hundreds of thousands of members.’ These statements are false because neither Illinois Farm Bureau nor Country Mutual or its affiliates are ‘dropping’ any members.”
Illinois Farm Bureau President Brian Duncan said in a statement Wednesday that the decision “was made after great reflection and for sound business reasons” and that it “was based on feedback from COUNTRY clients and sales representatives as well as competitive pressures COUNTRY faces in the marketplace.”
"The COUNTRY Financial Board vetted this decision for months and supports it,” Duncan said. "This decision is not only the right one for its policyholders, but it’s good for Illinois Farm Bureau and county Farm Bureaus because as COUNTRY Financial succeeds, so do we – and vice versa.”
According to the lawsuit, AFBF's Oct. 19 letter said IFB leaders’ decision to allow the change in membership rules surrounding policies “violates the AFBF Bylaws and Membership Agreement.” IFB disputed that argument in its lawsuit, saying “Illinois Farm Bureau has repeatedly asked AFBF to identify any provision that was violated and AFBF has not and cannot do so.”
AFBF also alleged in emails that the change “threatens immediate, severe, and long-lasting harm” with “devastating financial impact” to AFBF, the lawsuit said.
"Illinois Farm Bureau members pay their annual dues to Illinois Farm Bureau and their local county Farm Bureau, and Illinois Farm Bureau in turn pays a portion of those dues to AFBF as dues for Illinois Farm Bureau’s membership in AFBF," the lawsuit said.
Joby Young, AFBF's executive vice president, said in a statement that the AFBF board’s decision to end Illinois Farm Bureau’s membership in the federation “follows intensive efforts to meet with their leadership, which concluded with formal mediation.”
Young said the “heart of the matter” for the board “is the fact that farmers did not control an important membership decision that will harm farmers and Farm Bureau,” which he said is “contrary to Farm Bureau’s core commitment to organizational control by farmers for the benefit of farmers.”
"AFBF and our entire board will continue to nurture the cooperation, integrity, and trust that binds Farm Bureau together,” Young said. "If a future resolution is found to the dispute between Illinois and the rest of the federation, we would welcome a reunion.”
Duncan said his organization has “no desire to leave AFBF,” which he said “is choosing to abandon” more than 70,000 Illinois-based farmer members “because our affiliate insurance company does not want to force non-farmers to join.”
"We believe AFBF is choosing to put our farms, our families, and our communities at risk at a time when we need support through federal policy,” Duncan said. "In short, we believe AFBF has chosen to break its promises to Illinois farmers.”
Duncan said in Wednesday's statement that "AFBF is clearly ignoring" the 1990 agreement by claiming that IFB "must be held accountable for the actions of COUNTRY Financial, one of IFB’s affiliates. This tactic should serve as a stark warning to other state Farm Bureaus — a warning that AFBF’s priority is associated with memberships gained through agreements with insurance customers and the dollars that come with those, rather than focusing on a state’s farmer members.”
Duncan also wrote that “none of the communications from President Duvall suggest that forcing an insurance affiliate to require membership of non-farmers is good governance, they simply state it is the AFBF way.”
"What other states and other insurance affiliates may consider sound governance does not dictate the governance practices for Illinois,” Duncan said.
Philip Brasher contributed to this report.
