Blog
Young Farmer’s Conference Lessons: Land, Credit, and Capital
January 26, 2012
0


Early last month I personally had a very unique experience – I met and spoke with dozens of farmers.

I attended the Young Farmer’s Conference at Stone Barns in Pocantico Hills, NY. The conference assembled close to 250 young and beginning farmers from 24 states and five countries for workshops and demonstrations. The point of the conference was to spark, foster, and continue a dialogue about sustainable agriculture – to empower farmers to strengthen and expand local food movements.

By participating in the conference I began to realize the difficulties that these young farmers – and all farmers in general – have to face. As expected, variable weather and farming techniques pose problems. However, the main challenges to farmers were persistent insecurity resulting from the inability to obtain ownership of arable land and the lack of access to credit and capital to do so.

Farmers continue to have significant trouble purchasing land. Even long-term leasing is difficult to secure and problematic. Owning land means security, whereas renting land results in uncertainties and limitations, such as being unable to build permanent structures. Farmers are under the constant threat that the next year will be their last on the land.

One young farmer I met has moved her farm three separate times in the past four years. Such continuous upheaval prevents any significant establishment and security needed for both famers and farms to prosper.  It also means uneven stewardship of that soil. Regardless of farm size, access to land and secure tenure thereon are the central challenges common to all farmers.

Underscoring land tenure issues, three farmers presented a workshop entitled “Lets Do the Numbers,” detailing each farm’s finances.  Not surprisingly, each of the three farmers faced different but related obstacles to owning land. Ranging in size from 7 to 140 acres, each farm enterprise was struggling to expand its acreage or retain its land.  Strikingly, the longest lease among them was only five years.  Most commercial property leases are ten years or more, especially when the tenant — like a farmer — intends to make improvements that must be amortized over time.

Landowners are often unwilling to offer extended leases and land is prohibitively expensive to purchase, especially for beginning farmers. For example, leasing farmland in the Hudson Valley ranges from $50-$80 per acre per month.  Purchasing land in this area would cost $6,000 – $10,000 per acre. According to one farmer, an affordable price for such farm land would have to be closer to $2,000 per acre.


Unless land becomes more affordable to lease, young farmers must have access to credit and capital in order to purchase land to establish a successful farm. Unfortunately, as evidenced in my discussions with farmers at the conference, the inability to obtain start up funds is a significant barrier. In fact, according to the National Young Farmer’s Coalition, 78% of farmers ranked “lack of capital” as the biggest challenge for beginning farmers.

Aside from real estate, starting a farm requires expensive equipment, making initial funds a necessity. Raising livestock and running a dairy operation especially require significant capital for fencing and animal housing. Without the credit available to obtain this capital – it is very difficult for farmers to qualify for loans – starting a farm is impossible. The Department of Agriculture’s Farm Service Agency (FSA) has recognized this challenge and can make subsidized loans and guarantee loans through private lenders once a farmer is denied by a commercial lender. But while there is a FSA loan program specifically for beginning farmers, to receive these loans a farmer must have at least three years of farm managerial experience, excluding those individuals who need start-up capital most.

Though there is room for improvement, the FSA, along with other government and non-government programs have helped young farmers get started. One of the farmers I heard from was only able to purchase a farm due to the FSA, which financed his entire mortgage. Other farmers were aided by conservation efforts such as the Agricultural Preservation Restriction Program in Massachusetts and the Scenic Hudson Land Trust.  These programs and organizations seek to conserve agricultural land while aiding farmers in the process.

Non-profits also offer aid to farmers. The Carrot Project is a non-profit that establishes financing solutions that are capitalized by private investment for small and mid-sized sustainable farms in New England and some New York counties. In addition to providing business planning consultation, the Carrot Project issues small loans ranging from $3,000 to $75,000. The formula is simple – provide investment opportunities to local residents and organizations, while delivering needed monetary assistance to small farms.  However, the funds available through the Carrot Project are limited, helping only a handful of farmers in each region when dozens or hundreds need access to loan capital.  In addition, Carrot Project loans are not large enough to assist with land acquisition.

When the Young Farmer’s Conference ended after two days of informative workshops and discussions, I was excited by the enthusiasm I saw for organic, sustainable agriculture – the passion of the farmers and activists was awe-inspiring.  At the same time, I remained frustrated at the myriad of significant systemic challenges that these farmers face.  The success of local, healthy food systems depends on the increasing number of viable, small farms, yet the barriers to small-scale agricultural prosperity are substantial.

Solutions to starting farmers’ difficulties must focus on helping young farmers get established through small, locally-funded loans. Creating more programs that offer small loans like the Carrot Project and land-link initiatives connecting beginning farmers with established landowners is a step in the right direction. Other sources of operations and mortgage loans must be developed to help farmer’s run successful agricultural enterprises.

Some grassroots solutions give farmers hope and needed cash.  Community Supported Agriculture Cooperatives (CSAs) provide significant benefits to many of the farmers with whom I spoke, providing much-needed cash advances for a share of the harvest. However, establishing a CSA is also difficult for someone entirely new to farming.  The Beginning Farmer and Rancher Opportunity Act was proposed to aid farmers in this way, but it is also vital that communities form a relationship – both financially and socially – with beginning farmers. As supporters of local food investment, Slow Money NYC can help facilitate some of these important connections.