However, production knowledge, business, and (particularly) financial hurdles sometimes prevent the dream from becoming reality. The average U.S. farmer is 57 years old. In other words, many of our farmers are rapidly approaching, or have blown right past retirement age. Who is going to take their place?
Beginning farmers who have some equity may qualify for financing from traditional lenders. Undoubtedly, conventional financing through local commercial banks or Farm Credit is the simplest, most straight-forward route. These institutions carry a variety of financial products, but often won't finance more than 80% of a farming venture's start-up cost. If you're starting from scratch, or if your business plan predicts your farm won't begin to cash flow for several years, you might need additional financial assistance. Where do you go if you need a little extra help?
US Department of Agriculture (USDA) Financing
The Federal government has noted the ageing demographics of our agricultural producers and offers a variety of affordable financing options to help new producers get started. Farm Service Agency (FSA), the particular branch of USDA that distributes and services farm loans, has a wonderful website that provides a step-by-step approach and resources to plan and finance a farming career.
FSA can provide both farm ownership and operating loans for both new and established producers. Additionally, FSA can co-fund with, or guarantee loans from, conventional lenders. As with any government program, the application process for farm ownership and large operating loans can be a bit cumbersome. FSA has developed a Microloan program--$50,000 limit--for farm ownership or operating expenses. Microloans have a streamlined application process and can be a nice fit for many producers.
Other Financing Options
Sometimes new farmers can align themselves with a retiring farmer who agrees to finance the operation until the new farm gets on solid financial footing. PA Farm Link is one such organization that helps align established farmers with new ones.
Finally, sometimes loans can be combined with funding from various small business administrations, economic development organizations, and funding agencies. Most loan officers should be able to steer you in the right direction for these opportunities.
Navigating the financing challenges is just one hurdle for new and beginning farmers, but it's among the more important. There are lots of resources out there, but accessing them and determining which ones are applicable in a given situation requires some study. So jump aboard the internet and see where the surf takes you!