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Loan Opportunities for New Farmers

Farm Credit East offers multiple programs to support young, beginning and next generation farmers

The long range strength and soundness of the future of agriculture in the Northeast is dependent on individuals entering the industry. As with any industry, starting a new business comes with challenges. Farms require capital for upfront expenses, such as land, equipment, seed, etc. — capital that many startup operations lack. New farms often lack the credit history, repayment ability and/or collateral, so many lending institutions are hesitant to invest in their startup business. Furthermore, any new business lacks sufficient business knowledge, time management skills, confidence and marketing resources to efficiently launch and run a new business.

Marcy O’Connell of Holland Farm CSA in Milford, NH

“Farm Credit has a long-term commitment of helping young, beginning and small farmers get started in agriculture and helping existing farms transition to the next generation” said Bill Lipinski, CEO of Farm Credit East.

“We recognize the demands for capital and financial management skills that make it difficult for these entrants to establish their business. To fulfill Farm Credit’s vision of a vibrant, entrepreneurial agricultural community we have developed programs, such as Farm Credit East’s Young, Beginning and Small Farmers Incentive Program (YBS), FarmStart, LLP and Generation Next to give strong, new entrants a healthy start in the agriculture industry.”

In 2011, Farm Credit East’s portfolio included 6,729 small farm loans, 4,274 beginning farm loans and 3,107 loans to young farmers. A young farmer is defined as a farmer, rancher, producer or harvester of aquatic products who is 35 years of age or younger as of the loan transaction date. A beginning farmer has 10 years or less of farming experience and a small farmer normally generates gross annual sales of $250,000 or less. (Categories overlap for reporting purposes.)

“Young and beginning farmers face many daunting challenges when getting started in farming,” said Gary Bradley, an executive vice president who helped originate Farm Credit East’s Young, Beginning and Small Farmers program. To help this growing customer segment get started in the industry, Farm Credit East’s YBS Incentive program, established in 1995, provides special incentives to program participants. Incentives include discounts on services such as farm accounting software, tax preparation, consulting and appraisal for up to five years. These customers also receive discounts on FSA guaranteed loan fees and interest rate assistance. Farm Credit East’s special incentives for 2011 were $221,240.

FarmStart, LLP is a program to support talented, hardworking individuals entering agriculture. The first initiative of its kind in the United States, FarmStart invests working capital of up to $50,000 to help northeast agricultural businesses become operational. The investment functions the same as an operating line of credit. It is intended to provide the critical last dollar of funding  to be used as working capital.

“There are many excellent young people getting started in agriculture and we are very pleased to provide capital in support of these entreprenuers,” said David Boone, regional manager and FarmStart program director.Since the first investment approved in August of 2006, FarmStart has invested more than $4.1 million to 96 participants (as of June 2012).

“Knowing there are funds available through the FarmStart program has helped me to stay calm in financial situations” explained FarmStart participant Marcy O’Connell of Holland Farm CSA in Milford, NH. “The staff at Farm Credit East are extremely knowledgeable in farming, and knowing they are just a phone call away has allowed me to stay focused on my true passion, farming.”

Each FarmStart participant works with a FarmStart advisor. This advisor provides substantial consulting and financial planning to help young farmers stay on track toward achieving their business objectives and establishing a positive business and credit history. Furthermore, each FarmStart recipient is required to complete a business plan. The business plan helps organize the new entrepreneur’s mission and business goals, as well as define how to distribute their FarmStart funds. The plan serves as a roadmap for the first few years of their startup business.

Any beginning farmer, fisherman, forestry producer, farm related business owners and/or cooperative with great promise for success, but a minimal track record to date and limited financial resources is eligible to apply to FarmStart. To apply to FarmStart, an applicant must submit a FarmStart application, current balance sheet, income statement, monthly cash flow budget and a business plan, along with two personal references. For more information on the program and how to apply, visit FarmCreditEast.com.

Farm Credit East has also developed a ‘Generation Next’ program to assist those young farmers transitioning into management roles on the farm. This program provides management development training for young people, ages 20 to 35, who are involved in the agriculture industry and are the middle-managers/managers of a farm or agricultural business. The program offers three seminar sessions geared towards progressing participants’ overall business knowledge and management ability. For more information on the Generation Next program and for upcoming dates in your area visit www.FarmCreditEast.com

Through programs such as the YBS Incentive Program, Farm Start, LLP and Generation Next, Farm Credit East recognizes the need to invest in the future of farming and agriculture in the Northeast.  Northeast agriculture is strong for many reasons, including the diversity of its farm operations along with its wide array of farm products. The strength of Northeast agriculture will continue with the next generation and new entrants into the industry. Northeast farms contribute to a strong agricultural sector that provides wholesome, fresh products to consumers and essential economic activity throughout the rural communities of New England, New York, and New Jersey.

For more information on any of Farm Credit East’s programs for young, beginning, small and next generation farmers, visit www.FarmCreditEast.com

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Kristie Schmitt

Kristie Schmitt is Knowledge Exchange & Communications Specialist at Farm Credit East, ACA in Enfield, CT. She can be reached at Kristie.Schmitt@FarmCreditEast.com or (800) 562-2235.

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