Michigan Farm News

Breaking entry barriers for new farmers

Dollars and Sense

GreenStone FCS | April 24, 2018 

Cindy Birchmeier & Jennifer Whitford

Farm lenders can identify customers who may benefit from an FSA program, make recommendations and initiate the introduction. | Meg Sprague Photography

Farming can be a capital-intense business and with land prices increasing and commodity prices decreasing it may appear impossible for individuals to enter into farming. However, we also know if we are to continue to have access to a safe and affordable food supply, we must have resources available to encourage the next generation of farmers.

 As lenders to rural America and production agriculture, we understand the challenges individuals face when starting their own farm or taking on ownership of a multi-generational farm and as such, we work to provide the educational and financial resources needed to help establish a solid foundation for new farmers.

Working with the Farm Service Agency (FSA), a branch of the USDA, we connect beginning farm operators, by smoothing their way into their agricultural pursuits or paving the way for the next generation of farmers. These programs are tailored specifically for beginning farmers, defined as anyone farming for fewer than 10 years.

While many aspiring agriculturalists may have heard of the FSA, understanding the available programs, identifying the most beneficial to their unique situations, and figuring out how to access them can be overwhelming. As part of our mission to work with young, beginning and small farmers, we work closely with the FSA to make these programs more accessible to those who need them the most.

Beginning farmers can initiate the conversation about FSA programs by visiting one of our local branches or an FSA office. Farm lenders can identify customers who may benefit from an FSA program, make recommendations and initiate the introduction, even for customers seeking direct financing from FSA.

Conversely, if a customer reaches out to FSA initially for one of the programs on which we partner, FSA will reach out to an ag lender. We will then discuss the farmer’s needs and how to best structure the financing. Moving forward the lender and FSA work side by side in the customer’s best interest.

Beginning farmers most often utilize the Down Payment Loan Program and the Participation Loan Program. By participating with FSA in these programs, we are able to relax our underwriting standards, including requirements for working capital, owner equity and down payment expectations. Both programs may offer significantly reduced financial outlay by the farmer.

In the Down Payment Loan Program, available to beginning farmers, we finance 50 percent of the loan, FSA finances 45 percent, and the farmer provides 5 percent of the purchase price of the asset as a down payment. This program can be used to purchase land with or without facilities. To qualify, the farmer needs to currently own less than the county average farm size. This information is available through the local FSA office.

In the Participation Loan Program, the lender and FSA each finance 50 percent of the loan, leaving no required down payment by the customer. This program is available to producers who are within their first 10 years of farming and who have not previously utilized direct FSA financing and do not meet GreenStone’s normal underwriting standards.

Along with the FSA programs for beginning farmers, we offer programs for young farmers and small farms as well. While many times these segments are also eligible for the FSA programs, we may offer additional options.

In addition to financial assistance, we provide a number of educational resources and opportunities for young, beginning and small farmers including college scholarships, a mentoring program and grants for continuing education.

Our resources, and those from the FSA, have been utilized in all sectors of agriculture, from livestock and cash grains to vegetables and dairy.

For more information on programs for young, beginning and small farmers, reach out to your local FSA office or GreenStone branch.

Birchmeier is Regional Vice President of Sales and Customer Relations and Whitford is VP of Lending at GreenStone Farm Credit Services.


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