By Tom Driscoll, NFU Director of Conservation Policy and Education

The stability of the food supply in the United States depends upon farmers’ access to credit. Credit presents challenges to all farmers and ranchers because cash flows differently for farms than it does for many other types of businesses. But obstacles to credit can be especially serious for beginning farmers, who may not own land or equipment that is suitable to serve as collateral, nor the long-term relationships with lenders upon which established producers may rely. Accordingly, NFU policy supports flexible Farm Service Agency (FSA) loans for beginning farmers.

FSA is not the only source of capital for beginning farmers, and we will explore many of them here at the Beginning Farmer Column. Opportunities include small community banks, the Farm Credit System, and new decentralized and peer-to-peer sources of capital. Some beginning farmers from farm families, or beginning farmers working closely with established farmers nearing retirement, may also have access to capital (or assistance securing capital elsewhere) from the established farmers they farm with. Such arrangements have their own opportunities and hazards, which we will also discuss.

Beginning farmers should also remember that because they can access credit does not mean that they should. NFU President Roger Johnson, a third-generation family farmer from Turtle Lake, North Dakota, explained, “there are three types of debt that beginning farmers might contemplate: annual operating debt, equipment debt, and real estate debt. Before taking on real estate debt, before making that commitment, I’d advise beginning farmers to make sure they really want to pursue careers farming and make certain that they expect farming to pay back that loan. In most cases, they should have serious farm management experience and good knowledge of business principles before taking on debt for farm real estate.” This column will explore these and other important considerations, like what an off-farm job can do for a beginning farmer’s need for and access to credit.

Are you a beginning farmer who has pursued or considered pursuing credit to help with the initial startup or build-out of your farm operation? We encourage you to stay tuned to future posts, and to share what has or has not worked for your farm and why with other here at the Beginning Farmer Column!


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