Young Farmer Finance Discussed by Panel

Young Farmers Face Financial Challenges but Also Have Opportunities

Susan Payne
By  Susan Payne , DTN Social Media and Young Farmer Editor
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Five panelists and two hosts discuss issues that young farmers face and the opportunities that some financial providers offer as a solution. (Screenshot from Farmdoc webinar)

OMAHA (DTN) -- In one of its monthly webinars held Oct. 20, Farmdoc Daily, a University of Illinois production, invited a panel of ag industry financial experts to address important issues that many young and beginning farmers face, especially access to financial capital.

"Young farmers tend to carry much higher debt loads and weaker liquidity positions," said Krista Swanson, Farmdoc's research associate, before she introduced the panel. "Because of those challenges and being new to farming in the early stages, setting goals and having a business plan is a fundamental step."

Financial need and access to credit is an issue that affects operations across the country, and there's a heightened need for financing in the areas of land acquisition and annual farm expenses.

In addition to the financial challenges that young farmers face, the last census found young farmers have a higher rates of off-farm employment: Three quarters of producers in Illinois had a different occupation, Swanson noted.

Representing Compeer Financial, Cullen Kennedy, a business development professional, introduced a three-part program called Groundbreakers to help young and beginning farmers "face those challenges head on."

Groundbreakers' lending program offers discounted rates and flexible underwriting for young and beginning farmers with less equity, less cash on hand and lower debt repayment capacity.

The second part of Groundbreakers offers grants that can be used primarily to improve business and operation management skills for young or beginning farmers in Minnesota, Wisconsin or Illinois. The third part is education and outreach opportunities for farmers to gather insight and expertise from other farmers.

"Groundbreakers is a program that's committed to making their vision a reality," Kennedy said.

Speaking on behalf of Farm Credit Illinois, Caleb May, a regional manager, said farm credit associations have a mission to serve the industry and introduced a program called Fresh Roots for young and beginning farmers.

One part of Fresh Roots is the lending aspect -- focused primarily on farm real estate loans and operating loans -- up to $1 million with relaxed underwriting standards. Another aspect of Fresh Roots is the finance workshops, such as the nuts and bolts of balance sheets and fielding forward crop insurance. Farm Credit Illinois also has a recognition piece in connection with Fresh Roots where loan recipients can win a $5,000 prize.

Crystal Zwilling, with the USDA Illinois Farm Service Agency, discussed opportunities for young farmers to get help with down payments, operating loans and/or loans for machinery, equipment or livestock. She also discussed how the FSA partners with farm credit finance bureaus like Farm Credit Illinois and Compeer to take on part of the loans.

"(The Down Payment)5-45-50 program is only available to beginning or historically underserved producers. With a minimum of 5% down, FSA will provide 45% and the other 50% will come from a partner agency. The term loan is 20 years and the maximum amount of $300,150," Zwilling said.

FSA also has micro loan programs for beginning farmers that better serve unique financial operating needs for small to mid-sized farms.

John Gehrke, the chief of Farm Loan Programs at USDA Illinois FSA, said he highly recommends these programs.

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Susan Payne

Susan Payne
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