Finding Dollars to Farm

Grassroots Group Supports Next Generation

Matthew Fitzgerald helped create an initiative offering tax credits to Minnesota landowners who allow beginning farmers to buy or rent land. (DTN/The Progressive Farmer photo by Steve Woit)

When Matthew Fitzgerald left his family's central-Minnesota farm for college, it wasn't clear if he'd ever return.

"There wasn't a lot to come back to," Fitzgerald said of the family's organic corn, soybean, wheat and alfalfa operation, started in 2000. "We don't have a lot of generational wealth."

After college, Fitzgerald worked for a financial services company, then Cargill. But, he "kept circling back toward farming. I wanted to farm in the worst way. But, there weren't opportunities to purchase land."

It's a scenario to which many young and beginning farmers can relate. Scarcity of affordable land and lack of access to capital make it hard to jump into a traditional farming operation. While there are organizations and programs providing relevant resources, often, it all comes down to timing.

In Fitzgerald's case, 80 acres adjacent to the family farm became available. He jumped on the opportunity, buying the land with the help of a USDA Beginning Farmer Loan. The 25-year-old was able to share equipment and resources with his father to make it all work.

GRASSROOTS EFFORTS

The National Young Farmers Coalition (NYFC) is working to create more success stories like Fitzgerald. Founded in 2010 in New York state by a group of farmers, the NYFC has 34 chapters in 26 states and Washington, D.C.

"Our overarching goal is to recruit, train and support the next generation of farmers in the U.S.," said Andrew Bahrenburg, national policy director of the coalition. "NYFC's vision is one in which anyone who's willing to commit to this kind of business/life can make a go of it. No one is under any illusions that farming doesn't require hard work, dedication and, in almost every case, risk. That's always been part of farming and will always continue to be."

NYFC has gained traction across the country, owing to the enthusiasm of young (typically late 20s to early 30s) local food producers who form area chapters.

"NYFC is farmer-led and typically initiated by farmers who want to organize and engage within our network," Bahrenburg said. "We support them however they need support."

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Fitzgerald helped found the central-Minnesota Young Farmers Coalition in 2016. "They provide really practical, hands-on information," he said. "We put on a workshop on FSA [Farm Service Agency] loans. NYFC helped coordinate and cover costs."

NYFC works closely with Farm Credit, USDA and other private and governmental agencies to steer would-be producers to their best resources.

"One reason some young and beginning farmers don't use every service available is they don't know about them," Bahrenburg said he believes. "We work to bridge that gap, finding innovative ways to build programs and get more effective with outreach."

One of the NYFC's first major initiatives was working with USDA's FSA on its microloans program. This gives young and beginning farmers access to loans up to $50,000, with less-restrictive requirements than traditional farm loans. The idea is that a producer can purchase a small piece of equipment or a few acres. Since 2012, USDA has granted 20,000 microloans totaling some $470 million. The NYFC is also working to improve land access through communication with land trusts and conservationists to loosen land-use restrictions.

CREATIVE THINKING

Before Fitzgerald had the good fortune of finding some neighboring farmland for sale, prices in his area had hit $10,000 an acre. "You gotta know someone or have a lot of money," he said.

One of the initiatives of the central-Minnesota NYFC chapter was a state land access bill offering tax credits to landowners. Under the bill, signed into law by the governor in May, landowners get a state income tax credit if they sell or rent property or agricultural assets to a beginning farmer. The credit starts at 5% on a sale; is 10% on a cash rent agreement; and 15% on a cash share agreement. The credit is effective in the 2018 tax year and is financed at $12 million. Funds are on a first-come, first-served basis.

"It's just a practical win-win solution for beginning farmers and longtime producers," Fitzgerald said. "If you've spent 40 years paying off your farm, there's an incentive for you. We're not asking for a handout, simply asking for a foot in the door."

As Fitzgerald's own operation gets under way, he remains optimistic about his future, if not a little humbled. "When that land came up for sale, I cried like a baby and jumped in with both feet to make it happen," he said. "Every day I get to farm is a gift."

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OUTSIDE-THE-BOX SOLUTIONS

Carl Horne is vice president of customer solutions at Farm Credit Services of America (FCSAmerica) and Frontier Farm Credit. He oversees young, beginning and small-producer programs, and has these recommendations for those wanting to get into farming:

-- Find a lender that understands. FCSAmerica and Frontier Farm Credit work with both seasoned and hopeful new farmers. They match customized underwriting with access to all financial products. Farm Credit cooperatives also have a customized Development Fund, which provides intensive business-plan assistance. The emphasis is on working with producers from the very beginning stages of building a farm.

-- Think value-added. Access to information and niche markets has never been better. Leverage networking and information-gathering skills to create new opportunities for an operation. Increased interaction with consumers creates opportunities and challenges.

-- Get creative. Those marketing and economics classes you took in college can be put to good use. Look at applying and strengthening knowledge gained in the classroom to improve profitability of your operation. Consider the skills you have and how they might be best used.

-- Watch and Learn. If you have to wait for economic conditions to improve to farm, use the time to prepare and learn so you are prepared to take advantage of opportunity when it comes.

-- Consider off-farm income. The reliability of off-farm income plus access to health care makes it an attractive means of income diversification. Ag income is cyclical, but an off-farm job may provide the security that helps you sleep at night.

For More Information:

-- USDA New Farmers: newfarmers.usda.gov

-- USDA Farm Service Agency: www.fsa.usda.gov

-- Center for Rural Affairs: www.cfra.org

-- National Young Farmers Coalition: www.youngfarmers.org

-- Farm Credit Services of America: www.fcsamerica.com

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