Cultivating big dreams on a small-scale, microloan gains popular footing
We all know that Wisconsin agriculture is diverse. We also know that it is constantly growing and changing. New entrants that enter agriculture today may have a different skill set and background than farmers of the past.
However, over the past three-plus years, wherever I have traveled as the state executive director for the U.S. Department of Agriculture Farm Service Agency (FSA) in Wisconsin, I have constantly met people who are interested and excited about agriculture; from small and beginning farmers, to military veterans and disadvantaged producers. They want to farm; and they want to farm in Wisconsin.
Unfortunately, the high cost of purchasing land and equipment can be prohibitive, compelling newcomers and those struggling against odds to take risks to finance their dreams by relying on credit cards and personal loans with high interest rates. Due to high land costs and rents, as well as expensive and specialized equipment, too many people never follow their dream and begin farming.
A new program, offered by the USDA, Farm Service Agency, may provide the hope to the next generation of farmers. The Microloan program provides up to $35,000 to help bolster these producers during their start-up years. Likewise, it will assist small, established producers who find themselves in extenuating financial circumstances.
Microloans are like other operating loans. They can be used to purchase livestock, equipment, feed, seed, fertilizer and related supplies. And here's a real benefit when compared to those credit cards and personal loans; the current interest rate for a microloan is 1.25 percent.
It is imperative that we use solutions like the microloan to provide access to credit to those just starting out or those producing on a smaller scale in order to grow American agriculture.
Agriculture is an important part of our state's economy. After all, it is also part of our heritage, an important part of our state's culture. No other state can boast that their license plate proclaims "America's Dairyland."
A vibrant, robust agriculture industry ensures a safe and affordable food supply at home and abroad. In addition, a diverse and vibrant farm economy keeps people living in our rural communities, sending their children to our local schools and doing business in our local stores.
But here is how microloans are unlike traditional FSA loans. Applying for them is a simpler, more flexible process. By reducing the application form from 17 pages to eight and modifying requirements for experience, it's easy and far more convenient for both our customers and our employees.
Although some production experience is necessary, there are many producers who may not meet the managerial requirements for traditional loans but may be eligible for a microloan. FSA will consider an applicant's small business experience, experience with a self-guided apprenticeship and specialized education to meet the prerequisite.
As the country moves toward more local food sources and joins the farm-to-table movement, there is an increasing number of people going back to the farm and selling their products through farmers markets and community supported agriculture. Microloans are perfect for those who want to grow niche crops to sell directly to ethnic markets, farmers markets or consumers.
Young future farmers and ranchers also will benefit.
Prospects that previously used an FSA Youth Loan to finance an agricultural endeavor, successfully repaid the debt and are of the "age of majority" according to state law, are eligible for microloans. The microloan graduates producers to a new level and further prepares them for larger FSA operating loans or commercial loans through the FSA Guaranteed Loan Program.
By expanding access to credit, FSA continues to help grow the industry on which our country was built - Agriculture.
Through FSA, more than 128,000 loans totaling $18 billion have been issued. The number of loans to beginning farmers and ranchers has increased from 11,000 in 2008 to 15,000 in 2011. More than 40 percent of USDA's farm loans now go to beginning farmers, while lending to socially disadvantaged producers has increased nearly 50 percent since 2008.
At FSA, we aim for ways to help farmers achieve their dreams, to be part of the American population that feeds the world whether they are large-scale or small-scale operations.
By supporting America's farmers, we help all Americans. We provide a secure, low-cost food supply and make a major contribution to the U.S. economy. And we do these things while nourishing millions.
State Executive Director
USDA - Farm Service Agency