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Loan programs help farmers enter the industry

By Staff | Feb 4, 2019

The Beginning Farmer Loan Program receives a modest funding boost in the recently signed farm bill, which is important for an industry that needs more startup operations. The legislation guarantees permanent funding for the various programs that fit under the Farm Service Agency’s umbrella.

High land and operating costs along with risk are proven barriers for beginning farmers, which is why the farming population has grown older on average in recent decades. U.S. Department of Agriculture data finds that the average age of the nation’s 2.1 million farmers is 58 years old. Fourteen percent of farmers are female and less than 8 percent are minorities.

The FSA’s direct and guaranteed loan programs can help beginners pay for operating and family living expenses. The FSA Microloan programs open opportunities for capital.

Program eligibility is limited to people who haven’t operated a farm or ranch in a decade; has a farm that is 70 percent smaller than other operations within the county in which it operates; and meets other basic eligibility requirements.

Borrowers are also required to take part in farm and financial management classes, which increases their chances to succeed. Training includes record keeping, goal setting and cash flow tracking.

The federal government has a long history of offering programs designed to help less experienced farmers. After World War II, returning veterans who farmed received monthly payments if they participated in local agriculture education classes. Instructors offered classroom instruction in winter months, made on-farm visits to evaluate operations and offered advice. Many veterans credited the program for helping them establish their careers.

The FSA Youth Loan Program is another tool that allows young people ages 10 through 20 to get their feet wet in the industry. The program provides loans – in most cases without parental co-signers but with their approval – to obtain money to begin 4-H and FFA livestock and non-livestock enterprises. The participant must have a sponsor who can show they have the experience to advise the loan recipient.

The FSA funds can be spent on livestock, seed, equipment and to pay operating expenses. The maximum loan amount is $5,000.

Contact your local FSA office to learn more about available loan programs.

Iowa also offers a beginning farmer loan program, which was created in 1981.

The programs operated by states and the federal government have benefited beginning farmers and the communities in which they live.

It is challenging to enter farming, but the rewards for doing so are great.

The future of farming hinges on the next generation to establish themselves in the industry. Governmental involvement is helpful in this regard.

Editorial courtesy of Agri News.

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