Agriculture business Information

Financing Land Acquisition

This was widely experienced as an obstacle. Real estate loans were either unattainable or unsupportable with expected farm income (though several of the beginning farmers qualified for loans based on income from other activities.) Few farmers who qualified for a real estate loan thought getting one would be a good idea, and many respondents did not qualify. Credit thus does not seem to be the answer; other forms of land transfer and purchase need to be developed.

There appears to be a major unmet need here – for information, leadership, and creative ideas. This may also be a particularly auspicious time for work on innovative land transfers. There are many farmers who will be reaching retirement age in the next few years, as well as many dairy farmers trying to leave the farm. They are facing particular difficulties in selling their farms, and may be more open than they would otherwise be to unusual financing arrangements.

Probably the simplest and least costly approach would be to document and describe creative financing and land transfer arrangements that allow cash-poor beginning farmers to eventually own land.

Such arrangements could include rent-with-option to-buy systems, building up sweat equity, land trusts, and sharecropping, among other things. One important area of research would be tax and legal retirement issues for older farmers passing on their land.

A short manual describing various options could give both current and potential landowners an idea of the possibilities. If there is sufficient interest, a “matchmaking” seminar could be organized, at which current and aspiring landowners learn together about different avenues for land transfer, and meet each other.

Start-Up Capital and Production & Financing

This was an issue for virtually all the beginning farmers, and they had one major way of dealing with it: off-farm jobs. In this, it should be noted; their situation is no different from that of many established conventional farmers.

Most of the farmers in this study were wary of debt, and were prepared to spend several years as weekend or part time farmers, working elsewhere to capitalize their operation. Most of them saw this as inevitable, and felt that it actually had the advantage of letting them start slowly and learn as they went along. Several said it was just as well they didn’t jump in any faster.

Such financing arrangements may be a promising avenue for more beginning farmers, particularly those with strong urban connections.

There is another lesson here for beginning farmers: skills and connections developed in an urban setting can be a great source of strength and vitality for a new farm operation. These ties and special abilities should be tapped and nurtured, not abandoned.

Again, improved access to credit does not, for the most part, appear to be the solution for many beginning farmers. The development of alternative modes of production financing, such as community supported agriculture (CSA), could provide a real leg up to some farmers. Realistically, however, CSA would probably not be appropriate for very new or inexperienced farmers. This study suggests that an indirect though occasionally critical source of help may lie in the rural economy as a whole — the existence of offfarm jobs that can provide enough income to help capitalize a farm. However, we note that the low prevailing wages for most rural jobs will not provide adequate income for capitalizing a farm, and are not in themselves a solution to the problem of the high start-up costs and low income associated with farming.


Although there are several good reasons why many beginning farmers are unable to obtain start-up or operating loans, one unnecessary constraint is the bankers’ lack of familiarity with some of the enterprises and production methods favored by beginning and sustainable farmers. With regard to unusual enterprises or production practices, the banking community needs to be educated if it is to do its job well. Making an effort to attract loan officers to educational events — or specifically targeting them for seminars and field days – may help accomplish this.

Low-Investment and Low-Cost Farming

Given the almost inevitable shortage of capital for beginning (and other!) farmers, finding alternatives to big machinery and infrastructure investments would be a real service to the farm community. Such alternatives could take several forms.

 Creative “making do”:

Many beginners have learned how to avoid purchasing new, expensive equipment by piecing together simple but functional systems. Several of the farmers interviewed described their livestock housing, fencing or irrigation systems as “funkylt or “primitive” or “lowtech.”

Most of them can also point to neighbors who started out by buying state-of-the-art equipment, and who went bankrupt soon thereafter.

In any educational activities geared for beginning farmers, emphasizing the practicality and economy of the “make do” approach would be appropriate.

Purchasing and adapting used equipment:

Experienced farmers are often creative mechanics, and know how to adapt machines to perform a variety of functions.

Learning how to do this — or simply finding out that it’s possible — could help many beginning farmers who are facing large start-up costs. There may be sufficient demand among both new and experienced farmers to justify offering special seminars on certain kinds of equipment adaptation.

Sharing or renting equipment:

For pieces of equipment that aren’t needed by everyone at the same time, it may be possible to form a “lending library,” or simply identify a pool of equipment owners who are willing to rent large or specialized machinery to other farmers. There do not appear to be established communication networks to accomplish this. One simple and inexpensive solution might be to persuade publications serving the farm community to have special classified ad sections dealing with farm equipment rental.

Another possibility would be to encourage existing farm organizations to poll their members and see if members currently own pieces of equipment that could be used more intensively, or whether there is sufficient demand that purchase of a shared machine would be feasible. Such a solution would require that there be a “critical mass” of farmers with similar needs living in a reasonably small area, however.

Developing low-cost production systems:

Beginning farmers are in a good position to start out with low cost production techniques and avoid debt. They should be encouraged to look at rotational grazing systems for livestock, cropping systems that rely on few purchased inputs, and farm enterprises that complement each other and make the best use of limited resources.

Creating an Input Supply Network:

A number of farmers cited the difficulty of locating and obtaining needed inputs — and the high cost for purchasing small quantities. Buying clubs could fill a real need here, reducing research time and per-unit input costs. However, such an approach would require that participating farmers produce similar commodities and live relatively near each other.

Agribusiness Information