Western Washington Food Systems Partnership

AgWest Farm Credit

Responses by Jesika Harper, AgWest Farm Credit

Resources:

Questions & Answers

Q:   Is there someone to help my organization through the pre-application process to see what services we are eligible for?

A:   Email and we will be happy to discuss your situation.

Q:   Do you help non-profits as well as for-profit businesses?

A:   Yes, we have written loans to non-profits too.

Q:   Years ago as a new farm we got a loan through FSA (USDA Farm Service Agency) and basically were told we need to graduate to Farm Credit. It seems like this is different now with new/beginning farmers being able to work with you directly. What is the relationship between AgWest and FSA and how do things work for growers these days?

A:   Things have changed over the years. It really depends the office you get. The overall rule is that, if you were turned down by two ag lenders, you could take your decline letters to FSA and ask for their help securing a loan. There are certain eligibility criteria with FSA. FSA finances people that have farmed for a year or more. If you need $100,000 or less, you can get an FSA express guarantee which is great because their interest rates are very low. If you need more money than that, to buy real estate for example, then FSA requires documented proof you have been a farmer for two years, are a veteran, or have a college degree, or three years of farming if you aren’t a veteran or college graduate. Once FSA sees that you are doing pretty well after financing you, they want to let you go so they can free up capital to finance others. Then you could come to us with a history of running your business. So in that way, there is a graduation process.

We ask, “Are you a farmer?” We finance first-generation first-time farmers. We don’t have requirements about number of years farming.

There are times when we work together. There are two joint financing opportunities which are terrific. One is the Beginning Farmer Down Payment Program that is used for real estate. Some call it the “5-45-50.” The beginning farmer only has to put 5% down. We finance 50%, and FSA finances 45%. So your blended interest rate with us and FSA is a lot lower. There is also a “50-50” for those not designated as a beginning farmer. We would finance 50% of the loan and FSA would finance the other 50%.

Q:   Some years we did not have enough money to make a yearly payment and FSA was able to amortize it to keep us going. Is that something AgWest does now or do you work with FSA to do that?

A:   Without analyzing your scenario, I couldn’t answer that question because it is literally different for each commodity and even within the same commodity. We do understand agriculture better than a lot of folks.

Q:   We hear over and over from new and beginning farmers about how expensive it is to buy farmland now and the income from farming often is not enough to pay for the land. Consultants have said not to go on the MLS market or Zillow to look for farmland. Do you have recommendations for how to find land that is not being sold on the MLS market?

A:   People across the country are asking this million dollar question.It’s supply and demand. You could try an app called onX that shows who owns land. You can look for land that appears to be vacant, but it’s hard to do.

The unsung heroes are land trusts such as WA Farmland Trust. They are protecting ground forever and taking development rights off of properties. Affirmative ag easements have language written in specifying that the land will be farmed so it’s not going fallow.

We have been involved with land trusts in a number of “buy, protect, sell” purchases where the land trust bought the land and put a conservation easement on it. That removes all the development value. Then a beginning farmer was able to purchase it at ag value. That land is then protected forever and is never going to have housing on it. Building a relationship with those people in your local communities. I would love to see an MLS for land trusts. Those groups need to continue to get funding. The State of WA is supportive with grant matches through the Farmland Preservation-WA Wildlife and Recreation Program.

Q: If we are a current AgWest customer, are we eligible for the New Producer grant?

A:  That was a hard decision that we didn’t take lightly, but no, it’s designed for folks who are on the cusp of getting started or very new to agriculture, and obtaining debt in this early stage would provide additional challenges, or they are frequently unable to obtain financing for their farm overall. This grant exists to reduce barriers to entry for early-stage new producers starting an agriculture business who are doing all they can to prepare/be successful by educating themselves and preparing important records such as business plans and cash flow budgets. Those with more financial experience or preparedness may utilize ag lenders such as ourselves, and our AgVision program includes multiple benefits to help young, beginning, and small ag producers thrive.   

Q:  Today you have focused on resources for beginning farmers. Are there resources you want to mention for producers who have been farming for over two years?

A:   The many courses that are being offered in our state are a gift (most are free). Access these education opportunities including the online education that we have. People who take advantage of these opportunities are more prepared to run their businesses. Our goal isn’t just to start beginning farmers, it is to keep farmers and make it last. This requires discipline to study your financial records year over year and network with other farmers.