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Farm Finance Forum: Responsible Borrowing in Uncertain Times

With more than 60 participants, on September 30th we hosted conversations with farmers and lenders in our Farm Finance Forum. It’s a unique event that helps farmers explore appropriate financing options, and this year we emphasized borrowing during uncertain times. California FarmLink has organized several of these events over the years as a way for farmers to share their experiences with other farmers, and often alongside their lenders.

The event opened with a talk by Albert Straus, founder and CEO of Straus Family Creamery, who shared his thoughts on creating a sustainable farming model where “producers can sell directly to consumers and get more of the food dollar – I think it’s essential to changing the dynamics of farming.” He’s passionate about improving farmers’ abilities to manage their businesses, build infrastructure, and successfully pass a farm to the next generation. Reflecting on the forum, Albert said, “being able to understand finances and what the possibilities are is really essential to the success of your business.”

The event proceeded with precisely that focus: learning about the possibilities. Post-event reviews from farmers indicated that the forum was a valuable opportunity to hear other farmers’ stories about financing, and people really appreciated the dialogue-based format. Farmers who spoke about their experiences with borrowing included Gideon Burdick of Boonville Barn Collective and Arron Wilder of Table Top Farm, and you can view each segment below.

When offered the opportunity to buy a property near Point Reyes, Aaron found financing through American Ag Credit, which is part of the Farm Credit Alliance, a lead sponsor of the event. Recounting his loan pursuit, he explained, “There were some issues with my cash flow. During certain times of the year, I had very low cash flow because I spent all my money on crops and feed, and it helped to be able to find someone to cosign with me on the loan.” With a cosigner on board and a variety of leased parcels to support his production, Aaron secured a land loan. With the purchase he has secured land tenure in a way that was not previously possible with a variety of leases, and his farm stand and CSA-based business is surviving the pandemic.

Gideon Burdick, who farms 13 acres in Mendocino County’s Anderson Valley, shared his story alongside Catherine Van Dyke, FarmLink’s loan officer. He and his partner and their employees focus on growing and dehydrating fresh peppers to create spice blends, which are sold through a food service distributor to restaurants nationwide. He shared that starting around March 9, when restaurant sales plummeted, everything changed, but starting in June sales began to resume at about 60% of their past volume. When pursuing a loan, they found that as beginning farmers, and having just formed an LLC in 2019, they were not able to demonstrate a business track record typically required by most lenders.

They reached out to California FarmLink to express how they were pivoting to new sales strategies, selling directly to consumers, which meant they needed to invest in new packaging and other costs. As a value-added farm, they were not prepared to sell fresh produce. Through FarmLink they were able to get a COVID emergency loan, which Gideon detailed by saying, “The FarmLink loan enabled us to not worry so much…it allowed us to manage our cash flow in a way that we could keep our employees on, keep prep’ing the fields, we could invest in the new products that we needed, the seeds, and we could invest in the packaging that we need. So we could do that all without having to rely on a credit card interest rate. I’m able to pay that [loan] off every month, and that’s great!”

While they also received a PPP loan, Gideon explained that they were not able to take advantage of other COVID-related programs like the Coronavirus Food Assistance Program (CFAP) because of their limited business history. But the business has survived what we hope has been the worst of the pandemic’s economic slowdown. He concluded, “I’m super glad we’re here, with all of our employees, and with the product mix that we have…Direct to consumer will never replace our wholesale business, but it’s upped the game [and] our profit margin increases. It really helps carry us through and provides us with not necessarily a clear path, but a path forward.”

Throughout the following videos you’ll glean insights from our partners at American Ag Credit,  Farm Service Agency, and the Small Business Administration. If you participated in the Forum, please fill out our evaluation form (however the first ten folks did respond quickly and snapped up the free Straus Family Creamery coupons). Thank you to the farmers, presenters, and sponsors who made this event possible!

Part 1: Albert Straus, Founder and CEO of Straus Family Creamery talks about “Today and the Future: Redefining a Viable Farming Model”

Part 2: Ruth McClure from American Ag Credit explains the Five C’s of credit and speaks with one of her farmer-borrowers, Arron Wilder of Table Top Farm.

Part 3: Karri Jones and Katie Delbar from the USDA Farm Service Agency office in Ukiah answer your questions about loans available for farmers and ranchers, including land purchase, capital improvements, operating loans, microloans, and loan guarantees.

Part 4: California FarmLink’s Catherine Van Dyke speaks with Gideon Burdick of Boonville Barn Collective about navigating borrowing during COVID-19.

Part 5: Julie Clowes from the Small Business Administration discusses COVID-19 programs, Wildfire Disaster Assistance, and regular SBA Loan Guarantee programs.


THANK YOU TO OUR FARM FINANCE FORUM SPONSORS AND FUNDERS!

RAINMAKER SPONSOR

 

PROPAGATOR SPONSORS

 

GRANTORS AND OTHER PARTNERS

This event is based upon work that is supported by
the National Institute of Food and Agriculture,
U.S. Department of Agriculture,
under award number 2017-70017-26886.

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