Doerr and Fortenberry
It's tough to get started in farming, even in states like Nebraska, where one in three jobs is related to agriculture, Rep. Jeff Fortenberry said Friday.
Fortenberry chaired a House subcommittee hearing on credit availability for current and emerging ag producers, to help meet initial operating expenses.
The hearing also explored how access to essential ag financing could be improved in the upcoming Farm Bill, he said.
One of the five witnesses was beginning farmer Justin Doerr of Plainview, a veteran of the war in Iraq. Doerr is building a farm from the ground up.
Doerr grew up on a small farm in Plainview where we raised hogs, cattle, and some hay. He enlisted in the Army after high school, and when he came home, he wanted to farm. But the farm would not support him.
“Instead of immediately pursuing my plan of farming, I went to college and began working for a hospital as a CAD Designer,” he said. “During this time I began laying the foundation for my future farming operation.”
The farm got its start when he rented 40 acres of hay ground from a neighbor. He borrowed equipment from his dad to harvest the hay; then sold it to a local cattle feeder.
“With the money I made from the sale, I was able to rent an additional 10 acres from my parents and sow it to alfalfa hay,” he said. “With the revenue I made from the new alfalfa field, I was able to purchase 30 sheep and feed them through the winter.”
This spring, he rented an additional 80 acres of farm ground to plant to corn and soybeans.
Doerr said credit is hard to come by.
“After speaking with my local commercial banker, I was told if I was interested in purchasing land I would need to put have at least a 30 percent down payment on the purchase price of the land,” Doerr told the subcommittee. “The down payment, by itself, immediately prices me out of almost every farm land real estate market. This will prove true for most young farmers.”
Doerr said one helpful federal program is the Down Payment Loan Program, a joint-financing direct farm ownership loan program administered by the Farm Service Agency.
This federal program makes loans to beginning and socially disadvantaged farmers and ranchers and requires a lower down payment than most commercial farm ownership loans.
Doerr also said:
"When I needed an operating loan to cover some of the daily expenses associated with operating a farm, I first applied for a loan through the Farm Service Agency. The paperwork during the application process was almost overbearing, but the biggest thing that was keeping me from getting a loan through FSA was the uncertainty of whether federal financing would even be available. Even if my application had been approved as a beginning farmer loan applicant, federal appropriations had not yet been passed and the amount and timing of funds available for federal loan programs were unclear.
"If I had been working with a landlord and negotiated a fair rental payment, the last thing I want to tell them is to wait additional months for their first rent check because my operating loan hadn’t been funded yet. The landlord already assumes risk when they choose to rent to a beginning farmer and are doing a great service to the next generation of farmers. It would most certainly be easier and involve less risk for landowners to simply rent to a larger, well-capitalized operation that can spread its expenses over many acres.
"While there may not be an easy cure for appropriations bills being passed well after the start of the fiscal year, one important item in the Beginning Farmer and Rancher Opportunity Act that could help people in my position is the proposed new Microloan program. Under this provision, smaller loans could be made, with less delay and less paperwork, to assist young and beginning farmers whose credit needs may often be more urgent but also considerably more modest than other borrowers."