Financing
Beginning Farmer and Ranchers Development Program
Kohala Center
NOTES from class on April 27, 2019 by Jim Crum
Presentation by Jill Ficke-Beaton (for registered Students only) here
Presentation by Lester Ueda (for registered Students only) here
Presentation by Eric Bowman (for registered Students only) here
Jill Ficke-Beaton, USDA-NRCS
Soil conservationist
Acting district conservationist, Waimea service center
USDA Program to assist land owners, land managers and communities.
– can come out at our invitation to do a site visit within a couple weeks: soils and water folks come too, process of helping takes time, getting ready for farming.
– if you have a conservation program then you can be exempt from grubbing and grading program permit requirement.
– don’t help with illegal crops- look at soil, air, water, animals, plants, energy, resources
– steer you into a program like: environmental quality incentive program,
Ag management assistance (good for beginning farmers), conservation innovation grant, conservation stewardship program, emergency watershed protection, regional conservation, Ag conservation and wetlands reserve easements, landscape
– $450k available over 4 years with 2018 Farm bill
– mid-October cutoff for applications so do your work well ahead of this- don’t stop working to wait for funding.
– commitment to the federal government so think carefully
– waimea has 46 applications and only one person to manage it
– it’s about sustainability and making the land usable forever.
– have soil and (plant tissue test) by UH Extension in Waimea or Komo Hana and talk about crops you want to grow and organically so they can give
– eligibility: control or own eligible Ag land, comply with adjusted gross income limitation, in compliance with highly erodible land and wetland conservation requirements, develop an NRCS EQUIP plan of operations- Ferrell pig program helped with APHIS for mitigation and cameras and
– life span on projects: 20 years for fence,
– 5% have a spot check every year.
– plans are windbreak, pollinator habitat, mulch, seasonal high tunnel, cover crop, high tunnel system
– 1” of water on 1 acre requires 100,000 gallons
– 50% goes to livestock
– over $900,000 annual income is disqualified, but can still partner with others that make over that, but their portion disqualified
– you are the driver of your land system and so can decide what direction it goes- multi-species grazing can have great benefits, but sheep, horses with cows can help. Livestock should be a tool, not a burden* sustainability starts with profitability
Lester Ueda, USDA-FSACounty Executive Director
Hawai’i County FSA Office
154 Waianuenue Ave., #122Hilo, HI 96720
808-933-8381 x2
www.fsa.usda.gov
Help with non-insurance crops
– micro loans, farm ownership, operating (up to $50k @ 3.5% up to 7 years), emergency (up to $500k @3.75% within 8 months of disaster designation for 7-40 years), youth loans
– micro loan with expedited application process for annual operating expenses, supplies, farm equipment, farm vehicles, family living expenses
– the FSA county committee (elected by farmers and ranchers) but ranchers are the ones in charge
– programs include Noninsured Crop Disaster Assistance, livestock forage program, livestock indemnity program, emergency livestock assistance program, tree assistance program, emergency loans, emergency conservation program (this is used a lot)
– noninsured crop disaster assistance program (NAP): due to damaging weather or natural disaster, service fee of $325/ crop up to $825 waived for socially disadvantaged, limited resources, beginning farmers and veterans- losses have to exceed 50% and it covers 55% of revenue but can “buy up” to cover 35% loss and 100% payment
– must annually report acreage and production and it is verified.
– emergency assistance for livestock, honey bees, and farm-raised fish: managed hives, CCD, natural disasters, loss adjuster verifies,
– NAP (crop insurance) deadlines: 5/1 = Nursery 9/1 = floriculture, Christmas trees, aqua culture, mushrooms, sod grass and 12/1 = forage/grass, vegetables, fruits, honey
– Emergency Conservation Program: 75% cost sharing for land cleanup from natural disasters and water conservation measures during drought. Can help with wind damage- Reporting deadlines: 9/30 = floriculture, 12/2 = honey bee colonies, 12/16 = forage* bees are considered livestock* if you don’t register/participate and apply you can’t get help* documentation is key to success
Eric Bowman
The Kohala Center Microloan Program
“Farm Capitalization”
Spend money on: Equipment @ $10000, seed and plants @ $5000, fertilizer @ $5000, building @ $10000, animals @
– current assists = less than a year
– capital equipment & working capital are needed.
– cash is king to stay in business, so AP and AR are balanced to manage your inventory
– look everywhere to acquire money: friends and family, loans, selling assets, marrying well, other job l, retirement fund loan
– equity (ownership): personal savings, sweat equity, investors
– debt: customer prepay (CSA), loans, credit cards
– cost of money: investors take ownership and are there forever, loans require collateral and and interest, grants take time and administration.
– challenges: no money for needed equipment and building.
– most money comes from friends and family. They already trust you. Start there, then move to investors, then lenders, then customers- when asking, tie it to a milestone, put it in writing, show your own commitment, experiment on your own, don’t ask for more than they can afford to lose, communicate plan and risks, focus on well-connected friends with experience, tie repayments to revenues
– lenders:
1) start with equity from family friends and savings
2) next are micro lenders like Kiva and Slow Money
3) CDFIs like FTHF
4) government like USDA FSA and HDOA @ 3.74-4% 5) commercial like FCS and First Financial but need established operations and higher interest rate 5-7%
– Kohala Center hawaii food producers fund: kiva.org/borrow uses “social underwriting” and matches and is 0% interest and 36 month repay to all those that match too! Great for quick projects.
– Feed the Hunger Foundation: in Honolulu
– USDA Rural Energy for America Program: up to 25% of renewable or energy efficiency. 10/31 and 4/1 deadlines.
– Value Added Producer Grant: $75k planning or $250k working capital- htdc.org/money for 20% of hawaii-bases manufacturing aug-mar deadlines. Covers equipment, training and feasibility studies
– HIPlan Business Competition: $25k, monthly meetups, 9/7 deadline, 7-page business plan – food safety reimbursement grant: up to $5000 over 5 years FSMA deadline is application on 4/30 deadline
– most useful: more friends and richer relatives, register for free NAP insurance, trust the government when it is good for you.
Crooked Nail Farm- bamboo as windbreak if Malay dwarf or Fernleaf Multiplex- diversity of crops is key and plan for different times of harvest- use grafted fruit trees- avocado: add 3 cups lime, 2.5 cups 0-45-0, and a shovel of compost or chicken manure- tree shelters are good anywhere. Use 10’ hog wire and low% shade cloth- fertilize new trees regularly 4x/yr with emphasis on warmer months- K’au dwarf or Florigon mangos and Dave Frenz at 987-6455 in Hilo can help with best
* buy Stihl, Kubota, and DeWalt. Skip Ryobi and Black and Decker- diesel
* keep your day job (50% of farmers are there)
* need more friends with money!!
* Perennial peanut. Get it from KTA