MEMPHIS, Tenn. – With interest in locally grown food soaring, the federal government said last week it has created a small loan program to help community farmers who might not be able to borrow money from banks.
Call it seed money.
The low-interest microloans of up to $35,000 are designed to defray startup costs, bolster existing family-run farms and help minority growers and military veterans who want to farm.
Over the last three years, there has been a 60 percent increase in local growers who sell directly to consumers or farmers markets, Agriculture Department Secretary Tom Vilsack said.
Kay Jensen, an organic farmer who grows broccoli, strawberries and tomatoes in Sun Prairie, Wis., saw two immediate benefits from the program – paperwork would go from about 30 pages to seven, and it would be easier to borrow a manageable sum. Jensen might consider a loan for $3,000 to $10,000 to expand her irrigation systems.
A lot of times what we need is just small amounts of money, but a lot of times the only funding available is large amounts of money, she said. This whole concept of a microloan, where youre looking at smaller, reasonable amounts of money, this really fits an incredible niche.
The loan can cover renting land, buying seed and equipment, and other costs.
One goal is to create more opportunities for entrepreneurship and employment in the farming industry, Vilsack said. Another goal is to provide beginners a chance to build credit, so that they can eventually qualify for higher-value loans and expand.
Its about making sure that we have diversity within agriculture, that we have a good blend of large production facilities, medium-sized operations and smaller operations, Vilsack said. It will help bolster the local and regional food system movement that is taking place.
The loans could help urban farmers who grow fruits and vegetables – or raise chickens for eggs or bees for honey – on lots that can be as small as one-eighth of an acre, said Chad Hellwinckel, a research assistant professor at the Agricultural Analysis Center at the University of Tennessee in Knoxville, Tenn.
Vilsack announced the program a day after speaking at the American Farm Bureau Federations annual meeting in Nashville.
The interest rate for the new loan program changes monthly, and is currently 1.25 percent, and the loan does not have to be repaid for seven years.