Land: how to get it? That was the big question asked on the opening day of the annual Future Harvest CASA Conference.
It is a recurring question, especially for beginner farmers, who, according to the National Young Farmers Coalition, cite land access as their No. 1 barrier to entering the field.
Panelists said they wanted to buy land because it would help them scale up and maintain continuity in their operation, allow them to invest in infrastructure and soil health, and give them a valuable long-term asset.
But not just any land will do.
Emma Jagoz had leased several parcels of land before buying Moon Valley Farm in Woodsboro, Maryland.
When she was ready to buy, she looked for land that had quality soils, access to water and proximity to her markets. Ultimately, she wanted a turnkey operation that she could take over without interrupting the business.
Bryan Alexander of Good Dog Farm in Parkton, Maryland, had a similar wish list. Good soil is so important that he gave this advice, which he got from a mentor: “Always take a shovel when looking at land.”
While owning land has clear advantages, farmers may need to change what they do to afford the purchase.
Alexander and Jagoz have both expanded production to meet their mortgage payments.
Adrienne Granston of Cusheeba Earth said she still works full time off the farm. She and her husband plan to “bootstrap” it until they can invest in farm infrastructure.
Gale Livingstone of Deep Roots Farm in Upper Marlboro, Maryland, has made the transition to full-time farming.
“I’m confident in my ability as a farmer to meet my obligations, to pay my mortgage,” she said.
Many Lending Options
Getting a loan can be one of the most complicated steps in buying farmland.
To prepare, Alexander suggested beginning farmers start keeping detailed financial records as early as possible. These can establish financial aptitude to potential lenders.
Leah Peterson, a USDA Farm Service Agency loan manager in Prince George’s County, described the agency’s four major loans. All have eligibility requirements, including three years of farm experience.
The Direct Farm Ownership Loan has a $600,000 limit, a term up to 40 years, a current rate of 2.5%, and can be used for a variety of farm expenses, including land purchase, a down payment, capital improvements, conservation projects and closing costs.
FSA also offers a Beginning Farmer Down Payment loan, with a limit of $300,150, a 20-year term and a rate of 1.5%. This loan requires a 5% down payment.
The agency offers microloans up to $50,000 and a one- to 25-year term at a 2.5% rate.
FSA offers a Guaranteed Farm Loan, which has a limit of $1,776,000 and a 40-year term.
Peterson suggested farmers use the online discovery tool if they are interested in an FSA loan. The tool walks potential applicants through loan types based on what the loan is being used for, the amount requested and the location.
The main misunderstandings she sees are farmers assuming they will not qualify for a loan or thinking that they must make a down payment. Not all loans require that.
Steve McHenry and Allison Roe represented the Maryland Agricultural and Resource-Based Industry Development Corp. Marbidco, which exclusively serves Maryland residents, finances farming, forestry and aquaculture projects with partnership with other agencies.
Applicants need to provide a written business plan and a pro forma cash flow analysis, in addition to a balance sheet, income statement and tax returns. Marbidco’s new Next Generation and Small Acreage preservation programs target beginning farmers and pay up to 51% of the fair market value.
Amy Rowe, a loan officer at MidAtlantic Farm Credit, said people are often surprised by how many different types of operations her organization lends to, including cash crops, poultry, dairy, equine, horticulture and forestry.
Farm Credit provides land and farm loans, home loans, equipment loans and crop insurance. It also aligns annual payments with profitable times of year for farmers, typically after harvest.
If an applicant has no past farming history, the person will need to demonstrate how the operation will pay for itself. The Farm Credit website has a planning tool for beginning farmers that includes an example business plan.
Emily Lerman is a project officer for the Baltimore Roundtable for Economic Democracy, a collectively run loan fund that is a member of Seed Commons, a national network of loan funds.
These funds must be non-extractive, meaning they get no repayments greater than profits, no personal guarantees or collateral, and no credit scores.
Through Seed Commons funds you’re “never going to be worse off by taking a loan,” Lerman said.
Seed Commons offer loans for secured asset investment, working capital and lines of credit.
Buying Versus Leasing
For farmers who are unable to or uninterested in purchasing land, a long-term lease is an option, as demonstrated by Rachel Bynum of Waterpenny Farm in Sperryville, Virginia. Waterpenny Farm resides on the property of Mount Vernon Farm.
The 40-year lease, which must be re-upped every five years, includes 30 acres of land and an existing barn and house. It sets the rent at $75 per acre per year plus property taxes, and this lease may be terminated with 90 days’ notice.
The lessors must follow organic practices and buy back any buildings at the end of the lease. The lease stays with the land if the land is sold.
Michael Kane, director of conservation at the Piedmont Environmental Council, is working to create more long-term leases like this.
He says he often poses the question to farmers “how can you use a lease to manage your land?”
His advice for both lessors and lessees: Have a written agreement. This agreement should clearly outline the area, infrastructure, term, rent, permissions and prohibitions, landowner’s right of entry, responsibilities for maintenance, rights to property improvements, subletting, taxes, insurance, and termination notice.
Cooperative Farming Models
Agricultural cooperatives are a familiar tool for accessing markets, but some farmers are also using co-ops to access land.
Cooperative farming models give farmers the power of numbers.
“The people who are not sustainable are the ones who are not part of a larger support network,” said Hana Newcomb from Potomac Vegetable Farms. “You need a lot of social capital.”
For Chris Newman of Virginia’s Sylvanaqua Farms, the power of cooperatives is autonomy.
“We can decide to grow what people need rather than what trades well on the commodity markets,” Newman said.
Still, potential partners in a shared operation will have different amounts of farm experience and money.
To work through these differences, members should build the skills of the other members, said Ira Wallace from Southern Exposure Seed Exchange.
Participants also need to communicate well and be accountable for their responsibilities, said Blain Snipstal of Earth-Bound Building, a construction and farming co-op in southern Maryland.