Disk in the boneyard.
As I previously mentioned in our year end wrap-up, we were handed the opportunity to farm the full 260 acres this year. I'll spare the details, but essentially if we chose not to farm it and the other farmer who leases the land chose not to, the long-term availability of the farm land would have been in question. In other words, our landlords would have faced the very real possibility of being forced to sell the ground. Since our long-term goal is to grow to 260 acres, we figured we should just go for it this year.
My lovely wife discusses it far more eloquently here, but we sat down with our local bank, and our very nice banker did what he does best and pointed out to us all the fears he has as a banker looking at our application: specialty crops with unverifiable yields and prices (since since nobody around grows them and they're not traded on the open market), our limited experience as new farmers, uninsurable crops, and our lack of collateral. All valid concerns. We would ask for a land loan to purchase some of the acreage, an equipment loan to buy larger equipment for the increased acreage, and an operating loan. The one that scared me the most was the operating loan since when given the money, there is nothing tangible behind it. The ability to pay it back is completely reliant on successfully planting, growing, harvesting, and selling a multitude of crops.
Our visit to the banker was somewhat for show, since what we needed was for him to deny us. That is one of the requirements of the Farm Service Agency's (FSA) low-interest loans. But, the banker did his due diligence and spent a good amount of time with us, honestly assessing our application. We learned a lot, were given good reminders of the dangers of borrowing money, and were able to see the bigger picture when all was said and done.
Denied by our banker, I sat down with the FSA loan officer. I've visited with him before so he knows what we're up to. He spent a good three hours with me, talking about our plans, expressing his fears as a loan officer and generally increasing my already rising fear at borrowing so much money.
I've always believed we have to grow slowly if we are to be successful. We've only partly followed this path, as the demand for local, fresh, nutritious food seems to be far higher than we can possibly supply, even in this rural part of Montana. So, we've had to balance growing slowly with jumping at opportunities to grow and sell our diversified products. But, to go from 15 acres to 260 acres is quite the leap. One we're willing to take, but maybe not just yet if we don't have to.
Thankfully, the farmer who leases the rest of the farm agreed to farm it again this year. That buys us some time to thoughtfully plan our expansion. Not that we haven't been thoughtful these past few weeks, but it's been rushed as the planting season approaches. So, we will continue to plan on purchasing some of the acreage (so we can begin to build our homestead and live on the farm), possibly take out an equipment loan to give us time to find a solid set of implements and a tractor (classifieds, craiglist, equipment dealers, auctions), and in 2012, tentatively plan on farming the entire 260 acres.
As an aside, as I've gone through multiple scenarios with my 6- and 7-year cash flows, I've been surprised by how good it looks (on paper). Though my best-guess cash flow spreadsheets show that 260 acres, growing and raising what we would grow and raise, makes sense, I always second guess myself. If 260 acres makes sense here in rural Montana, why aren't more farmers farming this scale? Why do they continue to expand to two thousand, three thousand, four thousand acres and more? I realize what we're doing is unconventional and it requires a high degree of labor, but how can I, a beginning farmer, show success at this scale when so many others made the decision to grow by thousands of acres and not tens of acres? I honestly don't know. I'll ask myself that question again in 5 or 6 years when my spreadsheets aren't hypothetical. I just hope hypothetical agrees with reality.
