FCS Diversity and Inclusion - PROPOSED RULE - MARCH 2011
Dear Mr. Van Meter,
Thank you for providing the opportunity to comment on ways the FCS can better serve small and midsized, local and regional food producers. I strongly support your efforts to diversify the FCS loan portfolio.
The regional and local food sector is a highly profitable and growing sector in agriculture. While many of these producers have acreages under 100 acres many have revenues well north of $500,000 (ie “large farms” in the lexicon of USDA). I run a business incubator for beginning farmers, the Farm Business Development Center (www.prairiecrossingfarms.com) in Grayslake, IL. The opportunity for beginning farmers, many who do not come from farm families, to start and grow their businesses in a supportive environment dramatically increases their chance of long term success. As they "graduate" from the FBDC, the two largest constraints they have to growing their business? Secure access to land and reasonable opportunity to credit, both for capital investments and startup operating cash flow.
These are by nature entrepreneurial folks. They have developed a variety of different business plans that are often very different from conventional commodity businesses. While these plans often are extremely profitable (many of our producers are generating revenues of $18,000 - $23,000/acre with nets of 30%), they are complex, specific to the opportunity presented and often outside of the experience of the loan officers being consulted. In part because of this they are often not successful with their loan requests.
I would urge the FCA to encourage the capacity and commitment of the FCS institutions to do a better job of supporting this sector of agriculture. To do this I would make the following suggestions:
1. A requirement that each FCS institution create a baseline analysis of producers who meet the farm bill definition of local and regional food producers by number of borrowers, by loan volume, and other key characteristics.
2. An investment goal for local and regional food producers of not less than 20% of each institution’s capital within 5 years.
3. A plan for providing staff development training to FCS personnel across the full spectrum of lending, accounting, farm transfer and business planning services appropriate for serving local and regional food producers.
4. A plan for developing lending and business support products with terms and benefits appropriate for local and regional food producers. This might include supporting the growing capacity of many non-profits to work with these producers.
5. An inventory of strengths and weaknesses of financing for local and regional food infrastructure (aggregation, processing, distributing, etc.) and an FCA plan for how to use FCS local and regional food producer financing to leverage other public and private capital necessary to address the larger weaknesses in the rest of the local and regional food supply chain.
To best respond to the urgency that everyone feels about these issues, I would urge the FCA to consider testing new project models on a limited basis where there are supporting partners.
Michael W. Sands, Ph.D. Liberty Prairie Foundation Grayslake, IL 60030
Michael Sands 32400 Harris Road Grayslake, IL 60030