Don't know if this is the best place to put this, but maybe of interest to some in the U.S. Often there are grant programs (not loans, grants...) for conservation efforts that come down through the USDA as part of the Farm Bills of different eras and administrations. It's not everybody's bag and it's extremely important to look carefully through all the fine print for the contingencies on receiving such funds, but the grants can sometimes provide a financial boost for those wanting to move into a different conservation-minded aspect of their rural operation. Often, but not always, these programs are directed to land that is coming out of "traditional" farming production and being put to different use. But how to decide if your idea is one worth consideration by the agency? This office appears to have representatives in most, if not all, counties within most states:
I have a lot of experience with these, and have worked a lot with the USDA-NRCS over the years, but there is a lot of confusion with this assistance too. First off, let me say that they are a VERY valuable asset, and for anyone that qualifies, I encourage them to get in touch with their local USDA-NRCS and start a partnership with them. Their goals and conservative minded agriculture dovetail well together. Over the years, I can say on my farm they have helped me immensely; however they should NOT be regarded as a grant because they are not. They are a COST SHARE program.
So what is a cost share program and how does it differentiate from a grant? Well a grant is capital for a specified project that does not need to be paid back. A cost share program is only partially funded. This is how it works. Lets say your farm is approved for a manure storage pad. The USDA-NRCS comes in and engineers a manure pad that meets federal guidelines and they calculate the costs on what it would cost THEM to build the manure pad. Typically they fund the manure pad at 75% and you pick up the other 25%. Here is where the waters get murky though. Because the Federal Government tends to pay higher costs for things, most of the time you can build things to their specifications and not have to invest your portion of the money. Most of the time.
Here is an example of that. I had a manure pad at a 75/25 % cost share ratio and their portion was $7000 to construct, my portion should have been $2300. I built it to their specifications for only $7000 so in essence the manure pad was “free”. However you cannot bank on that. If the manure pad had truly cost $9300; $7000 coming from the USDA-NRCS, I would have had to cough up $2300 from my checking account to pay for the rest. That is why it is a cost share program and not a grant. That is easy to understand, but what if the cost was lower then $7000? Well first off, IT MUST BE BUILT TO THEIR SPECIFICATIONS so there is no cheating the system here, but it is possible to come in under what they pay. In that case you keep the extra money. Sweet huh?
I have an example of that. I had a field that lacked access and we were running sheep through a stream and driving through it with trucks. I was approved for an access road. The requirements were for the road to be a minimum of a foot deep of gravel, 20 feet wide for a quarter mile. Their cost to build that road was predicted at $10, 500, but because I own my own gravel pit, I built the road a quarter mile long, but 4 feet deep and 24 feet wide for $8000 and so I got to keep $2200.
But all is not rosy. When I had my Forest Management Plan approved under the same cost share program I came in well over what I got for a federal monies. In that case I was approved for $1100 dollars, but when the Forester got done, it cost a total of $1800 so I had to pay $700 out of my own checking account to pay for the forest manage plan.
There is another aspect to this that must be considered. You do not get the money up front. You are expected to build the project first, have it inspected and approved, then get the money. This may take some time. In some cases I was able to talk with contractors and let them know the money would arrive, but just when I was not sure. In an extreme case it was 90 days later. This is a huge deal too if you plan on renting equipment to get the job done yourself, because rental companies expect the money up front. Now once approved YOU WILL GET YOUR MONEY because it is put into an account that no one can touch until your project is completed so no matter what happens to the Federal Budget AFTER you are approved does not matter, you will get your money.
Still there are a few more details to consider. You have 2 years to complete the project. That is not a big deal, but the next time mandate is HUGE. Every project approved has an amount of time that must be dedicated to the project. For instance, the roadway I had built has a 15 year time limit on it. In other words I must use it for farming for the next 15 years. If I don’t, I must pay back part of the cost share payment that I got, plus 10% as an engineering fee. This is depreciated yearly of course, but it needs to be mentioned because people think these are grants and you never have to pay the money back. That is just not so. Every project has a determined life span so it may be 15 years, 10 years, 5 years etc. But this is a very good clause because tax payers should not be funding farmers to improve their farms just so they can sell it for higher profits a year down the road. Another place this comes into place is in divorces. Because these are not grants, and a married couple is considered a single financial entity, each is responsible for their half of the remaining portion should the marriage end in divorce. In my case, my ex-wife would have had to pay me $22,000 for her portion of the fiscal help we got with these cumulative cost-share programs if I had not let her off the hook on it.
So is all this worth it? ABSOLUTELY.
My farm has improved greatly with the appropriate sheep fence, crop rotation, rotational grazing, roadway, manure pad, and all the plans I had done. Few would have been able to be done had I done so out of my own pocket. However a farm must qualify. The key to that is using your farm to put food on the national food chain; that is after all, the purpose of the USDA. I think it is wonderful that people want to be self-sufficient and provide for their own families, but the USDA does not assist in that. With only ½ a percent of the population feeding the other 99-1/2%, they are trying to ensure farms stay viable and with conservative measures on their farm.
This is actually one of the few ways the Federal Government administers things appropriately because it is done on the local level. It comes from elected people in the county where they live and these grants are prioritized by anyone attending the sessions. It is not fool proof I know, we are talking people and personalities here. Despite being hundreds of acres in size and existing for hundreds of years, we were denied funding for 23 years because a member of the board HATED sheep farmers and preferred to fund dairy farmers. Now there is a shift to small farmers because of the woman that superseded him. Honestly the meetings, though advertised, are often under involved and so monies are diverted to the wrong categories.
Here is a case in point, despite having far more woodlot then I do tillable land, I fought putting federal money into forestry because this is Maine, the most forested state in the nation; it is a battle to keep farmland open and not the other way around. Well this meeting was staffed by state paid foresters and who fought strongly for monies in this county to be diverted into forestry. Because of that, it was, but after 5 years of funding it was discovered that most of the forestry money was going into road building and not actual forest improvement, so it was stopped. My case in point. But people like me who cared never showed up at the meetings where as a state paid employee never missed one. So the system only works if people get involved.
Right now there is the thought that the USDA cares little about sustainable agriculture, but there is actually a ton of cost-share programs out there for small farmers. Where I live it is actually far more likely that a small farmer will get federal monies than a big farmer.
If anyone has any questions; ask away. I was on the board for several years and my wife is currently on the board, but despite the length of this post, there are many details left out.
How often do they typically meet? Are new farmers/farms eligible? Where would I find the type of projects that are allowed?
Location: RRV of da Nort
posted 4 years ago
@Andrea R. "Are new farmers/farms eligible? Where would I find the type of projects that are allowed?"
Using Travis Johnson's excellent testimonial post above as a guide, peruse through the following websites. In particular, note the hotlink-button within the first link below that is titled "Service Center Locator".....there should be a regional office somewhere in your vicinity. I would start by ranking your top 3 projects (if you have that many) that you would like to see implemented on your land. Think about the projects, discuss them in detail with any partner or whomever may have a stake in what you plan to do with your land, and then pay a visit to one of your representatives in that Service Center with some of your ideas. They may wish to come out to your property to see a layout of what you have in mind, but this kind of visit is something some people don't have a problem with whereas others will not be so comfortable with government involvement on their land. As Travis noted, it *can* be a great boost to your operation, but good to go into the possibility with eyes wide open and with as much information as possible. In addition, as you note a location within Wisconsin, even if State funding is not available, I would dovetail as much as possible on probable excellent ag extension information coming out of the UW-Madison...many programs there with a long history of sustainable ag and engineering. There may be a way to leverage support between the State and Federal entities, but certainly information garnered from both can be very valuable.
It should not be a surprise that many of the ag programs are still geared towards "standard" production scales and practices, but increasingly there are some programs that may be useful for initiating and supporting sustainable ag practices and ventures.
“The most important decision we make is whether we believe we live in a friendly or hostile universe.”― Albert Einstein
Andrea Redenbaugh wrote:How often do they typically meet? Are new farmers/farms eligible? Where would I find the type of projects that are allowed?
Typically once per year. This is where the general funding is broken down. The group; whether it be a group of Permies, State Employees, Loggers, or conventional Farmers decide what percentage of the money for the county (or local area) will go. The reason it is done like this was because when this was started during the dust bowl era, farmers were leery of the government, so to aid in conservation a moderator was established...what is known as the Soil and Water Conservation Districts, as well as some elected boards for the Farm Service Agency and the Natural Resources Conservation Service. (FSA and NRCS respectively). Still ALL meetings of these groups are open to the public, and they meet on a monthly basis. Their role has been watered down a bit for two reasons, people do not get involved, and because gov has gotten so big, people as a whole are accustomed to Gov involvement now; neither of which is good. Still let me ask you this; I don't see any local representation in what happens to say welfare or transportation money...this is unique to the USDA alone. I admit I fought against Forestry being diverted from food production in my county, but my NEIGHBORS decided it was proper, and that is something I love...a local decision. I can live with that.
As for new farmers being eligible...yes and not only that their cost share rates are higher. Instead of the typical 75-25% what is known as beginning farmers get a 90%-10% match, so in other words they get 90% of what it would cost the Federal Government to build for a project. That status lasts for 10 years.
Projects generally are conservation minded, the biggest one being nutrient management, mostly because the costs to build composting facilities and manure pits is so high. Likewise pollutants are high too so its high on the priority list because farmers are doubtful to spend a lot of money doing the properly engineered system, yet water contamination can be high if they don't. The local issue can be good or bad too though; for instance in my county anyone is eligible for fencing to rotationally graze, however the next county over only allows fencing if existing fencing is there, but inadequate. Another note on this too. These are only given based on current need. They are NOT going to pay for fencing for animals you do not have yet. In my case I ran into this when I wanted to fence in a 40 acre field. I did not have enough sheep to justify that extra field, so I had to fence in a ten acre field instead. That is understandable though otherwise people would say, "well I plan to get 500 sheep" and for a slew of reasons it just never happens. So I understand the here and now. Its to fix problems, not as financing capital.
The other aspect of priorities is watersheds. They are everything. Certain watersheds have bigger problems then others and so rules change and more money diverted from one to another based on need. I live on top of a hill so I am in two watersheds. One is not polluted as the other so it receives more money.
One other thing, there is no anonymous money here. If you are really shy about getting money you should know that everyone that receives money is put on a national website that states your name, the year and how much you were given. For instance I know a fellow farmer who swears up and down he never recieves a penny for farming by the Gov, yet the website clearly states that he does...a lot in fact. I am fine with that, he is doing the work and kicking food out on the national food chain, but he should know that the information is out there. Its just something to be aware of that is all if that is a concern for you.
These are only the Cost Share Programs that I am talking about and on the NRCS side of things. The FSA side of things generally deal in loans, and while I lack the time right now to explain them, they can pick up where the cost share programs leave off. It is on this side of things that capital costs can be done...like buying farm land, and getting equipment. They are loans and not grants or cost-shares, but the terms are very good. I'll explain more when I can...great, great programs.
If your state participated in the Specialty Crop Block Grant Program, you can scroll down in the PDF file (first link) to your state to see what kind of projects were supported, usually through an ag research university, but often through grower groups.
On the second link, see the hot-link for "Definition of a Specialty Crop" which indicates which types of plants/crops are eligible. Just to reiterate, these are not easy to get, but can be worth it for some trying to get a start in a new direction with their land and vision.
“The most important decision we make is whether we believe we live in a friendly or hostile universe.”― Albert Einstein
One of the problems I often see with NRCS Cost share programs is people go into talk to them and the first thing they are told is, "All are funding is gone for 2016". This is indeed correct because the USDA closes their books in October, not December. Most (but not all cost share practices close for sign up in October, but again it depends on the watershed, I just signed up for one that closed this month). This confuses people and they think they lost out, when in reality the USDA is just ahead. In order to get these cost share programs, you do have to wait, but if everything so far is agreeable to you, it is worth the wait. So if you sign up for stuff now; the sooner the better! Don't be deterred!
The other thing is, don't be lost in terminology. They speak weird. For instance, I call my manure pad a manure pad because it is just that, a concrete pad that is flat and smooth; no sides, no end walls, no roof. But honestly I was never approved for that, I was approved for what is called a HUA or Heavy Use Area; a place for my sheep to hang out and a place to put my manure on. Now lets take a Heavy Use Area and add end walls, sides and a roof...yes exactly, what us farmers call barns, the NRCS will flatly say it is a capital project and not approved. They are right, but some counties allow Heavy Use Areas with sides, end walls and a roof (yes barns). See what I mean? It gets nuts.
Now I have always been honest with you on here, and said I will tell you the good and the bad. Often times it is what people leave out that is far more important then what they say. In this case you really have to know that all cost share programs may not be the best for your farm. Here is a case in point.
One program addresses wildlife (WHIP: The Wildlife Incentive Program) and while it may benefit your farm, in my case it just did not, even though the pay off was good. In essence I would not have been able to harvest hay crops until after song bird hatching was completed. I believe it was in August. Here that is just to late, it would have given me very straw like hay, no protein content and lots of waste from the sheep. I would have loved to have a bird nest on every other fence post in my pastures, and while I already use bats to control flies in my sheep barns, more would be nice, but it just did not make sense overall. We just don't farm like that. And so this is a powerful message, not every program is beneficial to every farm, it really must be carefully calculated. As the saying goes, "when you take the King's shilling, you also do his bidding." In other words, you must abide by some pretty harsh rules. If you go into some blindly you could end up paying that money back!
There was another program that illustrated this point well. They wanted to leave what was essentially saplings along the margin of our fields for song birds and the like. Its is nice in theory, but when I took over this farm I had some of that stretching nearly 50 feet from the first row of corn to the rock wall. It does not sound like much, but one field I have is exactly 1 mile in circumference. If you do the math on that, that is 7 acres of lost production! Now times that by all the fields and it really adds up. For some people its easy to justify, but for me, I farm right up to the rock walls. I say all that because it really shows that caution must be taken when signing up for these programs.
Always make sure the program fits the farm and is going to take it in the direction you want it to go. A lot of farmers alter their farms in order to be recipients of the government check and I have yet to see a truly functional farm work well from that method. It is why I am a HUGE proponent of having a sound, written Farm Plan.
(Sorry for all the bold print and capitalized words, I just want everyone to really know the hugely important stuff. I really dislike it when people (and farms) are set up for failure).
Location: RRV of da Nort
posted 4 years ago
@Travis J.: "... "when you take the King's shilling, you also do his bidding." In other words, you must abide by some pretty harsh rules..."
That's exactly right. And I'm glad a recipient of the support from one of these programs is here to make that clear. Since the programs change from year to year, I have not given up on looking into one that may fit my needs, but initially when I was looking into conservation reserve (CRP/CREP) and additional riparian zone conservation programs, I was balking at the "easements" that the program(s) wanted in terms of land access. In addition, as you noted, there often can be fairly rigid requirements on the land-use that you've improved with their dollars and support. -AND- often this is acceptable to the landowner, but important to do the research and decide if you want to abide by those conditions. And I don't mean to be "age-ist" with the following comment, but especially if you are younger, new landowners, getting to know your local reps in these offices sooner rather than later can allow you to establish a rapport with them so that information may flow your way through the pipeline whereas if they don't know you it may not. An example would be bumping into one of them at the mercantile and having them say "Hey, .....we recently got notice that certain restrictions for programs X,Y, and Z have changed that make work in favor of that project you brought in a few months/year back....". Part of the change in 'social capital' that you might cultivate with your new or changing life goals. Just a thought...thanks Travis for your in-depth and experienced input here that should offer guidance to many.
“The most important decision we make is whether we believe we live in a friendly or hostile universe.”― Albert Einstein
What about Farm Service Agency loans? Well I have applied for two, got one, and then by referral of the FSA moved to a private bank that obtained a loan via the Small Business Administration, which yes was for the purchase of my farm.
It is kind of a long story, but after 5 years we figured out a way to fairly transfer a 9th generational farm to me and my wife. Considering I have 9 brothers and sisters, that was not easy. For every previous generation the farm was handed down by gift (free) and to the eldest son. I am second in line however, and my parents wanted money for their retirement. Hey times change and that is just how it is. We settled on a fair price; enough to give my parents some retirement money, but not so much it bankrupted me, and while my siblings did not want the farm (or its taxes) they did want to use it, so it is there for that. Now how to finance it all.
The USDA does have loan money for farm purchases, and at very low interest rates, however there is a 2-3 year waiting period for this. If you can find a landowner willing to wait that long for their money, it is possible, but good luck. My parents...they wanted to retire. So we were referred to a in state bank that secures its loans through the Small Business Administration. It is a very long story, but due to ex-spouses, a big farm with an old municipal dump on it, houses, sawmills, barns, and a host of other issues; it was complicated. It took 10 months to go through. In the meantime we were set up with a SBA councilor who helped us draft a very sound business plan (I already had my farm plan done). The interest rate was not as favorable as what the USDA one was, BUT it was 10 months instead of 2 years! My parents liked that. Now, I said I would always tell the good with the bad and one mistake we did make was not getting enough capital. We did not obtain enough money for us to get all the rental homes in rentable shape and so we have one (my late grandmother's) that is languishing. It was my fault, our councilor told us to make sure we had enough money, but I am VERY conservative in nature and hated to borrow more than I absolutely needed. I just did not figure enough.
Still the experience was good and I got some great tools from the SBA that really help in creating spreadsheets for future use. To be able to toss around ideas on a computer spreadsheet and see what could happen if you do X, Y and Z is amazing. Overall it was a great experience. So my recommendation is to go with the USDA if you can first, the interest rates are far more favorable, but they work with other lenders and agencies like the SBA so things can happen. In our case a 9th generation passed a farm to the 10th and that is a very good thing.
Now the other loan I did get was called an Operational Loan and those can be used for anything. My wife and I decide in the winter what our one big farm project will be for the year and then just go for it with guns abalazing. Last year it was a new barn. This year it was the purchase of a bulldozer and a field crop rotated back into grass ground. But a few years ago we had three other choices.
After a lot of thought we put the horse before the cart and figured what is the sense to have a bigger barn if you have no sheep to fill it, and what is the sense to have sheep if you can't feed them, so we went with more tillable fields. (As a side note, all our fields are tillable. We do not have "pasture only" fields as we crop rotate). To do that we needed some money and approached the USDA. They suggested a Operational Loan. They are VERY favorable loans, with the one we had at 2.99% interest though that rate probably has changed now. I don't know. Either way it is paid back in the traditional agricultural way with a single payment once per year, though you can pay it in any installment you wish (monthly perhaps) and also early with no early pay off fee. Remember, the goal of the USDA is to keep putting food on the national food chain and not to make money on you. The low interest is to just cover administrative costs. We even had to move one years payment ahead by a few months as we were expecting our 4th daughter at the same time. It too was easy with no ramifications so it was very easy to do. Really the only thing that is concerning is that Operational Loans are a maximum of 7 years in length so plan accordingly for your yearly payment, and you can only get them 7 times. That does not mean if you get one this year you have to burn up 6 more in the next 7 years or you lose out, it just means you have 7 low interest loans before you must go to a regular bank. Even then you must prove you cannot get a loan from a commercial lender as once again, the USDA is not a bank...they just want to ensure US Farms stay farming.
With this loan in hand, we fired up the feller-bunchers and skidders, cut off twelve acres and then rented a bulldozer and stumped the field. It took from June to August to rid the field of rocks and get it sown down with enough time to fight off winter kill, but the transition is amazing, and crunching the numbers, the pay off for this field was less than 3 years time. Not bad!
Now that Operational Loan has been paid off and we have another now. (we had the land so why not have more sheep to feed that grass too), but this one is through the SBA. I mention this one only because it is slightly different because with the USDA you pay the interest rate WITH your yearly payment. With the SBA you pay the interest rate separately every month. Its not a big deal, just a few more stamps, and something you have to remember to do. Everything else is the same. No early pay off, a bit higher interest payment, but not by much, and really great to work with.
Again I am just hitting the highlights, but hopefully my experience with this stuff may help others so if you have any questions ask away. I am just trying to help others who love to farm.
John you are exactly right in every word you typed; a relationship is so critical. One problem with me is that my perspective is here and here alone. Yes I might be a 10th generational farm, but it is also all I know. Years ago we had a dairy-farmer-only representative here and so when others say they approach their NRCS and get the cold shoulder, I know EXACTLY how they feel. Today it has changed, our county NRCS Represenative lives in a yurt so I also hope to convey that things can change too. And the reverse is true as well, a friendship can tell you what NOT to get into.
The only thing I can add is this: you know of opportunities when you get involved. EVERY meeting is open to the public. Its precious time I know, but I can give many of you a tour of my farm too and point out how life has been greatly improved by a few key projects that I otherwise would not have done.
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