All The Farm That Is Fit To Print

Monday, July 16, 2012

Micro-Loans Available For Small Farmers In Northern Michigan

By Peter Payette

The number of small farms in northern Michigan has shot up in recent years with almost no help from modern capitalism's main weapon: loans.
Banks in Michigan are accustomed to lending money to farmers. But a lot of new farmers are avoiding debt.

Some people think that should change.

Like a lot of the new farmers in the local food movement, Jess Piskor is young, and not from a farming family. He doesn't own any land. But he's excited about growing vegetables, even if his farm looks more like a large garden.

"It's just an acre, a small bit of land, but we're producing a lot of food for a lot of families and it feels really good," he says.

He and business partner Abra Berens started Bare Knuckle Farm this year with their own money. And, fortunately, they were able to use land in Northport that Jess's grandfather owns.

Jess is amazed by the amount of debt some conventional farmers carry.

"That kind of farming requires that kind of investment," he says. "This small scale farming doesn't require that much capital. Anyone can afford this."
Still, Jess and Abra plan to borrow $1,000 dollars for next season. They want to help people eat locally year round. And their idea is to encourage people to buy large amounts of potatoes in the fall that can be stored and eaten through the winter.

So the loan will help them plant a lot more seed potatoes next spring.
They also want to create pamphlets with advice about storing potatoes and cooking them.

Abra is a chef and she says learning about food involves more than just sharing recipes.

"How do you get to know that food and know how to work with it," she says.

Farmers like Jess and Abra almost never approach banks or credit unions for a business loan, according to research done by Michigan State University.
Susan Cocciarelli is an economic development specialist, who wrote the report. She says the banks generally loan to commodity farmers that sell to known markets. But the bankers do know about the new trend in agriculture.

"I would say the majority of the people I interviewed had heard about local food suystems and could point out, 'yeah I've seen more farmer's markets,'" she says.

And that can mean missed opportunities. Coccerellie says wait to expand their businesses because they have to save up cash for every new investment. She'd like to see the banks and the people in the local food movement come together.

She calls it: "A financial pathway to scale up food."

Coccerelli says any pathway should also offer help to new farmers learning the trade and developing sound business models.

And that's exactly the goal of a new program based in Traverse City. The Utopia Foundation has started a loan fund that will help a handful of farmers in Leelanau County.

This is how Bare Knuckle Farm hopes to finance next year's potato crop.
In order to borrow money from the Utopia Foundation's fund you have to be part of the borrowing group. It's a group of farmers that meets each month to help each other with their businesses. They also help develop the proposals and advise the foundation about loans.

Utopia Foundation board member Heather Jordan says the group also has to help out a member in a pinch -- that is, if a member of the group is having trouble repaying.

The foundation also uses this group borrowing model to make micro-loans in Guatemala. And leaders say the needs of poor people in Guatemala are not that different from the needs of new farmers in northern Michigan. Both can use financial help and advice about starting or building a business. And Heather Jordan says both may end up moving if they don't get some help.
But farmers aren't lining up for the loan program.

The foundation could make up to five loans this year. And there may not be that many proposals.

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