YES, IT'S STILL POSSIBLE TO GET

STARTED IN FARMING

1st FCS WORKS IN MULTIPLE WAYS TO FINANCE, SUPPORT TODAY'S YOUNG BEGINNING AND SMALL FARMERS

By Gary Ash,, Executive Vice President and Chief Credit Officer

Granted, it may not be particularly easy, but there continue to be ways for young producers to gain a firm foothold in agriculture. It can take years of supplementing the farm operation with off-farm income; it can take slowly transitioning into the family operation; it can take sacrifices; it can take lots of hard work – but young farmers are still entering production agriculture . . . and succeeding.

One of the big hurdles young farmers face in establishing a viable operation is obtaining the necessary capital for land, equipment and operating. That’s where 1st Farm Credit Services comes into the picture. We’ve been providing financing to young farmers for 85 years. As a cooperative, it remains one of our key missions to be a dependable, constructive source of funds and financial services to young, beginning and small farmers.

1st FCS follows US government definitions for young, beginning and small farmers. Young farmer is defined as being 35 years of age or younger. Beginning is defined as having 10 years or less of farming experience. Small is defined as having sustained annual gross farm sales from agricultural production of less than $250,000.

It may surprise a number of people that a very significant level of our business is with producers in these three categories. In 2001, 1st FCS made more than 350 new loans to young farmers and more than 400 new loans to beginning farmers, totaling in excess of $75 million. Today, 1st FCS serves more than 1,700 young farmers and 1,800 beginning farmers in our 42-county territory, with approximately $130 million in loans to young farmers and $165 million in loans to beginning farmers. These two groups represent the future of Illinois agriculture.

Small farmers represent an even larger portion of the clients we serve. Our loans to this group represent nearly half (49%) of all the loans we have on the books. In 2001, we made nearly 2,000 new loans to farmers in this category, totaling $145 million dollars.

Our OTS (On-the-Spot) operating, equipment and farm real estate loan programs are particularly well suited to this group of clients. The quick application and approval process is designed for convenient and rapid delivery of the typically smaller loans required by this producer group.

Our YBF program

For a number of years, 1st FCS has had a special lending program geared especially to young and beginning farmers. This program offers lower interest rates and expanded loan terms and credit requirements specifically designed for producers who are getting started farming. We strongly believe that good farm records are an essential management tool for young, beginning producers. Consequently, for the first year of the loan we provide subsidization toward Farm Business Farm Management (FBFM) record-keeping services, or the services of another comparable provider.

In conjunction with our own YBF program, we also draw upon other available financing programs, such as those provided through the Farm Service Agency (FSA), the Illinois Farm Development Authority (IFDA) and the Illinois State Agriculture and Alternative Agriculture Operating Loan Deposit Program and Agriculture and Alternative Agriculture Long Term Loan Program.

Working with other family members to bolster collateral and financial strength also can help young, beginning producers obtain financing under more favorable terms and rates -- as can mitigating risk through the use of crop insurance and other means.

Does this mean that every young, beginning or small producer that applies for financing through 1st FCS will be approved? No. Applicants still need to demonstrate repayment ability and meet the guidelines of the various programs. But 1st FCS financial professionals are trained to evaluate each situation to determine which program might benefit an individual producer.

Providing these producers the necessary capital is important, but the value of our financial professionals’ knowledge and expertise should also not be underestimated. Their guidance, experience and counsel can assist young, beginning and small farmers through the process of making vital financial decisions for their operations.

1st FCS also supports young, beginning and small farmers – both clients and non-clients – in a variety of other ways. One is education. 1st FCS offices put on a number of client education meetings, particularly dealing with risk management through marketing and crop insurance, and young, beginning and small farmer clients are routinely invited to participate in these educational opportunities.

At the state level, 1st FCS joins with our sister association, the Farm Credit Services of Illinois, to support young farmer activities. In addition to being an annual sponsor of the Illinois Jaycees Young Farmer Program, our associations also provide yearly financial support to the Illinois Ag Leadership Foundation, Illinois FFA Foundation, Illinois 4-H Foundation, Illinois Association of Vocational Agriculture Teachers, Illinois Ag Youth Institute and the Ag In The Classroom (AITC) program.

Each of our offices also is involved in local support activities. Many counties have young farmer groups, most sponsored by Farm Bureau, and our financial professionals act as resources for these organizations. In many cases, beyond monetary support, our local team members are conducting financial workshops for these groups.

A number of offices also conduct financial workshops for community college agriculture classes and local FFA chapters. And our offices provide financial support for many FFA and 4-H activities at the local level. In addition, our annual "At the heart of a growing America" agricultural scholarship program, and community college agricultural scholarship program, help many future producers fund part of their education.

We recognize that young, beginning and small farmers need a financial services provider that understands agriculture and the capital requirements which farming today requires. We continue to be committed to serving these producers.

If you would like more information about what we have to offer young, beginning and small farmers, please feel free to contact your local 1st FCS office.