Avoid Farm Debt While Growing Your Business

Live below your means, avoid debt and manage growth to help ensure your market garden or farm business’s long-term success.

| August/September 2015

  • Polyface Farms
    By building the business slowly, Joel Salatin and his family have managed to keep Polyface Farms in Swoope, Va., free of burdensome debt.
    Photo by Richard Jeong
  • The Salatins
    Joel Salatin with his mother, Lucille; his wife, Teresa; and two younger generations of Salatins who are carrying forward the farming tradition.
    Photo courtesy Polyface Farms
  • Young Joel Salatin
    In high school, Joel Salatin started his own business selling butter, chicken and eggs at a local farmers market.
    Photo by Lucille Salatin

  • Polyface Farms
  • The Salatins
  • Young Joel Salatin

In light of our modern love affair with fast growth and fast money, I’d like to propose embracing the opposite: As you grow your market garden or farm business, slow down. A debt-free farm is a thing of beauty — but you can’t build it overnight.

A common business axiom is that financial collapse usually doesn’t result from a poor product, poor marketing or poor service. Instead, collapse is frequently a consequence of a cash-flow crunch: A growing business is strapped for cash because accelerated sales require increased infrastructure and labor, which often must be paid for faster than the business’s growth can afford. Before you know it, the business is mired in debt. With proper planning, however, you can avoid yoking your farm business or market garden to paralyzing debt.

My own trajectory as a farmer followed a path of slow growth and low debt. I’m nearly 60 years old; I started my first chicken enterprise when I was 10. When my wife, Teresa, and I review our current farm financials — our staff, infrastructure and expenses — we sometimes shake our heads and ask each other, “How did we get here?” We never planned or even expected to be at our current scale. The growth happened largely without farm debt, and the business developed so gradually, for the most part, that we didn’t even realize where the trajectory was headed.

You could say it snuck up on us — over the course of 50 years.

Live Below Your Means

Nothing stimulates creativity and motivation like being poor and hungry do. Teresa and I had limited financial resources — and I’m grateful for that. We both came from frugal families who always lived a little below their means. If every generation spends a little less than it makes and saves that surplus, wealth will accumulate. My dad and mom worked jobs away from the farm in order to pay for the land, but never made a living from the farm. At the time, the farm’s gross annual income was just a couple thousand dollars.

Because their off-farm jobs paid for the land, Teresa and I were able to launch without a mortgage when we decided to farm. That was a huge blessing and leg up, but before anyone thinks this deal put us on farming’s Easy Street, realize that every day, farmers who own their land or have inherited it still go out of business. Owning land does not necessarily lead to profitable farming.

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