Taking on Debt to Finance a Dream

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"I had to remind myself that whether or not we take on this debt, we’re putting everything on the line ."
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"Greenhorns" edited by Zoë Ida Bradbury, Severline von Tscharner Fleming, and Paula Manalo is a must-read for new farmers, self-reliance enthusiasts, and anyone interested in organic food.

Greenhorns: The Next Generation of American Farmers 50 Dispatches from the New Farmers’ Movement(Storey Publishing, 2012), by Zoë Ida Bradbury, Severine von Tscharner Fleming, and Paula Manalo is a collection of inspirational essays written by members of the Greenhorns — a non-profit organization that recruits and supports a new generation of young farmers across urban, rural and suburban areas. Topics in the book include financing, family logistics, machinery, community building, and social change. The following excerpt is from Chapter 2, “Money.”

As a farmer, most of my days are filled with the tangible: the green shoots of seedlings, the softness of a tomato ready to be harvested, the cackle of a flock of turkeys roosting where they shouldn’t.

But farming is as much about the intangible — things like cash flow and balance sheets. It’s about your dreams, and when to take on debt to finance them. So, when my husband and I were first planning our farm, we were sure to make the cash flow just as much a priority as the crop rotation.

We were watching the local-food movement sweep across the country, and we were inspired. We thought such an idea could work at home, too. So, two years ago, we packed up our life in Missoula, I quit my job as the editor of the online magazine New West, and we moved back home to rural Montana to farm.

We had no money and no assets to leverage. What we did have was a whole lot of people pulling for us. We asked a handful of friends and family for a loan. We said we would pay them back in three years with 3 percent interest. It was more than they could earn in, say, a CD, and we would be paying less for the loan than we would if we’d gone to a bank. Plus, we would have a group of investors to advise us, support us, and cheer us on.

We started with a community-supported agriculture model, which means we have sixty people “subscribe” to our harvest: They pay us in the spring for a weekly share of the bounty. That works well, because it gives us start-up capital each spring for seed, poults, irrigation equipment, and the like.

For two years this system has worked well. Investors are happy. CSA shareholders are happy. We’ve been doing just dandy as community-supported farmers.

Now, though, we’d like to expand our grain production and move toward living on the land we’re farming. (Commuting to a farm just doesn’t work.) But we need equipment. And we will have to buy a piece of land instead of leasing.

It all makes financial sense. The business plan works. But it works only if we go to the bank.

That just terrifies me.

I grew up on a wheat-and-barley farm that trudged through the farm crisis of the 1980s. For a majority of my childhood, the kitchen table was buried in bills. My brother and I knew to get as far away from the house as possible if my parents were in the middle of “doing books.” The pressure of debt — of equipment loans, of operating loans, of land ­payments — was palpable in my family and in every other family like mine spread across the American prairie. But to make it in the commodity-driven agricultural economy, you had to get bigger. And to get bigger, you borrowed.

We watched farms around us — mostly the small ones, but some big ones, too — crumble under that pressure.

The 1980s farm crisis was a good example of how dangerous too much, or the wrong kind of, debt can be. But it’s also true that if it weren’t for the banks that line the main streets of farm communities across the country, there wouldn’t be many farmers on the land at all. In a perfect world, we wouldn’t need an institutional loan to get our farm off the ground. But I’ve watched too many entrepreneurs try to eke out a living and fail, partly because they were undercapitalized.

So, although I’m terrified of taking on debt, I know the other route can be just as risky. We recently sat down with our neighborhood agricultural-loan officer. He’s just about the nicest guy in town, but isn’t afraid to tell us how bad the situation could be if things don’t go as planned.

As we walked through those worst-case scenarios, I realized that it’s not the debt that’s scaring me; it’s what the debt means.

It’s been easy for me during the last two years to think of our farm as an experiment, something we could walk away from. We’re young, educated, experienced people. Surely we could find something else if this failed.

In fact, in convincing me to farm years ago, my husband used just that argument to reassure me that we would not end up where my parents were when my childhood farm faltered.

I’ve held an escape route in the forefront of my mind, though. That’s what gave me permission to follow this folly and enabled me to take all the small steps we’ve taken thus far. It has also, however, kept me from taking big steps, and that’s no way to start a business — or a life, for that matter.

It’s true that each little decision — each seed put in the ground and each new customer signed up — marked another small commitment. And two years later, those have added up to one big commitment. But if all we ever take are those small risks, we’re never going to get where we truly want to go.

That’s why, when we were in the banker’s office this month, I had to remind myself that whether or not we take on this debt, we’re putting everything on the line — our hearts, our souls, our energy, our time, our family, our livelihood. These loans would just be a conduit for the big leap.

And maybe it’s time we leapt.

More from Greenhorns:
Lessons Learned from a Dairy Cow

A writer, editor, and farmer based in central Montana, Courtney Lowery Cowgill is the co-founder of the online magazine New West and a columnist for the journal The Daily Yonder. She and her husband run Prairie Heritage Farm, where they raise vegetables, pastured turkeys, ancient and heritage grains, and sometimes a little ruckus. Excerpted fromGreenhorns, © by Zoë Ida Bradbury, Severine von Tscharner Fleming, and Paula Manalo, used with permission from Storey Publishing.