Gail Gullickson explains ag loan options to young producers
An intimate group of agriculture students and professionals met at the South Dakota State University (SDSU) campus for the South Dakota Cattlemen’s Association’s (SDCA) Young Producer Council (YPC) meeting on Sept. 29, 2010. Topics at the meeting included an update on the Grain Inspection, Packers and Stockyards Administration (GIPSA) proposed rule for future livestock marketing, as well as available scholarships for YPC members, the upcoming state conference and, finally, available loans for young producers through the USDA Farm Service Agency (FSA).
Gail Gullickson, with the Brookings County FSA office, addressed the group of young people on FSA farm programs, the farm programs available, the application process and the requirements for those eligible for these loans and programs. Her presentation “FSA: What You Need To Know,” and accompanying speech was supplemented with an ample amount of questions from the group.
What loans are available? How do I qualify? What is the anticipated length of time for approval and closing on the loan? How long do I have to wait for funding to be available? Can I use this to buy real estate or cattle? What is the long-term sustainability of this program in light of the nation’s budget cuts? These were some of the questions asked by the group, and Gullickson offered her seasoned advice from a loan officer’s perspective.
“I encourage young people to first stop in their local FSA office to visit with a loan officer about our loans and business planning options,” said Gullickson. “We can help young producers develop a plan, put ideas on paper and work through cash flow. It’s important to remember that we finance for producer success, not for our own profit. We aren’t competing with the bank, and a large portion of our funds is targeted to strictly help young producers.”
Gullickson said that 55 percent of the loans made in 2009 in South Dakota went to beginning farmers and ranchers totaling more than $66 million to young people in production agriculture.
“We have helped young people do many things with the Beginner Farm and Ranch loans,” explained Gullickson. “The first option is to purchase farm real estate, whether it’s farmland or a building site to be made in a 40-year term. Another option is a farm operating loan to assist producers in buying livestock or equipment. Depending on the loan, this can be paid off in one to seven years. Also available are conservation loans, emergency farm loans and rural youth loans.”
To qualify for the FSA Beginning Farmer and Rancher loan, applicants must not have operated a farm or ranch for more than 10 years. Yet, they have to have three years of financial history in production agriculture including balance sheets, income tax returns, crop insurance records or calf production numbers. Available loans cannot exceed $300,000.
“To apply, we first need a purchase agreement before the application process can begin,” noted Gullickson. “The applicant must submit their application, then the loan official determines eligibility. Next, a final loan decision is made, and the applicant will receive written notification of each step in the process.”
Gullickson advised young producers to plan ahead to prepare for applying for these types of loans.
“With interest rates currently at 4.125 percent, it’s really a great opportunity for young people,” said Gullickson. “Plan ahead and get your three years of farming and ranching experience so you can pursue one of these loans down the road.”
YPC member and FSA employee Staci Anderson shared her experiences with the rural youth loans and beginning farmer and rancher loans.
“When I was in high school, I used the farm loan to purchase 12 cows,” said Anderson. “The day after my eighteenth birthday, I went back into the office and applied for the beginning farmer and rancher loan to expand my cowherd to 35 head. The application process isn’t too bad, and the interest rates can’t be beat.”
Anderson’s testimony was well-received by the young people who are all in different phases of exploring their options to get into production agriculture. The USDA FSA Beginning Farmer and Rancher Loan is certainly an option for these agriculturalists to explore down the road. For more information, contact your local FSA office or visit http://www.fsa.usda.gov.
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