I suppose technically, that should be meets the FSA (Farm Service Agency), but since it's a part of the USDA, I'll let it stand for now, since most of you probably haven't heard of the FSA. Among other things, the FSA is the "Lender of last Resort" for the small farm community, but like many things related to the USDA, that might not mean what you think that means.
Like many small farms and rural businesses, when I got cancer, lost my business. and basically started down the road to be an unperson, I started looking around for some way to save my farm. Many of you are probably saying now, why does he deserve to keep his farm, let him go broke and belly up, so some-one deserving can buy his farm (and I know some Kossacks have said this, I kept the emails). Over the course of my next couple of diaries, I hope to make all of you understand why I should keep this farm, but that is not tonight's subject. We first submitted for our loan (not a grant) back in February 2009, for this year. We got word back on the loan today, two thirds of the way through the growing season, long process heh?
During the process, I learned some things about FSA loans that I should have expected, but didn't.
During a time when 95% of farmers in New England have to have at least one full time job off farm to make the mortgage, the USDA will not consider off farm income when calculating ability to payback the loan.
During a period when the average farm in New England has $450,000 dollars in debt, at an average interest rate of 8.5%, a $375,000 dollar mortgage is considered excessive debt.
The USDA can request almost any bit of information they decide is relevant at the local office, In my case they required letters and medical records from my doctors certifying that I was under treatment for both Lyme disease and Cancer.
After going through the process, and obtaining the necessary premise ID's, and giving them full access to your bank account, they can inspect any part of your facility, including your home, at any time, without notice, whether they give you the loan or not.
What follows is the brief history of our farm that we had to submit, giving rationale for what the agency considered our "poor business decisions", and explaining why I didn't go out and get a job to service our debt.
A Brief History of No Snivilin Farm
Seven years ago, we purchased a small (108 acre) "farm", what would usually be referred to as a hill farm, meaning a small flat field, a small flat pasture, and everything else between 15 and 90 degrees. Additionally there was no barn, no chicken coop, no shop, so perhaps it is better described as a farm property, rather than a farm. What we had was potential, a respectable outside income, and a willingness to do what was necessary to turn the property into a home and a sustainable organic farm. So we did what we saw as necessary:
Put down 145,000 raised from 12 years of very frugal living and working, and rebuilding a couple of condemned houses.
Built a barn, dairy and creamery, without contractors, using traditional mortise and tenon techniques.
Designed and installed a whole farm sustainable heating system, integrated with pasteurizer and cheese vat.
In cases where we did not have the financial resources to finish a specific project according to plan, we intentionally left "stubs", instituting what was possible at the time, but leaving the project in such a state as to make resumption straightforward.
Given the financial situation at the time, my decisions were guided by long term concerns for the over all sustainability of the farm, rather than short term profitability. Given ample off farm income, but limited human resources due to the need to work off-farm, we focused on infrastructure, herd and flock development. While subsequent financial developments detailed below cast these actions in a less favorable light, at the time these methods seemed a prudent and conservative course, concentrating our resources on developments which would be usable in the future when our financial resources might be substantially more limited.
The first major change to our financial situation occurred in 2004, when Chuck was laid off from his employment without notice. Given the restructuring that was taking place in the job market at that time, other employment in the same or allied field proved impossible, particularly without a degree in systems engineering. Given that most of our "investment" had been associated with infrastructure for the farm, our liquid financial resources were very slim. On the advice of our lender of the time (First Pioneer Farm Credit) which believed that "the farm was not sufficiently mature or developed to provide sufficient income.", Chuck sought an off farm income stream in sustainable energy systems, founding Hilltown Alternative Energy in September of 2004.
The second major change to our financial situation also occurred in 2004, when my 80 year old mother came to live with us, being unable to continue living on her own in rural NH. This impacted the farm two-fold, as we lost the 750 dollars/month rent on the house she lived in, as well as a significant amount of my time, as I became the primary care-giver for my mother.
Hilltown Alternative Energy, while taking far greater resources from the farm, enabled us to provide a barely sufficient income stream to maintain the status quo on the farm, while never managing to bring any sector to full viability. The business decision to maintain the herds, and the elements of the farm that were not at the time actively producing income was probably ill advised, but there was an emotional component to the decision. We found it very difficult to part with components of the farm that involved hundreds if not thousands of hours of work to achieve, and were within thousands of dollars of being self-sustaining in the financial sense. The dilution of concentration was in hindsight our financial undoing, as was the effort expended in Hilltown Alternative Energy, which was woefully under capitalized to provide bootstrapping for both itself and the farm. While we were able to stay current on both our mortgage and business debt, there was never sufficient cash flow developed to allow either concern to expand or reach some measure of it's potential.
While not achieving sufficient income to be self sustaining, given mortgage payments of $3600/month, the farm was able to cover the cost of feed and hay during this period, although this was difficult to realize, as cash flow demands were such as to preclude bulk purchase of hay or grain, necessitating more expensive bagged and retail purchasing.
This precarious position was maintained by us until 2008, while steady increases in purchase prices, with no change in income, steadily ate away at our abilities to improve the circumstances.
While Chuck had been experiencing some health issues since late in 2007, including loss of vision and overwhelming fatigue, he attributed them to stress and aging. In July of 2008 he was treated for a kidney stone, and during the course of this treatment, a mass was found within his kidney, strongly indicative of a malignancy. At the time, we had no health insurance, so obtaining such, and paying off existing medical debt, occupied an increasing portion of our time. Concurrently, his health was deteriorating at an increasing rate causing him to have to cut his working hours to about 3 a day by the beginning of October, with a 40% loss of vision during the same period making working hours less effective. In January of 2009, having finally obtained health insurance, Chuck was diagnosed with renal cell carcinoma. The affected kidney was surgically removed on March 31 of 2009, prior to metastasis, and his prognosis for a complete recovery is excellent, according to the medical authorities.
For the second year in a row Terri is managing Patch's Patch, a small seasonal greenhouse and retail sales operation in Greenfield, MA, operated by Kyle Bostrom of Bostrom Farm.
Of course, all this was in addition to the usual business plans, 5 year projections, Credit check, personal interview, audit of the farm, 4 years of tax returns....
We didn't get the loan.
The self described libertarians who were hoping for this may now gloat.
See you all next time, when I will get to tell you all what the world just lost.