Ag Financing

Ag Financing

Agriculture is one of the most important industries in the US. In the 2007 Census of Agriculture (conducted every five years), there were 2.2 million family farms that covered 922 million acres of land, with approximately 418 acres per farm.

A majority of American agriculture is centered around the Great Plains, where there are huge expanses of flat, fertile land, and in the region known as the Corn Belt, located near the Great Lakes. However, farming takes place in every US state, and American farm products are exported to every corner of the globe.

The United States has been a lead innovator in farming technology, including the creation of hybridized seeds and the discovery of multiple uses for crops (e.g., the use of soy products for food as well as for biofuel and bioplastics). Tremendous advancements in agricultural automation have also sprung from American farms, from Eli Whitney’s cotton gin to the John Deere tractor.

Present day agribusiness in the United States includes everything from urban rooftop gardens to small-scale farms to large-scale corporations that cultivate thousands of acres of crops or livestock. Because farming is such a crucial mainstay of the American economy, federally and privately subsidized ag financing is available to every type of farmer, from the beginner farmer just opening up new land to the highly experienced rancher looking to expand operations.

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Common Ag Financing

The most common type of farming loans are available from the United States Department of Agriculture (USDA) through the Farm Service Agency, known as the FSA. The FSA is dedicated to supporting American agriculture by offering ag financing to all types of farms.

In addition, they support innovation and alternative types of farming, making America a world leader in agricultural technology, alternative approaches to food and energy production, and environmentally sustainable farming practices.

In particular, the FSA’s Farm Loan Program supports ag financing for small- and medium-scale family farmers and ranchers to start new farms and ranches, expand existing farms and ranches, and move agricultural operations or transition and evolve into new types of operations (e.g., making the transition from conventional farming to USDA- or TILTH-certified organic farming).

Loans are also available for advertising and marketing purposes. Through these efforts, Farm Loan Program financing aims to reinforce and strengthen America’s family farms.

In the spirit of nurturing the diversity that has always been an integral part of American agriculture, the FSA offers special loans to aspiring women farmers as well as racial and ethnic minorities who are learning to farm and who want to start their own operations. Diversity in US farming is an essential aspect of America’s future, and ag financing through the FSA supports this.

Ag Organizations For The Youth

Also crucial to America’s future are the young people involved with farming, ranching, and animal husbandry. National organizations such as the 4-H help inspire youngsters to take an interest in agriculture, and these organizations have been an important part of sustaining family farmers for generations. For children and teenagers who are involved with organizations like 4-H and others, the FSA is there to give financial assistance for their efforts.

Because young people often do not have credit histories and lengthy financial track records, these types of starter and educational farm loans take into account other factors like grades, community service, dependable family support, and previous work experience. Kids who are looking to make money through small, income-generating ventures, as well as those who want to pursue their curiosity and participate in agricultural education programs and projects can all benefit from ag financing through the Farm Loan Program.

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Urban Agriculture

To support America’s growing population, US cities are growing fast. Many farmers are moving to cities, and urban sprawl is beginning to take up a lot of arable land. In order to accommodate these natural consequences of population growth while maintaining sufficient food production, urban farmers are finding innovative ways to grow more food in smaller spaces.

Ag financing is available to urban farmers and gardeners to help them explore and develop new types of space-saving methods such as rooftop gardening, vertical farming, raised-bed gardening using recycled wood and other materials, and shipping container gardening.

In addition to the need for producing more food in smaller spaces, there is also an increasing demand for ecologically sustainable, low energy-use types of alternative farming approaches, including hydroponic agriculture, a bio-intensive method that reduces the need for land and fertile soil, and aeroponic agriculture, which reduces both soil and water usage.

Both of these alternative methods can produce high yields, but they require very little space and can eliminate the need for carbon-producing, unsustainable fossil fuels. The FSA offers special ag financing for the innovation and use of alternative agricultural methods.

Ag Equipment

Access to agricultural loans is not just available for alternative growers and kids, however. To remain competitive in the business, farmers often have to expand their operations, find new opportunities to take advantage of, buy new equipment or maintain old machinery, or they might just need some short-term assistance in managing daily operational expenses during the peak seasons.

Maintaining functional equipment is essential to the smooth operation of a farming business. Farmers can get credit to purchase new or used machinery and other farming equipment and tools, and many banks offer the flexibility of paying back a loan based on seasonal cash flow and the unique needs of any operation.

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Ag Financing & Real Estate Loans

Also available are real estate loans that offer farmers incentives to increase the size of their operations and improve farmland or other rural properties. Farmers can add value to their homes and farms with short- and long-term loans.

In addition to ag financing from the federal government, there are also many banks that specialize in agricultural properties. These banks offer a great variety of interest rates and payment options.

Ag Financing & Operating Loans

Operating loans are another common type of ag financing for farmers and ranchers, and they are designed to help meet the day-to-day needs of a working agricultural operation.

These loans are generally used to fund short-term needs such as feed, seed, fertilizer, repairs, pesticides and herbicides, and temporary staff during peak seasons. Many operational loans have tax-deductible interest, and some of them are even available as inventory loans, which allow farmers to plan their sales according to the best interest rates available at a given time.

Farming and ranching are the foundation of today’s thriving American economy. American farm and ranch products are consumed all over the world, and agricultural financing is available in many forms to US farmers and ranchers.

Both bank and federal loans are abundant to support this crucial American industry and foster a rich American tradition. Most of this financing is tailored to meet farmers’ needs, such as flexible payment schedules and interest rates to make repayment easier.

Affordable ag financing offers farmers cash when it is needed, and an additional attraction of these loans is that they often come with tax-deductible interest. It can be challenging to even know where to begin when there are so many options available to start, expand, transition, or innovate upon a farming or ranching operation.

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