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Advice on Agricultural Loans?

SkyWatcherSkyWatcher Member Posts: 1,571 ✭✭✭✭✭
edited April 2003 in General Discussion
I've noticed that there are several farmers and ranchers here. Has anyone here had any experience with ag loans and could maybe reccomend a good lender they went through - I've been looking online and there are just too many. I am looking specifically at the Beginning Farmer Loans, or "Aggie Bonds" - anyone dealt with one of those. If I do this, it'll be in SW Missouri or NW Arkansas, in case that affects which lender I should consider. I'd appreciate any input...and thanks in advance.

To whom much is given, much is expected.

Comments

  • Rafter-SRafter-S Member Posts: 2,173 ✭✭✭✭✭
    edited November -1
    I assume you are borrowing money to operate on (buy seed, fuel, etc.) for the crop year. Most people in these parts (Texas) use the local banks.

    The best place to borrow money for buying land is Lone Star Land Bank. But they require 25% down, and you have to have personal assets worth more than what you borrow. You become a "member of the association" and they actually issue dividend paying stock to the members. It is a great deal but only a select group of people can qualify.

    If you are already a land owner, a motto the old timers use, "don't mortgage the land" is a good one that still applies. Don't put your farm at risk under any circumstances. That is how lenders end up with land...land that had been in the same family for generations.

    Farming and ranching is risky...on good years the payback is marginal. To make a profit you have to work hard and have good luck.

    My humble 2-cents,
    Rafter-S

    "What is truth? No wonder jesting Pilate turned away. The truth, it has a thousand faces -- show only one of them, and the whole truth flies away! But how to show the whole? That is the question."
    --Thomas Wolfe, "You Can't Go Home Again" (1934)
  • SkyWatcherSkyWatcher Member Posts: 1,571 ✭✭✭✭✭
    edited November -1
    Rafter - thanks for the reply. I'm actually not looking for an "operating" loan, but an everything loan. The beginning farmer loans let you borrow up to 250,000 for land and equipment, and it will let you spend 67,000 or so of that on livestock/crops. In my case it would be crops. I am looking to start from scratch - I grew up on a farm in the Ozarks, and still have 40 down there, but I'm looking for more suitable land for an orchard. This is all still up in the air, my wife and I have just been talking about it for a few weeks...anyway, that's what I'm looking for...

    To whom much is given, much is expected.
  • IAMACLONE_2IAMACLONE_2 Member Posts: 4,725
    edited November -1
    Off to bat excuse any spelling errors.
    My wife has 1,000 acres in Springfield Il., Her 2 brothers & uncle own 1,000 acres each also.

    We lease our land out to the local farmers.

    The farmers & ourselves are active in the U.S.D.A. Commodites programs. The crops we are involed in are soybeans & corn on yearly rotation.

    The farmers usually are in the U.S.D.A.Farm Credit program, which allows us & the farmers to borrow money against the corps futures, and or not planting crops.

    The payment is based upon what the goverment pays per bushel for each crop, & the history of production.

    Example corn @ $2.50 per USDA price per bushel, average acre yeild 60 bushels per acre, results to $150.00 per acre can be loaned to the producer. The crop becomes the property of the USDA @ that price.

    Payment is in the form of Payment in Kind (PIK's)USDA certificates, these can be used to buy seed,feed,& fertilizer from the co-op's or other farm service vendors, the same as cash.
    The problem with PIK's is that they do not mature until, I think, June 30 & Dec 31 of each year, when they can be surrendered to a particapating bank or the co-op for the full face value, but you can surrender the PIK's early for usually .85 cents on the dollar to again the bank or co-op.

    But, lets say the price of corn goes to $2.85 per bushel, you can sell the crop to a co-op or broker @ that price, but you must pay the USDA their $2.50 bushel price back.

    Check with you local Co-op & district USDA office for more details on the PIK programs.

    Finance of new land & equipment can also be done through the local co-op & USDA district offices.

    I highly suggest that you get a hold of the USDA district office & speak to the agent in your area. As the USDA has special finance programs at low intrest rates, through selected banks in your area.

    Be aware that most of these programs close around April 15th!!!, so dont waste time in working the USDA agent.

    The farmer who leases from us farms about 8,000 to 12,000 acres, he use's a rubber tracked D9 Catipaller as the tractor, has 2 of them, he has to replace a tractor every year at a cost of about $1,000,000
    each. Yep, he wears them out in a 2yr period!. He finaces the D9's through Cat who takes PIK's as payments.

    But again he runs the D9's 20-24 hrs a day for 9mo. a year. Poor dude always in debt!
    Hopefully I did not confuse you more.
    Best wishes
    Walte
    [8D]
  • SkyWatcherSkyWatcher Member Posts: 1,571 ✭✭✭✭✭
    edited November -1
    Thanks, Walte...As to the PIK's, do you know what crops that program is available for?

    To whom much is given, much is expected.
  • IAMACLONE_2IAMACLONE_2 Member Posts: 4,725
    edited November -1
    SkyWatcher
    In referance to what crops are allowed, I would be lying to you.
    You would be better off to contact your USDA or Co-op, because I do know that it varies.
    Walte
  • dakotashooter2dakotashooter2 Member Posts: 6,186
    edited November -1
    I have the best idea for you yet. Do ANYTHING except farm. I have all the respect in the world for people who farm with one exception. Anyone who wants to bust their tail for 18 hrs a day (23 if you raise livestock) has to be a bloomin psyco. While there are a few "new " farmers that make some money the only real successfull one come from "old money". Quit while you are ahead. I worked for my uncles for about 5 summers and had opportunity to buy in to their operation after I graduated. As much as I enjoyed the work I said no thanks. Best decision I ever made.
  • SkyWatcherSkyWatcher Member Posts: 1,571 ✭✭✭✭✭
    edited November -1
    Actually we're considering an apple orchard, and selling fall produce in a retail type operation. My dad has had quite a bit of success fruit farming (strawberries mostly, some balckberries and raspberries) and a lot of luck with the fall produce like pumpkins, ornamental corn, gourds, etc. - minus the apples of course. That way we keep the majority of the really hard labor seasonal in the spring and fall, and the rest of the time, I expect a work schedule that isn't too taxing - especially in the winter. I WILL NOT raise livestock - except maybe the alpaca my wife wants for some reason...anyway, this is our line of thinking...

    To whom much is given, much is expected.
  • cowdoccowdoc Member Posts: 5,845 ✭✭✭
    edited November -1
    skywatcher if your looking at the begining farmer loan deal you need to go to your local FSA/FMHA office and ask about it there they should be able to help you out.
    i checked into the begining farmer loan when i started farming years ago but didnt use that program, i'll tell you right now that there is a lot of paper work to fill out with that program.
    doc
  • SkyWatcherSkyWatcher Member Posts: 1,571 ✭✭✭✭✭
    edited November -1
    Thanks for the advice Doc...if you don't mind my asking, do you think there is a better way to go about financing a farm from scratch (or almost scratch)...the reason I ask is that you mentioned a different route that you took...any advice is appreciated.

    To whom much is given, much is expected.
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