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Advice on Agricultural Loans?
SkyWatcher
Member Posts: 1,571 ✭✭✭✭✭
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.
To whom much is given, much is expected.
Comments
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)
To whom much is given, much is expected.
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]
To whom much is given, much is expected.
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
To whom much is given, much is expected.
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
To whom much is given, much is expected.