Investing in New Ag Producers from all Walks of Life

Since its inception, CoBank’s FarmStart partnership with Farm Credit East has invested more than $17 million in beginning agricultural businesses in the Northeastern U.S.

FarmStart, a partnership between Farm Credit East and CoBank, supports individuals looking to launch businesses in farming, fishing and forestry in the Northeastern U.S. This mission-related investment program helps Young, Beginning and Small farmers overcome some of their challenges and barriers to entry. Chris Laughton, director of Knowledge Exchange for Farm Credit East, manages the FarmStart program. Laughton refers to program participants as “starters” to ensure inclusivity of those seeking careers in forestry and fishing, as well as agriculture.

“Starters come from all walks of life,” said Laughton. “Some are the next generation of a family business looking to strike out on their own. Others are career changers with no real background in the industry — just a creative business idea and a passion for the work.”

“When FarmStart was developed, we saw a lot of new farmers putting operating expenses on credit cards, or maxing out family borrowing to an unhealthy extent,” continued Laughton. “Not a lot of Northeast lenders specialize in agriculture and those who do are looking for solid capital, collateral and credit history — something most YBS farmers and fishermen don’t have. We wanted to offer an affordable solution to fill that gap.”

“In many respects, the unique business ideas are the best,” said Laughton. “FarmStart loans are limited to $75,000 so they’re not suitable for buying land or investing in large-scale, commodity agriculture. But they can make a real difference for those who need help with operating expenses for specialty and niche markets.”

Once advisers believe an applicant has a viable business plan, FarmStart requests are sent to an investment committee that includes representatives from Farm Credit East and CoBank. Will Baildon, regional vice president at CoBank, has been a part of FarmStart since its beginning.

“One of the pieces I enjoy most is seeing the creativity of our FarmStart applicants,” said Baildon. “We have some conventional row crops and dairy operations, but we also have specialty mushroom farmers, custom forestry businesses, hard cider producers, bee keepers and lobstermen. These are some really unique business models that would have a hard time getting funding from anybody else, but FarmStart supports them.”

FarmStart participants are assigned an experienced adviser who meets with them at least twice a year to review progress and adjust their businesses as needed.

“The interaction between starters and advisers is one of the coolest parts of the program,” said Brenda Frank, CoBank’s executive vice president of Farm Credit Banking. “It’s a high-touch relationship with the borrower learning from the adviser and the adviser learning from the borrower. The relationship managers who work on this program are personally invested in the success of the farmers and the program overall.”

Since its inception, FarmStart has invested more than $17 million in the region’s beginning agricultural businesses. More than 100 starters have graduated to become regular Farm Credit East customers and generated nearly $30 million in peak loan commitments. In 2022, the program made 23 new investments.

“We call this an investment rather than a loan program because we believe in the future of Northeast farming, fishing and forest product producers,” said Laughton. “We know there are challenges, and it’s not always easy, but we continue to be amazed by the creativity, innovation and remarkable fortitude of the region’s agricultural entrepreneurs. Ultimately, FarmStart is all about helping beginning producers achieve their own goals, whether that’s a small, niche business, or something more ambitious.”

This story was originally published in the CoBank 2022 Sustainability Report.