Great Barrington — We’ve all heard about micro loans to underserved farmers in India and beyond. Also referred to as microcredit, the arrangement holds 19th century roots that originated in Great Britain and Germany. Enacted later on a far larger scale, it came into the public eye when first launched in Bangladesh in 1983 by Muhammad Yunus. Later, he founded the Grameen Bank and received a Nobel Peace Prize in 2006.
Here in the U.S., microcredit for small to mid-sized farming operations is also emerging, albeit on a different scale.
Like Community Supported Agriculture (CSAs) farms, first launched in the Berkshires in the 1970’s and then taking off worldwide, creative and practical initiatives to preserve and encourage the farming community continue to sprout in our own backyard.
Well, not quite in our backyard. Founded in Somerville, Mass., in 2005 by Dorothy Suput who has advanced degrees and background in urban and environmental policy, it was named The Carrot Project and spread through programs in Vermont, Maine and Eastern Massachusetts.
Four years later, it sprouted locally when Neil Chrisman and Joel Millonzi were dining at the Stagecoach Inn in Sheffield.
“Here we were enjoying local food and soon began discussing how farms making this possible could be maintained into the future,” explained Millonzi during a recent interview.
Neil Chrisman, a former banker and chairman of The Jacob’s Pillow Dance Festival in Becket, adds how land conservation coupled by productivity was a priority for him.
“In high school I worked summers on a dairy farm in California,” he explained.
Years later, he was growing organic hay on his property in Sheffield for use by Moon in the Pond Farm, while his wife Kathy joined the board of the Sheffield Land Trust.
Joel Millonzi, the other local founder, grew up with a large family-operated “canning” business in western New York. Both founders shared a fundamental link: commitment to healthy, local and sustainably grown food.
They also shared a background in finance and economics: Chrisman from Wall Street and Millonzi as a former executive recruiter and economics professor at City College of New York. Combining these two somewhat incongruous but parallel backgrounds, they pursued their vision to promote food security, diversification and long-term viability for local farms.
“As we all know, money greases the wheel,” explained Millonzi. “We were searching for a way to assist farmers achieve financial security and potential for growth but not in the form of outright gifts. Loans are more effective and self-sustaining long term.”
After extensive research throughout the Northeast, they came upon The Carrot Project in Eastern Massachusetts. Eventually joining the board, they initiated what came to be known as “The Greater Berkshire Agricultural Fund,” or GBAF, in 2012, in affiliation with the Carrot Project.
Under the Carrot Project’s umbrella, GBAF focuses on the Berkshires’ tri-state county region into New York and Connecticut. “After all, agriculture doesn’t have boundaries,” notes Chrisman with his engaging smile.
According to its mission: “The Carrot Project partners with farmers, lenders, investors, donors, and farm service providers to, first, create loan programs connected to technical assistance, and second, strengthen the sector’s knowledge base through research and information sharing.”
Basically, this translates into making loans to farmers and offering pro-bono advice for improving their business practices including long-term financial planning. Such loans require partnering with a bank, in this case, the Salisbury Bank, based in Connecticut that has offices in the Berkshires and New York State. Loans range from $5,000 to $75,000 on a 5-year average basis with interest rates that vary from 4.99 percent to 7 percent. How about collateral? It’s primarily production equipment such as tractors — even cows, but not land, as Millonzi is quick to point out.
Two small farms in Dutchess County, N.Y., recently benefited from this program. Dick Kelly, executive vice president and chief lending officer of the Salisbury Bank, stated in a June, 2014 press release: “We are delighted to help both of these newly founded farms achieve their goals and improve their overall standing as they move towards the future.”
While on a national scale the demand for local, healthy food is bursting at the seams, this cannot take place unless farmers obtain both land and dollars for operating and capital expenses. The farms need not be start-ups either.
The 300-acre Leahey Farm, in operation since 1889 in Lee, Mass., qualified for a loan in 2013 for purchasing milk bottling and frozen yogurt-making equipment. Here was a much needed opportunity to move into the 21st century. Only by achieving diversification — major challenges for traditional dairy farms — can the demise of small scale farms in competition with state-subsidized industrial agriculture be reversed. It is also about finding a niche and remaining resilient.
Of course, The Carrot Project is not a Robin Hood operation. Largely on the shoulders of Benneth Phelps, the project’s loan and outreach coordinator, and an active loan review committee, the modus operandi is to assess the potential recipients’ operations and credit worthiness. Particularly today, banks may not be staffed to offer specialized loans to agriculture. And for sure, they are not in the business of consulting farmers.
A third major, and crucial, component is finding investors who share a committed vision and will purchase a certificate of deposit at the partnering bank. The minimum is $25,000, but they have investors who far exceed that level. Quite literally, it’s about putting your money where your mouth is.
The bottom line is how to achieve viable access to financing and business planning for the food production and distribution sector.
“What inspires me is that we’re building bridges. We’re enabling a more conventional lending standard to focus on the needs of the farming community,” explains GBAF Program Manager, Martha Bryan, former owner of Shady Gate Gardens and current Executive Director of the New Marlborough Land Trust.
And building they are doing: “In the past year we have worked with 30 farms in our footprint and have closed six loans,” she said. “Our technical assistance services help farm businesses get ready to borrow so that by the time they fill out an application for a loan they are likely to be successful applicants.”
What are their future goals?
Most immediately it is to increase their lending program from this year’s $300,000 to $500,000. Also high on their agenda is to further develop their educational financial expertise and outreach. Consumers can only benefit.
Of course, all of this will continue to require complex networking and partnering with investors, foundations, businesses and other organizations. More arable farmland needs to be accessed. Land trusts such as the Berkshire Natural Resource Council and the Columbia (N.Y.) County Land Trust, committed to “working” open spaces, are instrumental here.
Also crucial to the food web are distributors such as the Berkshire Co-Op Market, the well-established “farm to table” nonprofit Berkshire Grown, and financial networking organizations such as the Berkshire Taconic Community Foundation.
Working together with this shared vision, such an approach will impact a farming system that values smaller scaled farms which use ecologically and financially sustainable practices.
“Our major understory is to build a constituency,” concludes Chrisman.