Funding the Organic Farming Transition
by Matt Leavitt, Organic Lead / Agronomist
Conventional crop prices continue to be challenging for Midwestern farmers’ bottom lines. Farmers looking towards alternate or diversified marketing streams have no doubt considered transitioning to certified organic production, but how can you make ends meet during the 3-year transition period to organic certification?
The 36-month transition period to organic certification is routinely cited as the primary financial hardship to those producers looking to transition to organic production. That is 36 months where growers are following certified organic farming practices but are getting paid conventional prices in addition to having to deal with weed pressure, lowered yields and learning new farming systems, purchasing machinery, finding new market outlets, and generally staring at a lot of red ink.
Are there any financial programs available for farmers to ease the financial burden of transition to organic certification?
We’ve listed some below (we’re sure this isn’t exhaustive). If you know of other programs, please let us know, and we’ll update this list!
- Compeer Financial Organic Bridge Loan: For those farmers transitioning conventional grain production, Compeer is offering loans where you can draw funding 2- to 3- years (during transition) and you are only required to pay the annual interest. Once you are certified, the loan transitions to a term loan. Learn more here.
- Perennial Fund: Offers farmers flexible financing during the transition where you’re allowed a 36-month grace period on your loan, you repay once certified based on a share of your net income (20 – 30%) and they cover the cost of certification. They also claim that if the farm isn’t returned to 150% the initial loan over 10 years, your debt will be forgiven. The amount owed is 1.5x of what is issued. Learn more here.
- Organic EQIP: NRCS has a separate funding pool available to certified organic producers. The CAP138 Supporting Organic Transition provides funding to pay a TSP (technical service provider) to help write a producer’s Organic System Plan. That is the primary document a producer would submit to an organic certifier to become certified organic. Contact your local NRCS office for more details.
- Contract for Change: The CCOF foundation in partnership with Anheuser Busch (as part of the Michelob Ultra Contract For Change Program) are providing $5000 per operation that wants to transition; all crop types eligible. This round of applications close April 30th, 2020. Learn more here.
- Organic Certification Cost-Share: Once you are certified, this program offers certified organic producers to offset the costs of certification. It can provide up to 75% of the cost of certification capped at $750 (whichever is less). Contact your state FSA office or Department of Agriculture.
- Pipeline Foods Farm Profit Program: Pipeline Foods offers a program for those in transition to select from a menu of services including long-term off-take agreements for marketable transitional & organic grains, financing, agronomic advice, certification services, educational programs, and networking. Contact Pipeline for more details. Learn more here.
- AgriSecure Organic Management Platform: Producers that sign-up for the different tiers of services get access to organic crop consulting, farm planning, certification & record-keeping assistance and marketing in addition to companion offerings from FBN (like inputs & financing, marketing, agronomic advice, etc.) Learn more here.
Please note: inclusion in this list does not indicate endorsement by Albert Lea Seed or any of its representatives.Tags: farm loan programs, organic grants, organic transition