Categories
Issues in Agriculture

How We’re Helping Small Farmers Gain Access to Capital

Let’s talk about a BIG issue that small farmers everywhere are confronted with: access to capital. In the United States, starting a farm generally costs hundreds of thousands of dollars (for acquisition of land, equipment, inputs, etc.) But agriculture is a business that just doesn’t bank well. It’s a cash intensive business, with low return on investment, and unpredictable cash flow. Beginning farmers are at a greater disadvantage, because they don’t have a financial history for their operations, which means that banks don’t have sufficient knowledge to grant them loans.

While we can’t necessarily do much for other farmers like ourselves in the United States, we do have the power to help farmers in developing nations! Through Kiva, we can fund micro loans to farmers in other parts of the world, where start-up costs are much lower (in terms of USD). This is not a donation, but rather, a very low interest loan that will allow the recipient to purchase materials to kickstart a new farming business, or give their existing business a major boost. The recipient pays the loan back over time, and the money is returned to our account. Kiva loans have a 97% repayment rate. Once one loan has been paid back in full, we’ll find a new project to invest in. The beauty of lending through Kiva is that it isn’t just for the wealthy; through crowdfunding, the platform allows ordinary people like us to make a difference, and to know exactly where our dollars are going and who they’re going to. If you have $25 to spare, YOU can afford to lend through Kiva!

Pictured right is Virgilio, the first farmer that we lent to through Kiva. He is a coffee grower in Costa Rica, and he has been working in agriculture for over 50 years! He used the proceeds from his loan to purchase agricultural inputs to improve the productivity of his plants, increasing his harvest and thus his household’s income.

We know firsthand that the ability to access capital during a farming operation’s early years can make the difference between success and failure. We had a number factors in our favor when we started our business: we both had very strong credit, we had savings (that we quickly exhausted), we had a solid grasp of finance and the banking system, we had some wonderful people in our corner at the Farm Service Agency who helped us secure loans, and we had a supportive family from whom we could borrow. Without all of these things, we may not have made it to where we are today, and we still have a lot of growing left to do! We recognize that we are incredibly privileged, and we want to use our position to spread a little bit of good in the world. We plan to set aside a small portion of our profits each year to be distributed as micro loans to farmers across the globe. In the hands of these farmers, our capital will be put to use creating better livelihoods and more sustainable food systems in their communities. It’s all part of the “Eat Local, Think Global” mantra!

Leave a Reply

Your email address will not be published.