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Small Farm Lending and why it's so important

Small farms are an essential part of rural economies and provide healthier, fresher produce

Small farm lending is something rarely talked about when discussing banking, but it’s an extremely important part of the lending that banking institutions should be doing, especially in rural areas.

In today’s economy, most products are mass produced by huge companies, then shipped across the country and the world. Food production is no different. Technologies such as refrigeration and preservatives have allowed even the most spoilable food products to be mass produced on enormous corporate farms far away from the markets at which they’re sold. However, unlike products that don’t degrade over time, the nutritional content of produce degrades while it’s being shipped and sold.

Additionally, refrigeration and preservatives; have significant negative effects on the environment. Farming methods used by smaller farms are also less likely to involve chemicals and are more likely to grow diversified crops, practices that are healthier for the land.

Small farming is an important part of rural economies. Small farmers are more likely to buy their inputs and equipment locally, and their products are more likely to be sold locally, avoiding expensive steps in the typical food distribution chain, which often allows local farmers to sell higher quality products for less. For these reasons and more, small farming fuels small, rural economies and communities.

Because most small farms don’t make enough excess profit to compete against large farms when weather events or a bad growing season affect their yield, small farm lending can be an important safety net. Loans are also vital to cover the costs of seed and other inputs at the beginning of the season.

Access to capital is key to bringing young farmers into the aging profession of agriculture. According to Census data, the average age of the principal farm operator rose by eight years between 1982 and 2012. However, the current agricultural climate makes it nearly impossible for young people who are interested in agriculture to start their own farms, as farmland has become increasingly expensive and hard to find. Small farm lending is essential when beginning a new farming operation to cover costs of buying land, equipment, or seed.

Looking for a banking institution with significant small farm lending is particularly important for those living in rural, agricultural communities, and it’s also a great choice for those concerned about how the modern farming industry affects their food and the environment. Local produce is not only fresher and more nutritious but investing in local family farms helps keep America’s small town economies healthy and thriving.


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