A new microloan program for small and beginning farmers quietly made its appearance this month with a press release from USDA Farm Service Agency (FSA). The program provides low interest loans of up to $35,000 for operating expenses, including start-up costs, annual production expenses, livestock, equipment, tools, irrigation, delivery vehicles and hoop houses. While $35,000 may not sound like much, the program opens the door for the smallest of farms to access a source of capital that larger farms have long enjoyed.

Consider the market farmer who has been growing vegetables on several small plots scattered throughout her rural community. Over the past five years, her sales and production have increased to the point that she really needs to buy a tractor. She has immaculate credit, funds to repay a loan, and a proven ability to manage a farm. Until today, she could not apply for a farm loan. Why? She was too small. The size of her farm and her gross revenue classified her as a hobby farm, the kiss of death for a farmer seeking operating funds.

Not only can this farmer now apply for a loan to buy a tractor at favorable interest rates (currently 1.25 percent), the application she will use is greatly simplified. Considering the size of her funding request and her operation, it makes perfect sense. For someone growing 35 different crops in just a few acres, requiring a separate itemized cash flow with yield data per acre for each of her 35 crops would be a waste of time and would not measure the success of her operation.

The about-face on making loans to very small farms has FSA loan staff in a state of shock, but happily so. As one experienced loan officer said, My wife buys 90 percent of our produce at the farmers market. In the past, when I would talk to the farmers growing asparagus from two-tenths of an acre and tomatoes from another tenth of an acre, I couldnt help them. Now, if someone has at least $1,000 of gross revenue from sales of agricultural products, with plans to increase that, they may be a candidate for a microloan.

The demand for fresh local food is one reason for the dramatic shift. According to the USDA Economic Research Service, local food sales grossed $4.8 billion in 2008 and the number of farmers markets doubled between 1998 and 2009. Much of the growth of very small farms is near urban areas, but rural agripreneurs also need capital. In fact, its possible to apply for a microloan even if you have never formally operated your own farm. You need to have a plan and experience, but the microloan application helps you create that plan, and it takes into consideration the many

different types of training and experience that a very small farmer or rancher might use to become successful. These could include work experience, mentorships, workshops, internships, involvement in FFA, 4-H, community or non-profit gardens.

So what is the down side? No additional funding has been appropriated to support the program. FSA typically runs out of money for operating loans and now more borrowers will be seeking access to this limited capital. Its a first-come-first-served process and many small operators will likely miss out this year. Still, its a monumental step in the direction of helping more people grow more food to feed more people in their own communities.

For additional information contact FSA at 541-278-8049.

Sara Miller is an economic development specialist with the Northeast Oregon Economic Development District.