Marilla, New York
Rick Janiga, a dairy farmer in western New York, has utilized FSA loan guarantees throughout the years to finance his very capital-intensive business.
Rick has been farming dairy cows in Marilla, New York, for over forty years.
Young and beginning farmers
When he began the farm all those years ago, Rick started by purchasing a little over 90 cows. However, in order to care for these newly purchased livestock, Rick also had to purchase equipment, feed inventories and real estate. When it was all said and done, he had invested a little over $1 million into the new operation – not a small sum for a young couple just getting started in a new business.
FSA loan guarantees
Rick understands the importance of loan guarantees from the Farm Service Agency (FSA), a division of the United States Department of Agriculture (USDA), both from experiences at his own operation, a well from watching the experiences others when he served as a member of the Board of Directors at Farm Credit East.
How it works
When a Farm Credit association makes a loan to a farmer, they may choose to apply for an FSA loan guarantee, which acts as government-backed insurance for the loan. If, for some reason, the farmer is unable to repay Farm Credit, FSA will step in to help.
These guarantees become particularly useful when lending to farmers with less credit history. “From my experience on the Farm Credit East board, we've used FSA guarantees as a tool for a lot of different loans, and for young, beginning farmers and small farm loans, I think it's a critical tool,” Rick said.
Increasing FSA loan guarantee limits
Much has changed, for both Rick, as well as the world around him, since he began the dairy business. The same 90 cows that he purchased all those years ago have more than doubled in price and the farm property would have more than tripled by today’s prices.
However, there are limits on the amount of money an individual farmer can receive through an FSA loan guarantee. These limits are determined by the Farm Bill, legislation passed by Congress every five years that dictates how much federal money is allocated for a variety of farm programs and agricultural support.
Rick feels it is vital that the Farm Bill limits for FSA loans reflect the real costs of farming, as they evolve alongside the ever-changing economy. “I think the FSA caps have to keep pace with the increased capital demands of agriculture to date,” he said.
Looking back on how things have changed since he began in agriculture, Rick said, “We may have as much invested in one piece of equipment today as we had in our entire line of equipment back 40 years ago. The costs of getting into that kind of operation for a young person are huge.”
Rick was proud to serve on the Farm Credit East board where he contributed to supporting young and beginning farmers getting into agriculture, farmers who remind him of himself all those years ago.