Getting a handle on the barriers to financing sustainable agriculture

Project Overview

Project Type: Professional Development Program
Funds awarded in 2001: $69,043.00
Projected End Date: 12/31/2003
Region: North Central
State: Minnesota
Project Coordinator:
Carolyn van Schaik
Land Stewardship Project

Annual Reports


Not commodity specific


  • Education and Training: farmer to farmer, focus group, networking, study circle
  • Farm Business Management: new enterprise development, budgets/cost and returns, agricultural finance, whole farm planning
  • Production Systems: agroecosystems
  • Sustainable Communities: new business opportunities, social capital


    The almost 600 results of surveyed sustainable farmers, agriculture educators, and agriculture lenders in Minnesota and Wisconsin suggest that farmers are more optimistic about their enterprises than lenders are about financing them. Most farmer respondents felt they are at least as profitable as conventional counterparts, though just 2% said they keep enterprise records to prove it. A third of lender respondents and a quarter of the educators felt they didn’t know enough to judge the profitability of sustainable farming; most of each group had not been to a sustainable agriculture-related training in the past five years. Lenders and educators alike indicated they were open to working with alternative farmer/clients but the majority of farmer respondents indicated they weren’t getting that message at the bank and few said they sought financial help from educators. Follow-up roundtable discussions punctuated the interest in smarter financing along with needs ranging from the particulars of cheese-making to those of business plans. A separate study confirmed a glaring dearth of benchmark information related to rotational grazing and organic management.

    Project objectives:

    We proposed to unearth some of the myths and assumptions behind the presumed low rate of lending to alternative agricultural endeavors. In the short term, we sought a better understanding of banker and farmer needs, the language of each group, what questions each needs to ask and be prepared to answer, and the role of perhaps unfamiliar farming enterprises at the bank, on the farm, and in the community.

    From this work in the long run, bank portfolio analyses will reflect greater activity in sustainable agriculture categories and these enterprises will be stronger because of sound business plan preparation. The environmental and social benefits of a financed sustainable agricultural community will be evidenced in its improved natural resource base and strengthened rural network.

    To do this well, principle activities included:
    a. three targeted surveys of lenders, farmers, and agricultural educators in Minnesota and Wisconsin to identify credit barriers in a substantive way;
    b. facilitated round-table discussions on key findings of the survey and what-next scenarios;
    c. the compilation and dissemination of existing benchmark data on alternative agriculture enterprises;
    d. incorporation of a soon-to-be-released manual on business plans, sample plans, data, resources, and success stories in presentations.

    This project assumed that stewardship of our agricultural resource base is best done in partnership: as much as a truly sustainable agriculture is increasingly a matter of small businesses, bankers and family farmers would be better off understanding one another. The motive driving this work was – and still is - a desire to help bankers view alternative farming ideas as opportunities and to help farmers address the expressed needs of their would-be lenders so that money flows toward good stewardship on working farm land.

    Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.