American Dream For Farmers Needing Dose Of Investment (Rick Fahr Commentary)

Rick Fahr

I have known Larry since I was a kid, barely able to reach the ladder on the combine he drove each fall. Shave his beard back then, and he was the spitting image of Steve Irwin, the crocodile guy. With the beard, he was a burly, scruffy salt-of-the-earth farmhand, quick with a laugh and a helping hand to anyone who needed it.

I often did.

I could get any piece of equipment stuck (even on dry ground now and then). My ability was legendary. One time, while cutting through the bank on an irrigation canal, I managed to bury up our backhoe. A backhoe. That’s almost impossible. Anyway, Larry came over to pull me out, something he did more than a few times over the years.

Larry was a great farmhand. He knew what needed to be done, and he did it, never cutting corners. He was strong as a bull and never seemed to get tired, even during the hectic planting season when we routinely put in 16-hour days.

He was a great farmhand, but he wanted to be a farmer.

Through hard work and help, he would get his chance.

Larry had a supporter, his employer actually, who helped him get into farming for himself. In just a few years, a testament to his knowledge and skill and work ethic, Larry’s own operation had grown to include several tracts of land. He’d been able to rent this little farm here and another there. He was responsible for several hundred acres, and he was on his path toward the American Dream.

To be sure, Larry earned his way, his opportunity. He worked hard and carved out success, but without that initial help, he likely would never have had the chance to have his own operation. He would have forever worked for someone else. There’s nothing wrong with that. Most of us work for someone else. But there’s something especially gratifying about being a farmer, rather than a farmhand.

Today, for every “Larry” there are several who never get their chance.

Striking out on your own was difficult back in the day, and it’s nigh on impossible now for many people who would want to try. The cost of equipment is the principal hurdle. Outfitting even a small farm can easily run seven figures, and not many people have the ability to stroll into a bank and walk out with that kind of money.

Why does it matter?

As is the case with many manual labor types of jobs, fewer people are pursuing this work. Look at the timber industry. Millions of trees are ready to be cut, but there aren’t loggers to cut them. As farmers and loggers and those in the protein industries retire, there is not a resupply of new blood coming along.

There is money to be made, but there are not enough people in a position to take advantage of the opportunity.

What’s the answer?

Venture capital doesn’t often find its way into agriculture. That system, generally, is set up to strike it big or move on. The methodical risks inherent to agriculture don’t tidily fit into that niche.

But a new form of venture capital investment is exactly what the state’s agriculture sector needs. These investments would focus on the equipment needs on the front-end, because many local banks can and do shore up funding for routine operations.

Say an experienced farmhand or catfish or poultry grower wants to go into business for herself; venture capital investment could help purchase the necessary equipment. The potential farmer could presumably go to the local bank and, based on her experience and standing in the community, get a production loan to cover operating costs for the year. Of course, an arrangement for land to rent or manage would have to be in place, but those deals come along frequently.

The same would be true for someone who wanted to start his own logging business. With help on the front end to acquire equipment, that logger could get to work with a partner that he could buy out over time.

Someone who wanted to get into the crawfish business could get help buying land and building ponds, paying off that initial investment with profits earned by sweat equity.

Ah, the American Dream!

Such arrangements would not only serve the industries, but they would provide worthwhile projects for investors, because food isn’t going out of style anytime soon. Neither is furniture or heating fuel.

If the traditional venture capitalists won’t jump into agriculture, perhaps the major players in agriculture could. Greenway Equipment is already investing in equipment technicians’ education. Imagine if John Deere put aside nine figures each year to help several dozen farmers get started in the business. Those farmers would outfit their operation with green-hued equipment, which hedges the company’s investment.

Unless the industry somehow lowers the bar to entry, there won’t be many new farmers or loggers at all in the coming generation. If that’s the case, we all lose.