Farming is a risky business — at least, according to the banks.
Urban-dwellers tend to think of farming as long slow days in the country, hard work, green leaves and sunshine. But crop yields are unpredictable. So many factors outside of human control — rain or drought, pests, diseases — can influence yields and market prices, often making it impossible for farmers to pay back loans on schedule. This of course makes it harder and harder for them to get future loans.
One Maine, USA resident (who asked that we only use his first name, Steve) was looking for ways to invest his money locally and responsibly: “I don’t like supporting the big stock markets or large corporate businesses … It’s not the kind of world I want to support.” He also lives in an area with lots of small farms and was already buying their local produce and meat for his family.
So he decided to provide loans to local farmers looking to expand their businesses in small ways. Since Steve has personal relationships with all of the farmers he works with, he’s able to adapt the loan terms to their needs, including giving extra payback time without penalty. For each loan he charges 5% annual interest, but interest payments are paid exclusively in the form of organic farm products — Steve has been paid in blueberries, vegetables, chickens, frozen lamb and half pigs.
Most of the loans Steve has provided are for $10,000. But one farmer who had already received several smaller loans needed $70,000 for a new blueberry harvesting unit and a tractor. Steve had built a strong relationship of trust with the farmer over the years, and so he lent him the money. That year, the Maine blueberry harvest was huge, the market was flooded, and berries sold for very little — particularly berries like the one this farmer grew, which were organic but not yet certified. Steve explains, “I understood the challenge the farmer was facing so I agreed to lengthen the loan for another year. There was no penalty, just additional ‘loan interest’ generated because of the longer payback period. As part of this loan’s ‘interest’, I have several 30-pound boxes of blueberries in my upright freezer that I’ve been enjoying all year! I think this kind of low-stress loan is important to farmers because if they went to a bank to tell them they couldn’t pay back the $70,000 for another year, the bankers would flip out and the farmer’s credit score would be damaged for years to come. In this case, I just get a lot more blueberries to enjoy, and the farmer can sleep at night.”
Though Steve is not currently working with any formal banks, organizations or credit unions that specialize in giving loans to farmers, he says a credit union that does specialize in helping farmers will soon open in his area, and he intends to move his money and banking activities there once they do. In the meantime, his work provides an inspiring example of one way an individual with a good idea can make a real difference by working locally!
To get more frequent updates on these projects and more, and to have a chance to connect with people working in their local communities around the world, join the International Alliance for Localization. And check out the Local Futures website to see a longer list of localization initiatives like this one!