Planning Your Farm Business
Consider your farming background and geographic location. It’s critical to start with a business plan for your farm. The planning process will help you address most of the issues you’ll encounter in your business. Your experience in the farming industry has a big impact on your plan, along with the types of crops grown in your area of the country. Evaluate your level of expertise as a farmer. If you’re new to farming, you may be able to find grants that pay for training and mentoring programs. Think about your available resources. Do you have access to enough land to farm? Consider what equipment you’ll need and how many people it will take to operate your farm. Take a look at the types of crops grown in your area of the country. You may be able to apply for grants that support organic farming, or specialty crop farming (fruits, vegetables, tree nuts). Analyze whether or not your area can support these types of farming.
Write a business plan. A comprehensive business plan will show a potential grantor that you should be considered for a grant. Your plan should include a discussion of how you will market and sell your crop. The plan should also explain how you will generate a profit and manage cash. Compute the initial costs you’ll incur to open your farm for operation, if you’re starting from scratch. If your farm is already in operation, explain why you need financing. In both instances, you’re explaining how you will use the grant proceeds. You may use the grant proceeds to purchase land, seeds, or new equipment. Your grant proposal may include your need for more labor, or improved housing for your labor force. The business plan should include a projection of the income you’re going to generate and the expenses you will incur each year. A good business plan will also include projections of cash inflows and outflows. Most business plans include at least three years of business projections. You may need to change your plan to meet the requirements of the grant application. Every grant, however, will require you to create a business plan in some form.
Decide which components of your plan may qualify your farm for a particular grant. Once you get your plan on paper, read through it. You may find a facet of your plan that relates to a specific grant. If you can connect your business plan to the purpose of the grant, you can make a compelling case to be awarded the grant. Say, for example, that you manage a profitable farm. You have more available land to farm, but you need capital (money) to hire more workers and expand production. You may be able to find a grant that exists to help disadvantaged workers find jobs. Assume that you have expertise in organic farming, but you don’t have the capital to expand your operation. There are grant programs specifically designed to help the organic farmer produce more crops. That type of grant may be a great fit for you.
Researching Available Government Grant Opportunities
Understand the different types of grant options available. Government farm grants are given based on a wide range of relatively specific criteria. For example, many government farm grants are only provided to those farms that qualify as a “small farm.” A small farm is typically defined as those farms bringing in gross receipts of less than $250,000 annually. Some of the main types of government grants include: Farm labor grants, which can be used to locate, hire and pay farm employees. New farmer grants, which are used to help those looking to start operating a new farm. Environmental quality incentive grants, which are provided to those farmers who agree to employ environmentally friendly farming processes in exchange for grant money.
Use the USDA website to research federal farm grant opportunities. The website explains all of the different grant programs available and provides details on eligibility requirements and application procedures. Always read through the applications in detail to make sure you qualify for the grant you're looking for.
Explore grant opportunities in your state. Call your state Department of Agriculture or access their website for more information about farm grants provided by your local or state government. If you live in a rural or tribal location, you might be able to get grants from your regional government as well.
Look for new and proposed funding opportunities. Oftentimes additional grants are made on a needs basis when funding is available to help in the areas of pest management, water conservation, and energy. Check the USDA's website, or www.grants.gov for opportunities that are only available during specific years or for specific communities.
Choosing the Appropriate Grants
Start your farm by applying for the Beginning Farmer and Rancher Development Grant. The USDA’s National Institute of Food and Agriculture provides farm grants so that new farms can receive up to $250,000 for training, education, and technical assistance. The USDA's National Institute of Food and Agriculture provides money to both state and local governments and to nonprofit organizations. Those organizations dispense the grant funds to new farmers. Contact your local, regional or tribal agricultural office to access grant money through this program.
Apply for Farm Labor Housing Grants. Labor Housing Grants are provided to farmers who want to build, remodel, or sustain housing for the farm workers they employ. The grant funds are given to nonprofit organizations, public agencies, and farm worker associations, who then dispense the funds directly to farmers.
Qualify for an Environmental Quality Incentive Grant. These grants are provided to all farmers, but for those who switch or transition to organic farming, the wait for funds can be much shorter. The same goes for socially disadvantaged farmers. In addition to receiving up to $20,000 per year, your farm can also qualify for $80,000 in grants over a period of six years. Get standards from the USDA's Agricultural Marketing Service.
Apply for the Small Business Innovation Research Program. Farms are considered small businesses for the purpose of this grant, which gives money to any business engaged in research that can solve scientific agriculture problems.
Applying for a Grant, Reporting Results
Complete the grant application. The grant application can require a large amount of information. On a basic level, you need to make a strong case as to why you are a great candidate for the grant. You’ll explain exactly how you will use the grant dollars, and the results you hope to achieve. The application will require many of the components of your business plan. You’ll include projected financial statements. Most grant applications will include information about your background. You will document your education and work experience, including any farming experience. The goal is to prove to the grantor that you can use the grant funds to meet the objectives or mission statement of the grantor.
Provide annual financial reports. A grantor will require periodic financial reports, usually annually. These reports help the grantor monitor how you are using the grant proceeds. You may be asked to provide annual financial statements for your farm, as well as the farm’s federal tax return. You will provide a balance sheet, which lists the assets and liabilities for your farm. Your income statement shows the revenue and expenses, and your farm’s profit or loss for the year. The farm’s cash flow statement lists the cash inflows and outflows for the year.
Send in grant reports. All grants will require you to complete and submit reports to explain how you use using the grant funds to meet the grantor’s mission. These reports are provided to the grantor at least annually. Say, for example, that your grant’s purpose is to provide improved housing for farm workers. You will need to document how the grant funds were spent on housing. A grantor is also focused on how their grant dollars are meeting a need over a period of years. If you receive a grant to farm organic crops, for example, your grantor wants to see their grant dollars have an impact over the long-term. Your grant reports should explain that impact. If you use the grant responsibly and generate results, you may be able to apply and receive more grants in the future.
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