Here is the conclusion to the Cash flow crunch story:
The Walters obtained an operating loan from the Farm Service Agency (FSA) to help finance the cost of feed during transition. The terms of their loan allow them to defer payment for one year which means they won’t have to begin making loan payments until after they are certified (and making more money from the sale of certified organic milk).
The Walters had an established relationship with their lender at FSA that allowed them to obtain a lower interest rate and deferred payments as part of their operating loan.
With help from their Farm Business Management instructor, the Walters prepared a projected cash flow plan, projected profitability plan, and projected balance sheet and updated their business plan to share with their lender when applying for the new operating loan. These statements gave the lender confidence that the Walters had a good plan and that they would be able to repay their loan once certified organic.
According to the Walters’ business plan, once certified they will be able to “comfortably repay loans” used to finance feed purchases. The Walters have renewed hopes that organic farming will allow them to maintain a smaller family farm, one that they can proudly pass on to the next generation.
Acknowledgments
This project was supported by the U.S. Department of Agriculture, National Institute of Food and Agriculture, Organic Transitions Program under award number 2013-51106-21005.
This project was also supported by the U.S. Department of Agriculture, Agricultural Marketing Service, National Organic Program under the Transition to Organic Partnership Program (TOPP) in the Midwest region.
Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and should not be construed to represent any official USDA or U.S. Government determination or policy.