Darrell and Tricia Hastings say that their biggest challenge in purchasing a new farm has been finding the right piece of land and competing against other buyers. They invested time talking with multiple lenders, integrators and staff at the Sussex Conservation District to educate themselves about different options, services and opportunities. They talked to different lenders to see who could offer them the lending package that was the right fit for their needs, ultimately working with a nontraditional ag lender. They also note that in working with an integrator, that a contract is preferable to a letter of intent as it gave them and their lender additional confidence in moving through the financing of their farm.
“Every person that we encountered throughout this process was a resource.” says Tricia. The key, they say, is to do lots of research, know what your needs are for land and making your project cashflow, and be ready when the right opportunity comes up.
In finding the right farm, the Hastings recommend to reach out to farmers directly to see if it’s possible to purchase a few acres needed for your project. You can also speak with multiple realtors, especially those that specialize in agricultural real estate, to let them know what your needs are. Don’t be afraid of parcels enrolled in farmland preservation programs, either, because they may still be the right fit for your needs.
The Hastings worked with the Sussex Conservation District throughout the process. District employees helped them to evaluate parcels that were for sale, showing them the options for arranging houses on the parcel to see if different projects were feasible. “Finding the land and getting the loan was the hard part. Permits were easy.”
Scott Willey and Ted Layton were and continue to be home builders. “We lived through and survived the recession. Based on that experience, we wanted to diversify our income stream. Poultry farming seemed like a good fit for us as we both enjoy physical work and working with our hands. There is a sense of accomplishment when growing live animals and the reward is more than a paycheck.”
Scott and Ted offer these tips for someone looking to build poultry houses:
- Require your building contractor include a clause in the contract specifying completion delays and list specific damages and how the farmer is compensated in the event delays occur. Most financing institutions will grant enough time for the buildings to be constructed and have the first flock through before the first payment is due. This was the case for all four of our buildings but due to the delays on the contractors part, we did not have an opportunity to have our first flock through the houses prior to our first interest payment. The building contractors have no repercussions in their contracts in the event they leave your job for weeks at a time thus, delaying the building process. This can hinder anyone’s cash flow and start your new business off in a deficit.
- Do not cheat on the site contractor! The site contractor will make or break the start of a quality job. When researching the building that is right for you, request all the options on equipment and upgrades available. There are upgrades like stainless equipment that are easy to do upfront. Unfortunately in this industry people generally start basic and do not know better. It is much more affordable to buy what you want upfront versus upgrading later. You need to factor a reserve in case there is a need for things like dirt. Site contractors are at best making an educated guess that all dirt is available on your site. It will be a hard obstacle if you did not plan for $10,-30,000 for an unforeseen need for dirt or stone. Make sure all piping is included in the site contractors quote. This would include your entrance to the farm along with any ditch crossings.
- Air penetration is one of the most important items to consider when building your new houses. As a whole, the chicken industry is behind in insulation and air seal techniques. If you have to talk to a local insulation company and coordinate the air seal on your own behalf, it will save you thousands later and you can also incorporate the added expense into your mortgage if you plan for it as part of the initial construction.
- New farmers should also be conscious of their impact on the environment and neighbors. Plan for water conservation/environmental stewardship from the beginning. Also, do not delay the process of seeking governmental grants that are available to farmers. Start the process early and stay persistent as funding is limited. The grant programs offer cost share money for things like your manure shed and compost building, concrete pads outside your end door. The grant money is not available to you until you physically have birds on your farm so any delay will lead to a very large mess when considering composting dead chickens without the use of a compost building. Whether you’re able to have your compost building built or not, you will have a need for manure to effectively compost your dead. You will need to line up the delivery of manure to your farm with your integrator for the first few flocks.
- Maintaining another source of income also allows you to pay down your debt at a much faster pace. Most poultry loans are for 15 years. You can depreciate your expense for only 10 years. Years 11-15 can be financially burdensome when considering you will still have the loan payment with no deprecation to offset any income. This can also set you up for a financial detriment when considering you may need to make major modifications to your buildings with any new technology that may be incorporated. Come up with a plan to have your loan paid off in 10 years or less.
Daniel and Pearl Zencak says that the Ag Standard Plan for agricultural stormwater structures has made the permitting process simpler. For their poultry house construction project, they acquired both an engineered plan and a standard plan, saying “I spent a lot of money just for them to tell me what I could do with my dirt!”
Daniel offers this advice for new farmers: “Don’t be afraid to ask too many questions to the people at soil conservation, and your county FSA office. They are all great people and are there to help you. There is a lot to the whole process and a lot of information to learn.”
They also recommend to have patience and anticipate that unexpected costs will come up. With the transition between old rules and new rules and the busy schedules of agency staff, it took about 15 months before all the pieces were in place to begin construction. “Be patient and push on.” Daniel says, “Eventually it will all come together.”