Farming in Massachusetts is a low-margin business, and financial stability for farms depends upon weather, global markets, and other factors over which farmers have no control. Further, initial infrastructure investments are costly, and changing technologies and regulations require ongoing expenses. In many cases it is challenging, or even impossible, for Massachusetts farmers to benefit from the economies of scale that come with large-scale farming, in large part because of the prohibitive cost of land or the lack of its availability. The costs of inputs for agriculture are typically higher in New England than elsewhere in the country, putting Massachusetts farmers at a competitive disadvantage. And the relatively short growing season limits farmers’ ability to compete, as well.
As the number of farms and level of agricultural production in the State have increased, public investment in support services for farms has not kept pace. Since 2009, MDAR has generated more revenue through fees and permits than its budgetary allocation for administrative costs to support the agricultural sector. In FY2014, MDAR’s revenue of $6.2 million exceeded its year-end operating budget of $5.4 million. But even as MDAR’s FY2014 revenue was 5.3 percent higher than the prior fiscal year, setting an all-time high, the Department has seen a decline in staff size in recent years.
Despite the number of nonprofit and private entities providing financial and business services to farms and other food businesses, few of the available services are provided consistently across Massachusetts or are accessible to all businesses that are interested. For example, there are resources available to help beginning farmers write business plans and obtain startup loans, but far fewer services are focused on business development, business management skills, and access to capital. When financing is available, it sometimes saddles farmers with unsustainable debt.
Massachusetts farmers constantly face pressure to keep product prices low to compete with food imported from other regions or countries. At the same time, farmers must ensure that the food they sell is as accessible to a wide range of consumers. Therefore, providing technical assistance for the business and financial aspects of running a farm is critical to help keeping our agricultural sector viable.
Recommendation 3.1: Strengthen governmental support systems for agriculture.
Action 3.1.1: Assure that MDAR’s annual budget is at least as much as the agency receives in fees each year.
Action 3.1.2: Increase funding for FVEP and similar State programs focused on farm business development by fully expending over the next four years the bond authorizations for farm viability provided in the 2008 and 2014 environmental bonds, and increase this item by at least 25 percent in subsequent authorizations. Use the USDA Rural Development definition of “urban” to determine allocations based on the legislative language.
Action 3.1.3: Continue funding for integrated pest management education and research, with a focus on new invasive species and the need for production of new crop species that better tolerate the effects of climate change.
Action 3.1.4: Restore funding for the Agricultural Innovations Center to foster new and innovative ideas to adding value to the Commonwealth’s agricultural economy, and sharing those ideas throughout the industry.
Action 3.1.5: Fund the AEEP to provide financial assistance to farmers for fencing and other structures to protect rivers from agricultural activity.
Action 3.1.6: Implement a tax credit for farmers who donate their surplus crops.
Action 3.1.7: Maintain the Massachusetts Dairy Farmer Tax Credit.
Action 3.1.8: Make available public loans and grants for on-farm and shared physical infrastructure investments.
Action 3.1.9: Increase funding for the Agricultural Food Safety Improvement program to help farmers comply with food safety regulations, as well as gaining and maintaining access to markets.
Action 3.1.10: Offer State-underwritten loan guarantees for infrastructure development, such as slaughterhouse facilities and mobile slaughterhouse services for small producers.
Action 3.1.11: Encourage farmer participation in USDA’s Census of Agriculture and other surveys so that the agricultural sector of the economy is better understood, and so that accurate data is available for formula-based federal grants and programs.
Action 3.1.12: Develop guidelines to ensure that nonprofit farms do not receive unfair competitive or financial advantages over for-profit commercial farm businesses.
Action 3.1.13: Forgive student debt for graduates of UMass agricultural education programs and other public agriculture programs who choose to work on a Massachusetts farm for at least ten years after graduation, consistent similar with federal programs for other professions with a public benefit.
Recommendation 3.2: Support the development of private sector financial and business support for farms.
Action 3.2.1: Establish peer networks of business technical assistance service providers and financiers to share information, enhance referrals, provide opportunities for skill development, and work to address gaps and duplication within the agricultural sector.
Action 3.2.2: Develop a range of credit options and business support services, including financial products that are flexible enough to support seasonal cash flow and meet fast turn-around approval and disbursement demands of some agricultural projects, to help farmers of all types at all stages of growth and development. Immediate, pre-qualified access to short-term loans is particularly critical.
Action 3.2.3: Ensure that financial products for farm businesses are coupled with services and technical assistance that help farmers understand all options, commitments, and risks.
Action 3.2.4: Develop resources to incubate and increase the number of farms and other agricultural businesses in urban areas, especially in low income communities and those with limited access to fresh and healthy foods. Support these businesses with technical assistance for legal matters, marketing, finance and strategic services, and public funding.
Action 3.2.5: Develop a Venture-Oriented Investment Fund for farms, with tiers for a range of ventures such as: business planning and technical assistance, including small grants; lending programs targeted to agricultural businesses; philanthropic funding for start-ups; and more return-oriented traditional investment for growing ventures.
Action 3.2.6: Align and leverage existing small business development centers, community development financial institutions, community development corporations, and development finance agencies to develop innovative and unique small and micro business development services for farms.
Action 3.2.7: Support the development of a network of urban agriculture practitioners to share resources and ideas that are specific to urban farming practices and considerations.
Action 3.2.8: Encourage the Massachusetts Congressional delegation to request USDA development of crop insurance products that meet the needs of small crop-diversified farms.