Reading "Credit Skills for Lending to the Agricultural Sector" – a report prepared to help Community Development Financial Institutions (CDFIs) understand how to make loans to farm businesses – helped me see how bankers view farmers. Since most farmers need bankers, this prespective is important. And I'm starting to think it's way out of whack.
Briefly, the report argues that to evaluate a farm business as a potential borrower a lender should focus on the things lenders normally consider: the "Five Cs": Character, Capacity, Capital, Collateral, and Conditions. From a lender's standpoint this is typically square one. As the report goes on to flesh out each of these criteria, it implies a set of values and behaviors that a lender should require of a farmer. These include cash flow analysis (broken down by "enterprise" such as poultry, corn, CSA or cheesemaking) and lifestyle expectations (the report casually mentions that 'Farmers generally live a very modest lifestyle, which appears to be well below the poverty line, and they usually have little or no cash fall-back position', an indictment of the place of food and farming in our economy IMHO, but that's an aside). Also required are 'Business Management Skills' and a whole range of skills related to marketing. This goes on in detail for pages.
But I wonder, are these requirements realistic? Reasonable? Appropriate?
A few years back I had a wonderul conversation with Lenny Russo of Heartland Restaurant. He lamented that so many farmers came to him asking what he wanted them to grow. In his mind that was backwards. Lenny wanted farmers to come to him with whatever they grew – but only because no matter the product it was was better than anyone else's. He didn't want to specify what a farmer should grow, he wanted the farmer to use her skill to figure out the best crop for her soil, climate, crop rotation etc. in order to produce a superlative product. Think about what's required to do that. Lenny didn't want good marketing, he wanted good veggies. To grow the best eggplant takes a lot more than a spreadsheet of inputs, outputs and profits, it requires deep understanding and skills that aren't mentioned anywhere in the CDFI report. Great farming that produces the very best products in harmony with the earth requires a vast skill set that bankers don't acknowledge – or possibly even see.
As I read that report, I couldn't help but think that the time and energy required of a farmer to satisfy these loan critera would pretty much exclude any time for actually farming. It's as if the bankers (who are, after all, the high priests of contemporary Euro-American society) and, by default, the rest of us put the cart before the horse: get your numbers right and do all this manangement and accounting stuff then maybe you can do some farming!
I've only been at this a short time, but I'm certain of this: a farmer's knowledge of crops, soil, water, weather, animal husbandry, forestry, conservation, biology and so on is overwhelmingly complex and valuable. And I'd rather have a farmer thinking about how to best sustain the land and produce healthy food than devote hours and hours to a marketing plan.
But that doesn't seem to be how the bankers see it.