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Delaware officials are preparing a loan program for farmers to help aid the costs for equipment, with the hope to help aid new farmers. | PHOTO COURTESY OF DELAWARE DEPARTMENT OF AGRICULTURE[/caption]
DOVER — The Delaware Department of Agriculture (DDA) is preparing to unveil a loan program geared toward helping farmers finance costly equipment in hopes of lifting up young farmers and emerging sectors in the agriculture industry.
The Delaware Agricultural Finance Program will open for applications on Sept. 2, offering low interest rate loans for all farmers and producers who are actively engaged in food production in the state. Loans can start as low as $25,000 and as high as $250,000 with the maximum capped at 50% of the project cost.
The program fund has $1.5 million, reallocated from the former Delaware Rural Irrigation Program that was established under Gov. Jack Markell. That revolving loan program was specifically geared toward irrigation systems. Over time, the number of applications dried up. Earlier this year, the Council of Development Finance approved reallocating that funding for a new purpose.
While the program will be open to all farmers in all areas, DDA Administrator Jimmy Kroon said the hope is to lend a hand to first time farmers and aquaculture projects. Farming is an expensive business — the United States Department of Agriculture found that farmers across the country spent $482 billion in expenses in 2023. Feed, farm services, labor and fertilizer came out to more than half that expense.
“Agriculture financing needs tend to be something that traditional banks don’t really understand. Sometimes they’re not used to the collateral they have to offer for large loans to buy thousands of dollars in equipment. A small tractor may be $100,000 and a combine could be half a million,” Kroon said. “It’s a significant expense for someone just starting out and we just want to provide another way to help farmers.”
The state has a small but significant role in the world’s agriculture economy. Delaware has the highest concentration of broiler chicken farms with most of it deriving from the Mid-Atlantic region. Many crops grown in the First State work to provide the feed for those farms which includes the $1.5 billion spent on feed ingredients in the state and on the Maryland and Virginia Eastern Shore.
Wages account for a significant portion of expenses, as well. One in eight jobs in Delaware is related to agriculture, according to state officials, showcasing a greater need to keep attracting young farmers and new ideas. The average age of a Delaware farmer is 58 years old while only 9% of farmers in the state are under the age of 35.
“Farming is a difficult thing to get into, between the cost of land, pesticides and seeds, and equipment. That’s even before you consider the low profit margins and high risks with the weather and crop disease,” Kroon said. “As a nation and a state, we need to have farming for food production, but it’s a hard industry in terms of work and the financial reality.”
The Delaware Agricultural Finance Program also hopes to spark more investment in Delaware’s budding aquaculture program in the Inland Bays. For years, state officials have laid the groundwork for oyster hatcheries as a way to diversify Delaware’s involvement in the seafood industry. But it’s also an expensive endeavor since the payout can be three years down the road and start-up costs are around $50,000, even without disease testing.
The new loan program offers a fixed interest rate for first-time farmers and aquaculture projects at 3.35%; other projects are eligible at 4.25%. All loans will have a term of up to seven years with interest-only payments due in the first year.
Kroon noted that the Delaware Agricultural Finance Program can also be stacked with other opportunities offered by the state, such as the no interest 30-year land purchase loan program for first-time farmers for 70% of the appraised value of land and not to exceed $500,000.
