Farms in Ontario

Summary by EFAO Board Member Denis Heraud

Having only started our farm operation in 2015, I thought this workshop came at an ideal time when I am currently building and planning to build tools to improve my own efficiency. The inspiration contained within was a courtesy of Ken Laing (of Orchard Hill Farm) and Jeff Boesch (of Cedar Down Farm), with both presenters sharing some of their custom tool building that aims to increase efficiency on their respective farms.

Jeff seems to be operating a farm very similar to our own, only greater in size and scope. He talked about his bed maker and row marker (very interesting as we also work with permanent beds, however we do not have a bed maker/marker at the moment). His design is simple and cost effective, though I personally wondered why he used a steel plate as a level instead of a cage roller (or similar roller), which I think would be lighter in weight and better at breaking soil clumps. Regardless, we were certainly inspired by this design, especially the row markers he built on a set of spring at the back of the implement. We also recently built a row cover and drip tape spooler that borrows ideas both from Jeff’s and Ken’s designs which works rather well. Speaking of the latter, his low cost hoop house design was interesting with its roll-up door that allows for easy ventilation of the structure. Sometimes it’s the little things that make a difference, such as how Ken welded small metal hooks onto his caterpillar tunnel’s posts to hook the rope onto, or the hooks that hold up the plastic cover to aerate the tunnel (an idea he himself borrowed from another farmer). However, Ken’s best work lies in his custom built horse-drawn implements that are so well thought out as to think they were commercially made. Some of the tools he uses are built from scratch, some are existing implements that he modified to fit his production system and equipment. One could say he has taken the plunge in terms of no-till soil management as he has already created or modified several implements in the last couple of years in order to reduce the amount of tillage that he typically would rely on. There are countless examples on Ken’s farm of ingenious contraptions that were built from scratch or subtle modifications to pre-existing implements that have greatly increased their efficiency.
Choosing Ken and Jeff as presenters was an interesting choice as the former could be considered a well-seasoned farmer (with over 30 years experience) and the latter as a younger farmer (with about 10 years of experience). Their approach to farming may be different, but the resourcefulness that farming requires reveals a kind of universal truth. Both use limited means and materials to solve a problem that is specific to their own production system, giving birth to ideas and corner-of-the-table sketches that, at the end of the day, they find their farm could not live without. This is perhaps best exemplified by Ken’s simple but effective wheel stirrup hoe, created 30 years ago with some wood and metal, and still used in his fields to this day.

Show Me The Money: A Conversation with Money Lenders

In this session questions were posed to money lenders that provided on the spot answers. The session was chaired by the Founder and Executive Director of FarmStart, Christie Young. The money lenders also offered a 5 minute presentation each on the lending products that their organization offers. Here is a summary of that presentation:

Options for farmers with experience:

Scotiabank offers three products: Scotia Flex for agriculture, Scotia Farm Legacy, and OFA partnerships. The also promise the services of a small business advisor who has farm experience. The Flex line of credit services offers credit for a mortgage, equipment purchase, credit line and credit card. However for a new farmer the requirement of a minimum of two years of experience in farming can prove to be a barrier. There is the option to get over this barrier through finding a co-borrower with farming experience that can provide the bank with the assurance that the new farmer has the support and advice needed to be successful.

Scotiabank also offers bonus rates and discounts on agricultural accounts through a OFA (Ontairo Federation of Agriculture) partnership. There are GIC bonus rates, a 15% discount on account plans for agriculture, 0.25% interest rate reduction on farm credit products and reduced legal appraisal costs.

Libro offers farmer services in current accounts, farm mortgages and lines of credit/term loans. What comes with all of these services is the local management of your account, financial advice, local decision making and a fast turnaround on loan decisions. With their commitment to building south western Ontario communities they offer not-for-profit community accounts without monthly fees. They also boast further investment in the community through a Prosperity Fund, Student Awards, and a youth leadership camp (CYL) plus sponsorship and donation programs.

Options for retiring farmers:

Scotiabank’s Farm Legacy Program offers successional planning for retiring farmers to pass a business onto new farmers. The program mostly deals in family wealth management needs. The Scotiabank advisor will assess the financial situation and develop personalized recommendations and present solutions to the farmers. After this the advisor will assist with the implementation of this strategy.

Options for new and young farmers:

FCC offers a young farmer loan for producers under 40. The FCC boasts their lending strategy is in developing strong partnerships with clients that lends eventually to long term success. Clients are judged on character, capacity, commitment, conditions and collateral. A strong credit score and a well-developed business plan can help you purchase up to $500, 000 in farm assets.

Farm Credit Canada (FCC) has a farmer Transition Loan that allows new farmers to purchase an existing farm and build equity fast. Through managed cash flow the new farmer pays off a fraction of the total loan each year making payments easier. For example through the program if a 500, 000$ farm is purchased the current landowner will receive $100, 000/year and the new farmer pays for a loan of only $100, 000 for the first year. The loan will increase $100, 000 each year as the current owner is paid out. Sellers must be willing to agree to the arrangement and are guaranteed by the FCC to eventually receive the full amount.

Scotiabank also offers a mortgage with a 5% down payment and up to 80% financing. You eventually have to make up the 20% over the years to the current farm owner.

Q and A:

Why is it that someone can receive a mortgage for a recreational property but someone applying for a mortgage to develop a farm on the same property is rejected?

Libro – credit union would consider the application but the applicant would need an excellent credit rating, some cash flow and a business plan that includes off farm income that is sufficient to pay the loan.

FCC – would also consider the loan if you have demonstrated that your cash flow is sufficient to make payments. Unfortunately southern Ontario land is often over valued because of its location which makes it hard to produce a business plan sufficient to pay off these loans through farming alone.

What makes a strong business plan?

A basic business plan should include your assets and liabilities, your projected cash flow and a great communication piece (description of your plan).