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Paul Dietmann is the Emerging Markets Specialist with Badgerland Financial, a member-owned rural lending cooperative and Farm Credit System institution serving southern Wisconsin. Paul has worked with farmers and farm financial issues for over twenty-five years, first as an extension agent, then as director of the Wisconsin Farm Center and Deputy Secretary of Agriculture for Wisconsin, and most recently in his role as a lender. He has woked with hundreds of farmers, helping them assess their farm financial situation. Paul is the co-author (with Chris!) of the book, Fearless Farm Finances: Farm Financial Management Demystified. We talk about common pitfalls of beginning farmers, strategies for getting on the land, profitability and cash flow, how to set up early-warning systems for your farm finances, and the guilt and shame that hamper our ability to deal with farm financial issues in a timely manner.
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Quotes from the Show
If you think going through an investment analysis before you make the investment takes the fun out of farming, you ought to try going through bankruptcy.
You work with a few people who are in such serious trouble and you see the kind of suffering that they go through, and it’s hard not to want to do everything you can to keep people from getting into that situation in the first place.
There is a real hunger for the business planning, and [new farmers] want to know, they want to do a good job.
If I had to do pick one thing, and say that this is the single most important thing that you’ll do with starting a farm, it would be to do a month-by-month cash flow projection.
Land can be a good investment, but you’re setting yourself up with a lot of overhead expense before you have your sales established.
You should set your quality of life goal first, because it’s easy to set your business goal and then your quality of life goes out the window as you try to meet your business goal.
Lots of beginning farmers try to get going as quickly as they can, and they overlook the fact that they should have some working capital built up before they get started. If they don’t, and something goes wrong, they’re sunk.
Take a look at opportunities to partner with somebody, whether it’s an experienced farmer or a social-impact investor.
Personally, I think this is one of the best times there’s ever been to start a farm. Even though land values are high and money isn’t necessarily easy to come by, the infrastructure we’ve got around people getting started [is very different than when I got out of school].
In the short term, cash flow is much more critical [than profitability], because if your cash flow is negative, you can’t survive for very many months. Profitability… comes into play when you’re ready to retire or pass it on to the next generation. If the farm hasn’t been profitable, the next generation isn’t going to be able to buy the assets at market value.
Debt is like a chainsaw. It can help you accomplish something really quickly and do some really good work for you, but if you don’t know how to manage it, you can cut your leg off.
I saw too many people who figured that, if I keep my head down and I keep farming and I farm that much harder, every day that I’m on this farm is another day that somebody hasn’t taken me off it At some point, you’re going to come to the end, and every day, your options become less and less. That’s why it’s so critical to get to people early on and get them back on the right track.
The more stress you’re under, the fewer things you can focus on. Some people, when they are under serious financial stress, they literally can’t do anything to help themselves with that situation once they’re into it.
It takes a lot of courage to ask for help.
Sometimes when you get so close to it, you can’t see what the fix is… sometimes it helps to have somebody come in from the outside who isn’t so close to the business.
Paul recommended FarmAid as a first point of contact for farmers who are looking for resources for help.
You work with a few people who are in such serious trouble and you see the kind of suffering that they go through, and it’s hard not to want to do everything you can to keep people from getting into that situation in the first place.
There is a real hunger for the business planning, and [new farmers] want to know, they want to do a good job.
If I had to do pick one thing, and say that this is the single most important thing that you’ll do with starting a farm, it would be to do a month-by-month cash flow projection.
Land can be a good investment, but you’re setting yourself up with a lot of overhead expense before you have your sales established.
You should set your quality of life goal first, because it’s easy to set your business goal and then your quality of life goes out the window as you try to meet your business goal.
Lots of beginning farmers try to get going as quickly as they can, and they overlook the fact that they should have some working capital built up before they get started. If they don’t, and something goes wrong, they’re sunk.
Take a look at opportunities to partner with somebody, whether it’s an experienced farmer or a social-impact investor.
Personally, I think this is one of the best times there’s ever been to start a farm. Even though land values are high and money isn’t necessarily easy to come by, the infrastructure we’ve got around people getting started [is very different than when I got out of school].
In the short term, cash flow is much more critical [than profitability], because if your cash flow is negative, you can’t survive for very many months. Profitability… comes into play when you’re ready to retire or pass it on to the next generation. If the farm hasn’t been profitable, the next generation isn’t going to be able to buy the assets at market value.
Debt is like a chainsaw. It can help you accomplish something really quickly and do some really good work for you, but if you don’t know how to manage it, you can cut your leg off.
I saw too many people who figured that, if I keep my head down and I keep farming and I farm that much harder, every day that I’m on this farm is another day that somebody hasn’t taken me off it At some point, you’re going to come to the end, and every day, your options become less and less. That’s why it’s so critical to get to people early on and get them back on the right track.
The more stress you’re under, the fewer things you can focus on. Some people, when they are under serious financial stress, they literally can’t do anything to help themselves with that situation once they’re into it.
It takes a lot of courage to ask for help.
Sometimes when you get so close to it, you can’t see what the fix is… sometimes it helps to have somebody come in from the outside who isn’t so close to the business.
Paul recommended FarmAid as a first point of contact for farmers who are looking for resources for help.
Show Links
Paul and I were co-authors, with Craig Chase, of Fearless Farm Finances, a book about financial management for farmers.
Paul is the Emerging Markets Specialist with Badgerland Financial.
I mentioned the MOSES board – that’s the Midwest Organic and Sustainable Education Service, and the MOSES Organic Farming Conference.
Paul discussed the USDA Farm Service Agency Beginning Farmer Loan program, where the farmer can get started with a 5% down payment.
Paul recommended FarmAid as a first point of contact for farmers who are looking for resources for help. Their Farmer Resource Network connects farmers to a directory of trusted resource organizations. They also have an 800 number and email if you need immediate assistance.
Paul is the Emerging Markets Specialist with Badgerland Financial.
I mentioned the MOSES board – that’s the Midwest Organic and Sustainable Education Service, and the MOSES Organic Farming Conference.
Paul discussed the USDA Farm Service Agency Beginning Farmer Loan program, where the farmer can get started with a 5% down payment.
Paul recommended FarmAid as a first point of contact for farmers who are looking for resources for help. Their Farmer Resource Network connects farmers to a directory of trusted resource organizations. They also have an 800 number and email if you need immediate assistance.
