It has been said that the nine most terrifying words in the English language are “I’m from the government and I’m here to help.” but in our episode with Buddy Nichols from the US Department of Ag’s Farm Service Agency, there is nothing to fear! Listen as we talk about their loan program that may be the first place you want to look for loans as an ag producer, and we also speak about FSA’s role related to the Maui wildfires.
Brought to you by University of Hawaii College of Tropical Ag. and Human Resources (CTAHR), and the Seeds of Well-being (SOW) Project. This podcast is supported by the Farm and Ranch Stress Assistance Network (FRSAN) grant from the U.S. Department of Agriculture, National Institute of Food and Agriculture and Hawaii Department of Agriculture.
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It has been said that the nine most terrifying words in the English language are “I’m from the government and I’m here to help.” but in our episode with Buddy Nichols from the US Department of Ag’s Farm Service Agency, there is nothing to fear! Listen as we talk about their loan program that may be the first place you want to look for loans as an ag producer, and we also speak about FSA’s role related to the Maui wildfires.
Brought to you by University of Hawaii College of Tropical Ag. and Human Resources (CTAHR), and the Seeds of Well-being (SOW) Project. This podcast is supported by the Farm and Ranch Stress Assistance Network (FRSAN) grant from the U.S. Department of Agriculture, National Institute of Food and Agriculture and Hawaii Department of Agriculture.
Resources:
Find out more about us:
The views, information or opinions expressed during the Seeds of Wellbeing series are solely those of the individuals involved and do not necessarily represent those of the University of Hawaii College of Tropical Agriculture and Human Resources, our funders, and any affiliated organizations involved in this project. Welcome to a Seeds of Wellbeing"Voices from the field" podcast, featuring voices of Hawaii agriculture producers for Hawaii agriculture producers. These podcasts are made possible by a grant from the University of Hawaii College of Tropical Agriculture and Human Resources, also known as CTAHR, and the Seeds of Wellbeing or SOW project, and is supported by a grant from the US Department of Agriculture, National Institute of Food and Agriculture and the Hawaii Department of Agriculture.
Buddy Nichols:Presently, our administrator, who was an appointed official under the present administration, his number one saying is "We need to find a way to see yes. So whatever a farmer needs in agriculture, we need a way to find yes." So utilizing a system that may be antiquated and it has a lot of its own challenges because of the paperwork involved, we still need to focus on how do we say yes, and get food being produced.
Jim:It has been said that the nine most terrifying words in the English language are "I'm from the government, and I'm here to help." But in our episode with Buddy Nichols from the US Department of Ag's, Farm Service Agency, there's nothing to fear. Listen, as we talk about their loan program that may be the first place you want to look for ag loans as an ag producer, and we also speak about FSA is role related to the Maori wildfires. Hey, welcome to another Seeds of Wellbeing podcast. We're trying to round out our discussions with folks about funding options for ag producers in Hawaii by speaking with FSA, and Buddy Nichols is kind enough to join us on the call today. So just want to say aloha to Buddy and mahalo for coming on the show.
Buddy Nichols:Thank you. Pleasure is all mine actually.
Jim:What is FSA and and what's its role? And how does it fit in with the USDA?
Buddy Nichols:Okay, yeah, Farm Service Agency is an agency of USDA, and we deal strictly with farmers. There's two basic sides of the Farm Service Agency; there's the production side or the program side, which deals with disaster, disaster type relief. So when Congress passes laws, like the Inflation Reduction Act, or does anything with farmers and has funding available for any kind of disaster, or hurricane, weather related, so on and so forth, that's the side of the program in which everything comes through. So that's the part of the Farm Service Agency is that end, is dealing with disaster type of stuff and funding that comes directly from Congress, usually free type money, if you will, if there's such a goal. The other side is the farm loan side, which is lending money, low interest money, to farmers to find... to develop farm products, programs buy land, and we'll get more into that. But the farm loan side is another source of revenue, open all the time, doesn't have to be connected to any disaster or anything on that order. Another part of the Farm Service Agency is crop insurance, which is a part of the production side or the program side in which for the crops are primarily for Hawaii, and for here on the islands, covers most of all the crops that we have. The things that doesn't cover is corn and wheat, and those traditional type of crops. Those you can get through crop insurance, normal crop insurance. So we do provide crop insurance capability for anything that isn't traditional, which is pretty much all of the crops here on vegetables, all fruits, so on and so forth.
Jim:Let me interrupt you for one sec. Because you piqued my interest for a couple of reasons. One is certainly the recent fires and on Maui have, is I would expect, qualifies as a disaster and are so are you actually, maybe ask you first, are you on Maui?
Buddy Nichols:Well, I'm not on Maui. My personally, I'm based out of Honolulu. I was on Maui for you know, for eight years as farm loan manager on Maui so I'm very familiar with Maui and worked very closely with a lot of the producers on Maui. So yeah, Maui's very fond in my heart because I've lived there for so long. Yeah.
Jim:And I thought I saw some references to your connection to Maui when I was doing some some research. So has, so FSA monies, are they coming into Maui, and are you involved in any of that? Or do you know folks from, they're involved? What's going on there?
Buddy Nichols:Yeah. What was going on Maui right now as a fact is anybody that got affected by the either the fire or the high winds, is a big item, or any anything related there too is called the ECP program in which it is the Emergency Conservation Program. And so there's funds available And, I mean, are you involved in all sides of that? So you work to help clean up any damages created by the wind, or by the fire. Not too many farmers were hit with a fire somewhere. This includes ranchers too you know, so anything, anything you grow, when you grow anything, you're eligible through the Farm Service Agency. So whether it's trees, you name it, fish, bees, blah, blah, blah, flowers, whatever. So once, once you create something, once you grow something, you're good to go. So that's primarily what's available there as primary cleanup for any disasters, and things of that were. Fence building, repairing fences, cleanup trees, reseeding, and so on, and so forth. So that's what primarily from that type of disaster, and that's generally which mainly happens is, particularly with a weather event like that. Droughts, okay, you know. We always have droughts every year. So there's drought relief type programs for feed, for crops, getting lost, lost to not have enough irrigation water, so on and so forth. So we're always perpetual, but from from the hurricane and from the winds. That's an event declared by the President, so funds become available. Also with that, we have emergency loan funds that came available. But they're, you know, they're pretty competitive with normal loan funds. So there's always money available. And no matter what, whether we use emergency loan funds or not to help get the farm back on its feet. On the farm loan side, the government's position is there here, we are don't want to be your long term lender. So they're here to make us as successful as they possibly can. So that you can either pay the government off or get a loan from a bank, here and why banks are too eager to loan money, perhaps, to farmers. So that's how we play. We come in and help you get to, help the farmer get to a point where they're very attractive to the other type of lending institutions that are out there. And however, we can help them get there that's what we try to do. on the disaster side, and you work on the loan side. So whatever, whatever needs to happen, you're involved with FSA?
Jim:Correct? Correct. The basic concept of USDA has always been hungry people revolt. And that goes back to the Roman days. And so you know, our country wants to keep our people feed. And so consequently, we have programs in place to help make the farm sustainable over the long haul. A big push right now, of course, it has always has been, but it's even more so now is the next generation. They want the next generation to come to the farm. So in order to do that we have to compete with the, agriculture has to compete with every other job market out there to keep the kids at home. And so how do we help our farm families grow, develop and create a lifestyle that they that the next generation can follow? Because this is definitely we're always going to need to eat, we're always going to need to produce it. And so how do we help the next generation prepare for that? So beginning farmers are huge. Yeah. And so... I guess, before I ask, I'm curious to know what what you've seen with kind of the evolution of younger farmers taken over for older farmers, you know, the average age of the farmer in Hawaii is about 62. And I think a lot of them told their kids or their kids realize they shouldn't go into farming because it's hard work and doesn't pay well. So I think there's maybe we're in this situation where, you know, we may not have food if we can't find younger farmers that want to step up. And so, I guess, I mean, how many years? Have you been working for FSA?
Buddy Nichols:I've been working for FSA a little over 10 years.
Jim:10 years.
Buddy Nichols:Yeah, I farmed myself, forever. I'm a fourth generation farmer myself. I raised my family on the farm. That was our sole source of income. Traditional farming. My parents were there, I bought my parents out when I came back to the farm and they continued to live on the farm and finished out their life until they were, my mom passed away at 101. So they finished out their life on the farm. And so, you know, that's where I come from. I come from that generation. And I farmed until I turned the farm over to my daughters and went to work were USDA, particularly on the finance side, because I saw the great opportunity there was for farmers to acquire capital. You know, we've only got four resources. Anybody in the whole world only has four resources to work with and one is money, one's time, one's whatever physical stuff we have, and the other one is human resource and farming. The human resource is the farm family; Time, there's only 24 hours in a day; And physical is what we have to work with right now; And so the left one is left out there is money. So so how do we get funding and how do we get funding to fit the farm and with the farm needs? And that's what's the beauty of USDA is program is designed for farmers to make them successful, sustainable. It's not designed to make money. It's designed to produce food.
Jim:And yeah, I've heard a few people refer to FSA. USDA FSA is kind of the loner, the lender of last resort, but I don't know if that's how you see it. But I think it seems like that's part of what we're here to talk about, right, is where does it fit into this whole puzzle? Because we've talked about Kiva loans. We've talked to American credit. I think we've talked everything in between, right, small and large. So I think figuring out how FSA fits in is great. One quick question tho' was when you farmed, was your family farm in Hawaii? Was it on the mainland? Or where was that located?
Buddy Nichols:Yeah, that was located on the mainland. It was primarily dairy. Did value added, took it right to the consumer, blah, blah, blah. You know, typical farm, you name it. We had it. We had hogs, we had chickens. We had crops, vegetables, fruits, and la da da da da.
Jim:And your daughters, your daughters' taken it over and it's still doing well.
Buddy Nichols:Yeah, they're yep, they have other outside jobs, they turned it into organic. We're doing value added, they're takin' out right to the consumer. And that's when the you mentioned the question earlier about the next generation, that is the future. You know, we got to be price makers and not price takers. We've got, we can't just say okay, what's my avocado worth? Well, it's worth what everybody else has sell theirs for now. My avocado is worth what it means to me to keep my farm sustainable. The consumer will pay for it. No question about that. We just we've got to start looking at how do we get this to the consumer, closer to the consumer, without being a price taker, versus becoming a price maker.
Jim:So doing a lot of cost of production analysis I imagine?
Buddy Nichols:Correct?
Jim:Yeah. Okay. You said you have, do you have the finance background as well? Are you just, it sounds like you've been doing it your whole life?
Buddy Nichols:Yeah, I, my original degree was in well, animal science and production ag. And then I went back and got my MBA in accounting. Excellent. So yeah, finances, the driver. And, you know, we've set up over the years, you know, conducted groups of farmers, particularly even in dairying, and cropping where farmers got together, we compare every year, our cost of production units per pound units per 100 pounds of milk, units petr acre, costs per acre. And as we start moving towards knowing that farmers, you know, I'm my, my biggest competitor, not my neighbor, farmer, but that's pretty traditional for farming, you know, we all help each other out. So yeah, so yeah, cost per unit, figuring out what it's gonna cost us and then we know what to charge. Because this is what I need. This is what my avocado needs to sell for, to make me and my family successful. And the next generation. If I know that that I can go to the consumer.
Jim:And can I ask, is your daughter planning to have her children take over the farm, the family farm?
Buddy Nichols:Well, we'll see. We'll see about that generation. They're pretty young. We'll see.
Jim:Like, you know what I'm saying, right, because it's, I think that's what we see. Right is actually... When we did, or Seeds of Wellbeing did the study, it found that the younger farmers are, are sometimes or are typically struggling the most, right? When we look at the data, it shows that they're really having the toughest time because I think folks that have been doing it for a long time have figured out how to get through those seasons of cycles, those hurdles, and have figured out ways to deal with it and still be successful. But I think the younger farmers, right, are running into some of those struggles. So.
Buddy Nichols:So that's what FSA, let me go there on that. That's what FSA does. We have super... what's called supervised lending. Now, which means that we'll take financials every year, work with you on your financials every year, and do some cost comparisons between previous years. And now what's happened, what's going forward. Have those discussions with you. So that so we can help the farmer get to a place where they're looking at their numbers, they're looking at their projections, looking at where they're at, where they're going, and be an active part and help them be more successful. Because again, our job is, our best, the best day is when you come in and slap a check down on my desk and say, "Here you are, buddy, see, ya!" Because that's the best day of my life, because that means that you've been successful enough to come in and get the government out, or, you know, pay your debt or whatever, and then move on. So we've got you to that point. So yeah, so that's our, that's what we, that's what we do.
Jim:Yeah, so maybe now talk us through a typical scenario that, that you would encounter kind of beginning to end for, for an opportunity for, for you as lender and for for the ag producer.
Buddy Nichols:Yeah, for example, a farmer come to me or somebody comes in, particularly here on the islands, with land being so high, oftentimes, they'll start off with just some lease land, lease some land. And so then they, they come in and looking for annual operating money to plant the seeds to pay for the rent to get things started. So what we lend is one to one. We do not have any downpayment, you don't have to bring any skin into the game, whether you're buying real estate or buying equipment, or whether you're just doing annual operating expenses, it's just one to one. So whatever you need, we'll land you. If this pen, for example, costs your costs a buck, I'll lend you a doller. I don't need your firstborn. Just that, that pan, I'll use this pen for collateral, we're not collateral lenders, our job is to see that this pen can generate enough money to pay for itself and its recovery and everything else that goes with it. Take care of the family and the pen. And it's our job to make sure that that that's happening. So we were not collateral lenders, just one to one, if you buy. So you can come in with a piece of real estate, we have a piece of real estate in mind. We'll lend you 100% of real estate, we pay for the appraisal ourselves. Our loans are up to 40 years. No closing costs anything on that order other than what the title company may required to close the deal. Our interest rates, you know, have been notoriously down around 2%. Now they're higher they're at that 5%. But we can do forty years on those. If it's more than we can lend up to, right now we can lend up to$600,000, which isn't a lot, but we can do participation loans in which we can lend you $600,000 and you get the rest from another banker, and we'll hook those up, those veins with you. We can also guarantee that, that banker if you will, or that other lender, up to 95% of their loan. And we can also set it up where they can come in and and they can sell that loan on the secondary market and sell it through the government. The government will actually buy that loan from them and take the risk away from them totally. So the program is set that we can lend you up to whatever that value is going to be. Not all the money will be at that low interest rate. You don't need any money down. You can use our money for the down payment so you don't need anything down. So that's for buying the real estate to get started farming. If you need equipment, I can lend you equipment that's for up to, money for equipment, that's up for seven years. And the interest rate is also on that is a little less, around about 4% now, it's been down in at 1% most of the time, but that's for a seven year loan. And annual operating loan? Okay, that's for fertilizers and waters and make the leases, even family living. I can lend you money for you to while you start your farm up I can lend your money so that you can feed the family while you're getting your farm up and going. So all these things all the whole part of the farm, we can lend funds to help you with that. Also with other programs, so if you're with a different lender or you're doing a conservation program or you're doing a grant and you need funding up front, we can take a position where when you get paid you pay us and we'll lend you the money to get started with the grant. So a grant will pay after you guy after you do this then the grant will send your money to pay for your product or whatever, where you need funds to get started. Well, we can lend you the money up front to help you get that started. Even with the NRCS, which is Natural Resource Conservation programs, you know, anything on that order where you have to come up with money up front, we can help support that. Or another lender that says, Okay, you need this. Okay, fine, we'll lend you the money upfront on that. So get you into that, because our job is to help you take advantage of other other programs, and how can we get that funding to help you do that.
Jim:Well, with all the benefits, I'm thinking, there must be lines out the door, and you must be busier than you can keep up with that try to, because like, I would think every ag producer in Hawaii would want to knock on your door and try to get resources. I mean, especially infrastructure, if you can do helps pay for roads, and, and perimeter fences, all those things that are just impossible to find money on, cash flow, startup costs. It's kind of, to me, it's incredible. So I would think you'd be the lender of first resort for me, but but but tell me, tell me, tell me, what's the catch.
Buddy Nichols:That's how that's how I look at it. The lender of first resort. And oftentimes, that's usually always area well, it's too good to be true. Well this is one of those cases where it's not. This is where the case where your Department of Agriculture, or Congress if you will, again, goes back to that concept, we got to keep our people fed. We got to keep our people nourished. So they've set these programs up so that we can get farmers up and going knowing perfectly well that we're, we're here to help the farmer get to the point where he takes it to a commercial lender. So you'll find other sources of funding, but we've got to get you there first, we got to get the farmer to that level first. So yeah, we can get, you know, our biggest challenges, and that's why working with you is so important. Workin' with CTAHR, working with, working on this project you're working on is so important to get that word out there, what is available? There's so much available. Particularly like I said, if I'm gonna buy a $2 million piece of property and so I lend you the$600,000, which covers or FSA lends you the $600,000, which covers your down payment, you get it from another lender. So you're in at 100%. Then I can work with that lender and get that loan guaranteed up to 95%. So they're covered no matter what. And then I can also work with Farmer Mac too, which is also created by Congress to buy their own loans out. So they have set the program up so that you know basically the commercial lenders or the private sector is not at risk at all. So that we can get, help farmers get, produce food.
Jim:So like the other some of the other folks like Steward lending, or we were talking about Feed Hunger, right, was another one that's in the similar area. You and I were talking before, before we started recording about Feed Hunger, and American AgCredit, right, and, of course, more traditional banks. But I think as you indicated earlier, traditional banks, I think, are usually not worth trying to go to. So I'm I'm feeling like Steward, you know, the American AgCredit, you know, Kohala Center has the Kiva program and some micro loans. Those I think are what or Feed Hunger, right, are options for ag producers that I think people think of, but I guess I feel like with all these great things you said and from, again this is gossip or hearsay perhaps, but I feel like, do I need to be denied by American AgCredit before I can come approach you? Is that how that works? Or what's, I feel like there's a catch because it is it does sound so good. And I feel like everyone should be lining up to get funds.
Buddy Nichols:Yeah. Over the past, notoriously up until this last administration, last two administrations, it's been where yeah, you you've got to be denied somewhere else. And we're not competing against commercial lenders. Those days are gone. Those days are gone. The new era is USDA is here to fund farming and to help ag, because we're seeing, we’re seeing it across the country. We're seeing bigger farms owned by you know, we're seeing farmers not own land, you know, and they're, they might be leasing 1000s and 1000s of acres, but they don’t own that, it is owned by some other companies, some whatever, some investor group, whatever. So, you know, trying to get more traditional, trying to keep that land in agricultural setpoint that is kind of what the government's headed toward and has happened. And right now they've been, in the past to ja…, like I said in the two administrations, it's been, yep, those days are gone. We're here to help farmers and get the best deal. So if for ourselves, if another program can get you a better deal and get you what you want, then we're going to help you, support you, and help you get that. Because we want that we want you to get the best deal we can for the farm. Because the farm is in control, it's not about me, and it's not about even the farmer, sorry to say, you know, the farm is in control. The farm gotta’ prove the products, it's got to sell it, it's got to make the profit. So we're all here to help the farm be successful. If that means using any other type of program, bring it on, and we want to make sure that happens.
Jim:Sounds like you're connected in with all of them. And we have
Buddy Nichols:We're here to help them be successful. Like I said, you know, we're not here to make commission, we're not here to make money, you know, Congress, you know, we're just not here to do that. That's the beauty of it. That's why I'm here. You know, I'm here because that's the opportunity is. Being a fourth generation farmer, you know, it keeps coming back to me time and time again, is, you know, I was raised in the country, help my neighbors, so on and so forth. And it's the only reason I'm here. I'm here to help farmers be successful and this is a great way to get money out there to help farmers be successful. Because I'm part of that community, there my, a part of my ag community.
Jim:Right? So I'm an ag producer, myself. And so I'm, of course, all this is interesting to me from, with that hat on, right? So I'm thinking, what's, what do I have to bring to the table I have to have the farm has to be registered with state I have to be filing? Do I have to be filing years? It sounds like I don't if it startup, but it sounds like you need financials, you need projections, you need cash flow analysis, what kinds of things would I need to bring? Or have ready to bring to you? While when I approached you to look for some funding opportunities?
Buddy Nichols:Yeah, when you come in primarily is what's your what's your projection? What do you seein'? What are you going to grow? What's your market? You know, what's your projection? Where are you seein'? Now, you don't have to have it written down on paper, I'll help you with that. But at least at least we start that process of what are you going to do? Is there gonna be leased ground or is it gonna be purchased ground. And then okay, then we start pushing the numbers, working the numbers with you and analyzing the numbers with you. If you've got those numbers, great. If you don't, we'll help you get there. We not only from the people we have, we have different groups that we're attached to that can help you set up your computer systems, blah, blah, blah, blah, producer education is a big thing that we have access to. So that we can bring that to you so that you can hook into the University groups, GoFarm, whatever, whatever the program is to help you get started. So yeah, an idea of what you're going to do was really good. This the crop, this is where I can sell it, this is how much I can sell it for. Do your due diligence, and then whatever, we need to work with you to help you get that due diligence that you're going to need as you're trying to put this together. So it's kind of a growth process. Oftentimes, when you walk in, now here's my application, that's gonna, you know, we're gonna we're gonna work with you to see what we can do to help you be successful. In the past, notoriously, experience wise, for real estate, they always said, well, you needed three years of experience, and I hear that out there. But anything's experience. We're gonna doin' a business, that's experience. Coming from a family farm, that's experience. Having education, that's an experience. Selling of crop, that's an experience. So those, those have requirements keep dropping lower off more and more and more and the new, this fall we're looking at probably that three year requirement or anything on a requirement or previous experience for farm ownership is probably going to go away. And right now, if you walked in and say, "Okay, I've been raising so I've got some avocado trees, I've got some crops I've been selling at the farmers market periodically. I've been doing this. I've also, you know, have a small business that I do landscaping, whatever, blah, blah, blah," all that counts, and we can it's not a big deal.
Jim:So it's almost like you're a case manager I'm using, of course Seeds of Wellbeing is about mental health. So I think of mental health case managers, but it's almost like that is your role is just to help anyone work through the process and be connected with resources, not just the FSA loan program.
Buddy Nichols:Yeah. And working with you know, and I can't say enough about the University system. It's huge. That's where the information is. You gotta carry that information, to bring that information, and how we can work with getting that farmer hooked into the University system and understanding what yields are. Understanding what's out there, that's huge. Because, you know, we're not here to manage your farm. I mean, that's that. Don't ever get us wrong on that. You let a bank or major farm you're not going to survive. That's the way it goes goes, it's the farm. It's not about any individual. It's not even about the farmer, the farmer is just there to help the farm be successful, too. We're all there to help the farm be successful, so that's what our drive is. How do we help the farm be successful? The farmers a part of it. Everybody's a part of it. So, Yeah.
Jim:Nice. So any, like, just on average, do you have a sense of, I mean, I'm imagine there's a wide variety of the folks you see and the opportunities and the situations, right. But like, if I were to approach you today and say, you know, I need a loan to try to do XY and Z, for this farm, or for a new farm opportunity, like, is it a lengthy process? Is it six months, is it a year? Is it multiple years? Does it, I'm sure it depends on a lot on how prepared the person is that approaches you and, and how much how much information I have. But is it you know, if, assume that I have my financials, assume I have a property picked out, can it be a fairly quick process or, or? or is it fairly lengthy?
Buddy Nichols:No, generally, or farm ownership is usually the longer process. So you come in with an application, you know. I dearly tell everybody, when you're doing when you're, you know, you need a contract, or getting ready to sign a contract. So when I tell everybody, okay, set your contract for if there's no environmental concerns, and in other words, if you're not going to build something, if you're just going to go to farming, generally you know, they set your contract for 90 days plus, plus, you know, a 30 day extension, if, if needed. The appraisal will take 30 days for real estate, to send and store. So give yourself a couple of weeks, two weeks to a month to get all the information put together, get a process through, get obligated and then let the appraisal comes in. And then give the title company a couple of weeks to do their work and get everybody together. So there's that's where the 90 days come in. And then 30 days, okay, if something goes wrong. You know, there's some glitch with some kind of easement on the property that nobody knew about and they got to figure it out, and blah, blah, blah. So that's it. As far as our turnaround time, right now is 28 days on all of our loans. So that's how fast we can once you walk in with an application 28 days later, you'll have the money in your hand.
Jim:So wow, wow, that's...
Buddy Nichols:and oftentimes it's quicker than that. But 28 days is our average, because that's also taken into real estate, which may take 90 days so we can move through pretty fast.
Jim:That just floors me. I just had no idea. I'm glad I reached out. So is there again, I keep looking for catches, so bear with me, so is there like a set pool of funds every fiscal year that's available. And so you have to get on that list quick or other are the limits like that I shouldn't be thinking about or we should know?
Buddy Nichols:Yeah. Last year, I think the Congress set aside$6 billion. And I think we only use $4 billion across the country. So there's $2 billion out here waiting for you to come get.
Jim:So that should do it just a bunch of $600,000 loans. It sounds like right, and I can line all those up?
Buddy Nichols:Yeah, so we do have a favor of Congress. But this is you know, and that's one of the beauties of it is the fact is, you know, the program pretty well breaks even for Congress, so it doesn't cost them any money. So that's how they can keep the interest rates low. And because it's not cost them any money. So this is one of those programs that yeah, you know, most programs that the government pays for costs them money. They don't get anything back. So this one here.
Jim:Sounds like really low or non existent default rates. Is that true?
Buddy Nichols:Yeah, right now we're below 5%. Most the time, you know, across the entire state for this entire state. We're about 4.2-4.5% Something like that. We don't we haven't had to foreclose since I've been here for eight, nine years now we've never foreclosed on anything. We always find a way. See that's the beauty of the program. The program has, I can come in and restructure again. If we're having problems and Mother Nature, we know Mother Nature's you know, that's the beauty of the program, but we don't it's designed for farmers. We know Mother Nature is going to spank us, we just don't know which day. So if she comes in and spanks us, or he or she, Mother Nature comes in and spanks us today, then I got restructure type programs where I can come in, and I can carry you, I can change our seven year old loan into a 15 year loan, I can change it longer. I can re-amortize out, I can do debt set asides, I can do a lot of different programs to get the farm back to square one, get through that tough period, where this pricing where there's weather or whatever.
Jim:And it doesn't require or, doesn't require a "disaster" to happen, you can do that? Yeah, okay.
Buddy Nichols:I can do that anytime. Outside your control. COVID - prime example. No market. The market had nowhere to go with your crop, you have to throw your crop away and blah, blah, blah, blah, blah, okay, we can come in and restructure. And we can take that out. And basically, the restructure is, okay, it's not working here for seven years, let's take it to 15, and it works for 15 years, we're good to go. So if it's not working today, you know, we have to prove that it's not working today. And then we after we prove it's not working today, then we prove that okay, by restructuring you and doing these changes, that boom it's going to work in the future. Good to go. We're off and, running. Yep. So I could take an annual operating loan a, you know, that you're going to use for fuel and fertilizer, I can take that out to 15 years on a restructure, because we're going to start to have the future crops pay for it. And we just got to make sure that we got a future crop can do it. And that we're not demanding too much on that future crop where that future crop cannot do it. So we're trying to look at it from a crop basis, we're looking at the crop and saying, Hey, Mr. Tomato, you're going to have to pay for all this stuff, can you do it, and then we'll figure out we'll help that tomato plant be successful, it would be
Jim:Nice, like, I like how you're talking to the food, right? The food, the food is the boss.
Buddy Nichols:Very much so very much. So that's the that's the driver. And the food, you know, the the tomato plant is giving me its offspring, the tomato, for me to be for me to support the plant. So I've got to respect that. I've got to respect that. And I have to give it that, that, that admiration, if you will, or whatever. Respect that it's given up, it's it's it's given up its child to help to help support that plant to help support this earth and the whole nine yards. So very important.
Jim:Nice focus. So I'm gonna take another run at this from a slightly different way. So why why would I not go to you?
Buddy Nichols:I don't know...
Jim:Are there scenarios that just don't fit for folks that approach you?
Buddy Nichols:Yeah, you know, if you got free money, no point in borrowing money, if you got free money. You got a better deal, then no point to come to me if you can get a better deal. How can I use you know, how can we utilize these funds? Yeah, if you need if you need outside capital, other than your own capital. Now, I used to have a partner and one of the visiting one of the farms I used to have, that always was about "I'd much rather use your capital than my capital." And that's how he looked at it. So he would much rather go somewhere like the USDA get their capital and use their capital and keep his capital for other other things. So you know, yeah, if you have if there's something better out there, free money, cheaper money, however, then yeah. That's why you wouldn't you know, that's why you look somewhere else.
Jim:Yeah. So again, I feel like it's changing my phrase to be the lender of first resort is really where it feels like, folks should always start with you. And then because you have the connections to the other resources, you'll know what's going to work, you know, what the limits are. It sounds like that $2 billion that's out there in petty cash waiting to be spent, is, it's available, all of it could go to Hawaii, or is it, is that a nationwide number? Or do they like have certain amounts that are pots that are just for by state by state basis? Or how is it just all it's all available? First come first serve?
Buddy Nichols:Yeah, generally the $6 billion is for the across the country. And, and so we just request for national when we have a loan. Last year, normally we'll do, you know, our goal is to do $50 million a year. Last year, we did 60, so we passed our goal, so we're gonna have to raise that goal. But yeah, so, you know, I'd like to see all $6 billion come to Hawaii and the basin. So we got a long ways to go to get that kind of capital here. Now, you know, the rule of economics is the, or used to be you know, 10 to one. For every new dollar we bring in, it generates $10 in the community. So, yeah, so that's a big, that's a big thing we can do for the basin is bring that kind of funding in from the mainland, if you will, here to help our farmers here. We will help the tractor guy who helped the fuel guy, blah, blah, blah, blah, blah.
Jim:So those other $10, those other $9? Right? Yeah.
Buddy Nichols:What?
Jim:Does it, of the $10. Right, you get a for one that you bring in you gotta pay $1 to the tractor guy, the fuel guy, right?
Buddy Nichols:Yeah yeah.
Jim:No, I like it. So what's the process like? I mean, I think there's folks on all the different islands, is that right? And you're maybe at the hub in Oahu, but what's the process? If I'm on the Big Island, for example, or folks are on Maui or folks are on Kauai, or you know, what's their process to try to approach you folks and what's the first step?
Buddy Nichols:Yeah, we have offices on every island. FSA does. Farm loan, we have one on Maui, we have one and on the Big Island, we have one on Oahu, that takes care of Hawaii. Maui takes care of Molokai and Lanai. So we'll lend money to any Island, no matter where you're at. We have an office in Guam, we have an office in American Samoa, which is also part of our program. So wherever we are, we have loan officers in all those areas. Now what we do here in Hawaii is we pool it. First in, first out. So you might, a loan officer might be working on your loan, he may be located in Honolulu, but he's working on your loan on the Big Island. Because even though the islands are different, but you know, our, our ecosystems are very similar on all islands. So you'll be working primarily, you know, whoever the whoever the farmer is working with somebody local. And but we pool it and that's how we get this high turnaround time. Because we can be able to work on as a whole unit with all of our loan officers. We have 15 people, on our staff and so we consolidate, we find ways in order to get things done for wherever you're at. So if you're on the Big Island, and you're trying to close on a piece of real estate, I may have somebody working on Maui, going working with a closing agent to get all the paperwork in place, because it's shuffling paper, until the paperwork's in place to make that happen quickly for you without you know, fuss or muss. And, yeah, so we we definitely work as a team to get things done. Like I said, I call it first in first out just because I pointed evey, you know, every week we meet and "Okay, Who's got what? Where we at where we at? Who needs to help? How can we get things done quicker? How can we make things happen faster?"
Jim:And so is there a, I noticed on your website, there's, it shows all the folks and phone numbers and email addresses. Is email best? Is there some is, what's the best way to do the initial approach for you folks? Do I look for the resource on the island that serves me? Do I reach out to you directly? I'll probably put something in the show notes. So just for that mindset, you know, what's easiest way to start the process with you folks?
Buddy Nichols:You know, yeah, contact your local office, you know, email your local people, give 'em a call, go see 'um. Do, my generation was all about you know, and I'm still that way, and I want to see ya', I want to talk to you. So anyway, long story longer, so you can go see'um, you can talk to 'um you can email. You can email me because we communicate very closely Nice. And what's your job title there? together and try and get you hooked up. So that a loan officer, so somebody close to you, were they're on your island, or very close to you, or just covering your island is in contact with you to make sure that they can help you get your application in meet all those parts, because it is government paperwork. You know, and so yeah, so we're here to help you, you know. Come on in, an hour later we'll have a complete application and we'll work with you to get that done. Yeah. Pardon me?
Jim:What's your job title?
Buddy Nichols:I'm, Farm Loan Chief for the Hawaiian basin, Yep. All right. Well for the Pacific Basin which includes American Samoa, Guam and all the islands.
Jim:So for Hawaii, does the buck stop with you essentially, with these loans is?
Buddy Nichols:Seems that way.
Jim:Okay. Good.
Buddy Nichols:Another thing is we don't do things by committee, each loan officer makes the decision. It's their decision. If it's outside of their lending limit, if you will, I have to I have the ultimate highest lending limit so it'll come to my desk. So one person makes a decision. It's not a group decision. It's not about bla bla bla bla bla. Yeah, it's all about one person making that decision. And yep.
Jim:So maybe just give us a couple of examples of the range maybe on the just to give us a sense of the range of the types of loans you've been involved with, over the past few years, let's say?
Buddy Nichols:Yeah, well, like I said, let me start with value added. Once you grow a crop, I can help you take it all the way to the consumer. So an example is I grow a crop and I have a food truck, I can finance a food truck, I can finance everything
Jim:Quite the range, and of course the traditional loans that's in the food truck, I can finance, the crop, I can finance anything connected to you taking it to the consumer. So I've done a fair few of those as of late. We're doing food trucks, or they're doing farm tours, you know, working with the hotels, and doing ag tourism. We can help any part of that, whether you need a van or whatever. So as far as so yeah, so that's the kind of thing so if you're growing, another example, you want to grow fruits, and you're going to grow fruits in this particular area, I can help you design your farm with, you know, a series of different crops so that as your farm grows, you're making, you're producing funds the whole entire way all the way through. Irrigation systems, same type of deal. I can help you with that I can help you get established an irrigation system. Working with NRCS such as they're doing cover crops and or if they're doing greenhouses, we've helped, we've helped finance, put them on with NRCS, which is going to end up paying for the greenhouse, but you have to build it then they reimburse us. So we lend the money to you, the farmer, you build a greenhouse, you go to NRCS they pay you for the greenhouse you reimburse us. So we do greenhouses. Value added, you know, like I said, value add is always the most interesting one because people will you know, I'm growing. I'm growing some kind of particular herb, and I'm making a spread and I'm going to make some kind of macademia that spread and sell it. Okay, I can help you with that. Because you're growing the the herb that's going in there. I can help you all the way through it. So that's that's a big item. Animals. 4-H, we have a youth program. There is an example. Here we have a youth program in which, if you're in 4-H, FFA, or any youth or one of the associations, livestock association's youth program, we can help you finance to help the kids finance their animals. We can help them, I had one particular girl that came to us when she was eight years old, I could lend her $5,000. I lent her $5,000, she bought four head of cows, when she graduated and went to college, she had a herd of 50 head. It all started with those four cows. And she showed'em at 4-H, and pretty soon she him she was raisin' em and selling 'em and so on and so forth. So there's programs such as that. So we've helped we helped with that a lot. that you were talking about for for ag properties too so I mean it's, it's, it's it's a great story, it's a great range of options to I'm really impressed. So I feel like because of the Seeds of Wellbeing project right, which is trying to help ag producers in Hawaii or or I'm thinking that with your experience and with your role that is there advice that you might want to share or tips that you might want to share for Hawaii's ag producers that might help them if if they're struggling at the moment.
Buddy Nichols:Yeah, basically the advice you know is let the farm work the numbers. Works your numbers, work with CTAHR, work with people that know the numbers. Know what production yields are. First off, know what your numbers are, so you know how to price your crop and let your you know and let your crop be the driver on that because this is what I need from my clump from my farm. For this farm that I'm helping be successful. That's that's probably the biggest thing. And then if, for example, it's cost me, avocado is going to cost me$20 to produce an avocado and I can't find a market for $20 for this avocado, then I probably ought to look at what else this foreign can do because this avocado can't do it. So what else can I do for this farm? Maybe I put that into guacamole, maybe I go value added, maybe I do some other things, but look at my opportunities, but at least I know what can be done and what can't be done. It gives you the options.
Jim:Yeah, eyes wide open and listen to your food.
Buddy Nichols:That's right. Listen to your food.
Jim:Don't play with your food, but listen to your food.
Buddy Nichols:Let your food be the driver. Let the food be the driver. It'll tell you.
Jim:And and maybe, maybe you don't want to go there, but I figured I'd... The Maui fires are so much in everybody's hearts, minds. And it's so devastating, right? And so I just I don't know, if you want to share anything about your involvement there, your connections there, the status of things, or what your you've been seeing and, and perhaps how FSA has maybe been trying to help.
Buddy Nichols:Yeah. I've worked, I'd worked back in the day, this is in 2013, I worked with FEMA, on a flood situation. And this is back in Colorado, where I was from and 1000s of acres, rivers moved, so on and so forth. So I've worked with FEMA. So when FEMA came in and they came in immediately. And the person that I was working with, I helped him load ships down here in Honolulu, going over there in the middle of the night. Navy ships. So I got to see it firsthand, real early, like within a day. Because the guy called me and says, "Hey, what are you doing? I know, you can run equipment." And so they're they're particularly you know, they that's the first wave. The first wave of FEMA is we come in and we help. We bring, we bring, we bring, and we dump on. So anyway, so that was the initial that was the initial involvement in that type of catastrophe over there. The biggest challenge for farming off of that fire is effect is is the market. You know, farm lands, there wasn't a lot of farmer land affected, but the families that were affected in our community is huge. We're talking COVID type of days, we're talking about people wanting to stay home, people aren't traveling, people aren't doing things are hunkering down. You know, we're helping farmers bring in more food, produce food for those people that are now homeless. You know, that's a big item. Oftentimes that's free food, food that the farmers aren't gonna get paid for. So his market is being affected. So that's our biggest challenge right now is helping farmers with either this restructuring or other things that we can do to get them financially through these times because the market has fallen out of bed for farmers that are selling yield to. The farmers that were affected there, we have a few, we don't have a whole lot that were affected because we don't have a fire. The fires were primarily residential located in the Lahaina area. So our you know, our big push is to see how we can help those farmers get through this tough time through those times as they're donating their time, to their community being a part of their community, helping them refurbish, and how can we support their farms or their farm is producing food and keeping their family going while they're helping other families? That's our biggest that's our biggest goal. Those farms that did get some burn? Of course we will, we've got programs in place, disaster type programs that's gonna to get them started back up in business again. Of course, we have you know, farm loan money available to help them also on that. And to try and just to stay involved in that way.
Jim:Sounds like having conversations and restructuring loans, and, you know, the same things you've had to do through COVID. Because you've been you've been through those years, certainly at FSA and seen what that's like
Buddy Nichols:Because a lot of them's you know, a lot in a lot of our farmers sold to the, to the hotels and local markets
Jim:So it sounds like, is it selling or getting product to there in Lahaina and that was a big area. So those are gone. It's just like that. That happened within like, the fire hit Tuesday I believe it was, well by Thursday or Friday their orders fell out of bed. So they already had crops harvested sittin' there in the pile. What do I do with this? So they donated, and rightfully so, you know. They donated them and they had homes for them to feed people, but however the cash revenue is gone. So how do we help them recover and get through these tougher times of keeping the farm going, so that we can help the community rebuild? Keep everybody fed while we're rebuilding our community. other islands or to the mainland or overseas? I mean, what are the some of the solutions for those ag producers that have no market locally anymore?
Buddy Nichols:Well, as far as getting crops overseas, that's kind of, I guess, be kind of tough. Get it to the other islands is, is quite helpful. And particularly, you know, for those, you know, as we look at as we look at Maui, there's the, you know, everybody supporting, so Maui-grown crops are, of course, are looked very highly upon, people want to help the island of Maui. So that's a very local, local thing that. Moving, moving crops, moving crops to mainland has always been a challenge. It's pretty hard to compete with the Mexico's and South, South America. One of the things that COVID helped us a lot with in agriculture is theafact is people wanted to know where their food came from. And we need to keep that sentment out there and entice people to utilize local, local food, local food, local food. The school system has been very good, very supportive on that. We'd like to see more ag more local ag get into our school system and make that more competitive, if you will, for our local farmers. Tough deal because, you know, we always don't know what we'll have today. Will we have squash, what do we have? We have squash we have corn, what do we have today? It's a little hard to set up a menu, where do you don't know exactly what you're going to have every day, but at least right, so we got to get through some sales challenges there.
Jim:Yeah, absolutely. Yeah. We talked a little bit with Kamehameha Schools about their goal of having 50% Local and some of those challenges, for sure. But I think, you know, having co-ops where we're folks can, or hubs where folks can basically band together and have that consistency, right. So I, you always want squash and tomatoes and corn let's say, then somebody is growing it, right? And they can all kind of band together to help. I think GAP certification is I think one of the hurdles that folks have talked about for school systems or some of those markets. But I think there are folks that are trying to make group GAP and things like that. An easier solution to get on that on that school lunch wagon, the school lunch menu, I guess. No, but it's this is great. I think it I'm really, really glad we had a chance to talk. I think this will be great info for our ag producers in Hawaii. I think you folks are doing amazing things. It's reminds me again, on the podcast, we spoke with Tim Richards, senator from the Big Island. And he the way he put it was government's role is to get in there early, provide some resources and money, help get things up and running, and then get out of the way, and it sounds like that's exactly what you're doing and, and with all the supports as well. So it's a seems like a great solution. So I'm gonna recommend you first when people ask me in the future. We hope you enjoyed this talk story with Buddy and thank him for the time and information he has shared about FSA assistance available to our ag producers. Please check the show notes for links and please like and subscribe to let us know what you think. Mahalo.
Buddy Nichols:Born optimism. You know, farmers are born with optimism. Tomorrow's going to be a better day. Today may rain. Today, we may have had high winds. Tomorrow, the winds will die down and we're going to be planting and we're going to have a new crop tomorrow. So that's kind of how they're trying to run the program.
Jim:And it sounds like you can honestly say, "Hello, I'm from the government and I'm here to help."
Buddy Nichols:Everybody hates that. But yeah, hopefully hopefully we are here to help what we can.
Jim:And you can actually make it happen.
Thao:The intention of these podcast series is to create a safe space for respectful and inclusive dialogue with people from across a broad and diverse spectrum involved in growing and making accessible the food we share together. A diversity of voices, perspectives, and experiences can serve to deepen mutual understanding, to spark creative problem solving, and provide insight into the complexities of our agriculture system. If you, our listeners, have experiences with Hawaii agricultural ecosystems, from indigenous methods, permaculture, small holder farmers, to large, including multinational agricultural industrial companies, and everywhere in between, and you would like to share your story please contact us. We welcome your voices and perspectives.