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Individual Development Accounts

March 26, 2009 | By Patty Cantrell
Great Lakes Bulletin News Service

Patty Cantrell
Josh Speers, left, works with alfalfa producer Tom Wright and used an IDA to purchase his own hay rake.

Soon after Katie Brandt graduated from the University of Michigan, in 2001, she landed her dream job—working as a hired farmhand. Even though she earned a minimal wage, Ms. Brandt learned so much she realized that she was indeed born to be a farmer.

Too often that’s where the story stops for so many young people who want to farm. But Ms. Brandt is now working for herself on her own farm in Zeeland. She overcame one of the biggest obstacles that new farmers face—financing the new operation—thanks in part to an innovative combination of local leadership and a federal business development program traditionally applied to inner city needs.

Known as an Individual Development Account, the program uses funds from the U.S. Department of Health and Human Services to match money that an entrepreneur saves toward needed business investments.

Van Buren County Extension is Michigan’s only farm-related example of this program. Agricultural IDAs are growing nationwide as a low-cost way to make a big difference for beginning farmers who have limited resources. In addition to the cash, participants are finding that the network of peers that emerges for the young farmers is invaluable.

In partnership with the C.S. Mott Group for Sustainable Food Systems at Michigan State University, Van Buren County Extension in 2004-2008 offered IDA opportunities to local farmers. Fourteen have since completed required business training, saved $1,000 each in the year-long process, and received an additional $2,000 in local and federal matches.

Ms. Katie Brandt will put hers into equipment. Lee Arboreal, another participant, made the down payment on a new tractor. Josh Speers, who is just 16, bought his first hay rake; he plans to follow in the footsteps of his mentor, Tom Wright, who makes a farm living supplying feed for suburban horse lovers.

Josh, along with Van Buren’s other IDA holders, says getting to know the other startup farmers was one of the biggest benefits: “I learned a lot. There were people doing blueberries, chickens, fruits and vegetables, organic. Now we all know each other.”

Michigan could use many more local IDA programs and the business support networks they build, said Susan Cocciarelli of the C.S. Mott Group at MSU.

Her long-term goal? She would like to see Michigan build an endowment fund for IDAs so the program could be more widespread and bootstrap more local food and farm businesses. In the near term, there’s a chance Michigan could be one of 15 states chosen in 2010 for a Farm Bill pilot program aimed at building agricultural IDA programs across the nation.

Contact Ms. Cocciarelli at 517-432-4525 or cocciare@msu.edu.

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