A Conversation with The Carrot Project's Dorothy Suput
BY JACQUELINE GRADY SMITH / PHOTOS MICHAEL PIAZZA
As recently as ten years ago, a beginning farmer probably would have been frustrated. Needing a new piece of equipment, or ready to introduce a value-added product to the market—and unable to grow—without a significant amount of cash on-hand since farm equipment can cost north of $50,000. Banks and the United States Department of Agriculture (USDA) were weary of taking on the risk of a farmer lacking either a traditional commodity model or significant collateral to offset the loan, making it difficult for farmers to capitalize and grow their businesses.
Enter Dorothy Suput.
In the early 2000s Suput was working with several environmental and agricultural coalitions around New England when she realized that while there was an uptick in people expressing an interest in farming, those same people lacked access to the kind of capital they needed to get off the ground.
A graduate of Tufts University’s Urban and Environmental Policy and Planning program with an undergraduate degree in biology from Purdue University, Suput launched an inquiry, surveying over 700 farmers about their farms, businesses, and access to capital. The results were telling – while established farms with sufficient collateral were generally able to get funding, similar financial products were not accessible to small- and mid-sized farms. Shortly thereafter Suput launched The Carrot Project through which she provides capital and business development training programs to young farms across New England.
Q: Tell me why you started this project.
DS: Back in about 2006 I was working with different environmental and agricultural groups in the northeast and realized that many farms that were using sustainable and organic practices and had very happy customers were unable to access the capital that they needed to purchase land or purchase equipment – they were stuck in their ability to grow and meet the market demand because they couldn’t access pretty simple forms of capital.
That led to a broader research project, the results of which showed that this lack of capital wasn't entirely the farmers’ fault and it wasn’t entirely the lenders’ fault. Sometimes farmers needed better business plans or better management skills, but other times lenders lacked the information to support small- and medium-sized diversified farms. Traditional agricultural lenders were stuck—if a farmer wasn’t planting commodity crops then they didn’t have the information or training to analyze the loan. For example, a farmer might be selling their eggs for $8/dozen at a market, but the traditional lenders’ models might show that a farmer could only get 75 cents per dozen at a traditional grocery store so the business model didn’t look sustainable.
The other challenge with the lending industry is that banks have consolidated and have lost their agricultural staff. The people who might have had the ability and knowledge to make those loans have retired and haven’t been replaced.
Q: Tell me about how the lending environment has changed.
DS: When I started The Carrot Project, farmers thought they wouldn’t be taken seriously and that they were shut out of the market but that’s changed over the last ten years. There’s a lot more capital available now than there was then and that’s partly due to a shift in the Farm Service Agency [a USDA agency] which has done a very good job in the last eight years of opening up funding opportunities to more diversified farms and farms that aren’t just producing commodities like peanuts, cotton, wheat, soybeans, and corn. They are getting better at administering those types of loans and they've also set up some loans that are the equivalent to the products that we have—essentially microloans.
Q: Let’s talk a little more about some of your farming clients.
DS: Yes! That’s the reason we’re here, isn’t it?
Q: How do potential clients find you? What’s the process for getting a loan or getting help with business development?
DS: Most of our clients come through referral organizations. Wherever we have a loan fund we build strong relationships with other organizations that are working with local farmers. The farmers that are doing well are those that are figuring out how to build their networks and the community around them, both in terms of production and in terms of the business. We are connected to an alphabet soup of organizations—nonprofits, government, and cooperative extensions—that work in sustainable agriculture in New England. We go to conferences, and do trainings and workshops for those organizations and for their clients. Then those farmers often become some clients of ours.
When we started, it was clear that access to capital was the biggest challenge. But as an organization, our focus is on changing the system and the environment doesn’t look the same as it did ten years ago. Capital is still a barrier but there’s a lot more out there now. The other persistent gap, however, is in really skilled entrepreneurs – people who are investment ready or still need help running their business. There is a lot of education around production practices but there is a lot less available for business. Where do you get those MBA skills to run a business if you’re learning how to farm?
A lot of people are also entering farming coming from completely different backgrounds and so business management is important. Over time we’ve continued to loan the same amount of money every year more or less but what we’ve found that certain places lack financial management training.
So that’s what we started to do, both as a risk-mitigant for our own borrowers—if we’re going to make an investment we want to make sure they can pay us back—and also to support our mission to grow the number of successful farmers. That means that in addition to paying us back, they need to do well, they need to grow and continue to prosper.
Farming is really hard, so making strategic decisions is important. The technical assistance sometimes supports us making a loan and sometimes we suggest that people go elsewhere for the loan because lending is part of what we do but isn’t our end all and be all. Our end all and be all is that we have an increasing number of financially and economically viable farms. And the lending is easy to hang your hat on but it’s really about growing thriving farm businesses.
Q: What do these business and technical assistance trainings look like?
DS: We have one-to-one trainings, webinars, workshops, and longer seminars. It’s still evolving. It started as a one-to-one program, which is great but we were spending a lot of time doing the same thing with everybody so we’ve developed some trainings over the last couple of years. That shift is helping clients become better prepared to start more intensive work.
Potential clients can come to us two ways – one is by filling out a questionnaire on our website that we then evaluate. The other is through a training or seminar, as I mentioned before. If they come to us through a workshop, we’ll provide coaching for an hour or two to figure out what they need. Outside of those conversations, we may do some longer-term business technical assistance with them, which can take from between several months to two years. For a lot of people, this work is focused on helping them set up their financial systems and collecting enough information so that they can make decisions about whether they want to enter a market, grow, or invest in equipment.
Q: Do people come back to you multiple times for different assistance?
DS: Our goal is to work with beginning farmers, set them on a path, and then get them out. There’s a fair amount of business assistance available for mature operations and if you have enough money, there are also paid consultants that you can hire. But you have to be doing well to use those services. Our focus is on startup and beginning farms— although not really beginning farmers, since they need to know how to farm already. But new businesses in their first six years are probably the majority of our clients. The idea is that they will “graduate,” so we have some repeat clients but not a ton.
Q: Obviously paying back the loan is one measure of success, but how, in terms of your mission to grow small farms, do you measure success in a broader scale?
DS: We’re interested in their economic viability and we’re looking at how they’re making money over time but a large part of success is about helping farmers meet their own goals. Most of them are setting income goals, and we’re helping them reach that. But their goals are also more specific. Can they buy a piece of equipment? Can they add employees? Can they produce a new product? Sometimes their goals are less monetary too – like trying to find time to take a vacation or make farming their full-time occupation. Another common goal is making enough money so they can have a livable income.
We measure success by helping the farmers reach their individual goals.
Q: Have you found that farmers are hesitant to take on debt?
DS: Yes, that’s actually part of the trainings that we do. Often people coming to us are very undercapitalized, to the point where they are working themselves to the bone, but aren’t able to grow. We found that there is debt averseness and a lot of that has to do with not understanding what debt really is and how it can help you when it’s appropriate. Some things just can’t be bootstrapped. If you take out debt to purchase a piece of equipment, for example, you might free up 2-3 weeks of labor for you and your employees and then you can spend more time planning or marketing or strategizing or doing something else.
Q: Tell me about a client that you think is indicative of a successful Carrot Project client.
DS: Skinnydip Farm in Compton, RI and Westport, MA is a great example. When they first came to us they wanted a loan but they were hesitant to take on the debt, so we helped them set up their financial management systems and train them in tracking their numbers over time. That allowed them to feel confident that they could afford the payment and that they knew that the greenhouse would help them extend the season. Now they are ready to start giving back and we’re incorporating them into our trainings. Farmers love to hear from other farmers and build a community of people who are willing to talk about their businesses, talk about their successes, talk about their failures, and the importance of strategizing.
Q: What would you say one of your biggest challenges is?
DS: Lending is easy for people to understand so there is a lot of information available, but the huge gap in business assistance and training, is another big problem. Trying to spread the word that there is a need in increased capacity for human skills—both for trainers and for the farmers—to get a better education and better training in business management is a big challenge. Because farming is a business - a low margin, difficult business.
Q: That’s an interesting point. Is there anything else readers should know?
DS: That it can work. There’s a certain amount of starry-eyed-ness in many people who enter farming because of its value in society. But farming is really, really hard work so the only way to be successful is to be very strategic in your decisions about what you’re investing in, how you’re investing in it, how you’re going to start the business and grow. Most farmers aren’t millionaires, but they are independent business owners doing the work they love - beautiful, wonderful work!
This interview has been lightly edited and condensed for clarity.