Chris Laughton, the Director of Knowledge Exchange at Farm Credit East, joined Maureen Ballatori on this edition of the Spilled Salt podcast to share how the century-old organization is providing more than just loans to get farmers started on the right foot.
Farm Credit has been helping farmers for over a hundred years, and they’re just getting started.
Chris shared insights into the challenges and opportunities facing the food and agriculture industries. Farm Credit is addressing these with customer education and outreach programs.
One such program is the Generation Next program, a leadership training course for emerging ag leaders. It addresses essential skills for the next generation of farmers, focusing on human resource management, leadership, financial management, and risk management. Laughton emphasized the importance of developing skills beyond farming techniques, such as the ability to manage people and navigate financial aspects, which are crucial for the long-term success of any agricultural enterprise.
Another notable initiative discussed was the FarmStart program, designed to provide unsecured capital for startup or early-stage farms, filling a critical gap in the industry. This program aims to support emerging farmers in covering initial expenses, offering up to $75,000 in capital with a unique structure that includes an advisor to guide recipients through their journey.
Laughton’s extensive experience and diverse background, from growing up in a greenhouse nursery business to obtaining an MBA and a master’s degree in applied economics, highlight the varied expertise he brings to his role. His passion for continuous learning is evident, showcasing the importance of staying informed in an ever-evolving industry.
The conversation also touched upon the challenges for new farmers, particularly those who must secure capital for land, equipment, and operational needs. Laughton discussed Farm Credit East’s collaboration with USDA programs, such as loan guarantees and down payment assistance, aimed at making agriculture more accessible.
Looking ahead, Laughton expressed optimism about the future of Northeast agriculture, citing advancements in technology, including robotics and artificial intelligence, as transformative tools for farmers. He highlighted the resilience and creativity of farmers, emphasizing their ability to adapt to changing landscapes and innovate in response to emerging challenges.
This transcript has been edited from its original form to support readability.
Maureen Ballatori: I’m Maureen Ballatori and this is Spilled Salt, a podcast on the thrills and spills from the food, beverage, and agriculture industries. Today’s guest is Chris Laughton. He’s the Director of Knowledge Exchange at Farm Credit East for the Northeast of the US.
Chris’s role is really about education and outreach for up-and-coming farmers or existing farmers that are looking to continue their knowledge and expertise in agriculture industries. So he says that they serve all of agriculture and some of what we talk about today is some of the ways that they do that, not only with the education side of things from people and leadership and financial to lending and some of the programs that Farm Credit East has available to folks that are looking to continue to grow and scale their agricultural business venture.
We talk about that a little bit on the podcast today, as well as some of the great stories that Chris has experienced in his 13 years at Farm Credit East, as well as some of what he sees forthcoming for the agriculture industry. Enjoy the conversation.
So, I’m gonna jump right in… I know you’ve been at Farm Credit East for a long time, 13 years according to your LinkedIn profile. Can you talk a little bit about your work?
Chris Laughton: I’m Director of Knowledge Exchange at Farm Credit East, which is a sort of a fancy title. It doesn’t really explain what I do, but it sounds good, right?
Maureen: It does sound good.
Chris: Basically what it means is that I run our customer education and outreach programs. For example, today I’ve spent a lot of time working on our Generation Next program, which is basically a leadership training course for emerging ag leaders.
People that are say the next generation of a family business that are going to take on more responsibility or beginning farmers or that sort of thing. And it talks about managing people, leadership, operations, that sort of thing.
Maureen: And what kind of things are you teaching them? As you mentioned people, leadership, finances, but what are some of the core skills that an emerging leader in agriculture needs to know?
Chris: One of the big parts of the program, like it is normally when it’s in person, is that it’s offered as three full days of instruction that are spaced a few weeks apart to give people a chance to do other things.
The entire first day is on human resource management and leadership. So it’s a big focus of the program. And sometimes we get a little bit of pushback from beginning farmers. They might say, well, I don’t have any employees yet, or that sort of thing. But one of the things that we say is that at some point in your career, whether you’re a beginning farmer or taking on an established operation, you’re gonna reach a point at which you can no longer do everything yourself.
Getting things done through others is an important skill to develop if you ever want to grow beyond what one person can do. And so we talk about things like the difference between being a manager and being a true leader. You know, we’re a manager, you’re kind of like top-down command control, that sort of thing. Whereas a leader, you’re almost more of a servant to your staff, if you will, and helping bring out the best in them, building a high-performance team. So we talk about that.
We also talk about financial management, financial statements, how to create and read a balance sheet, how to create a cash flow budget, how to approach a lender, what a lender is gonna wanna see from you, the importance of record keeping, and other things like that.
We talk about risk management, managing risk of all different types related to your farm. And that’s just one of our programs.
I also do a lot of speaking to groups either in webinars or live events. I have a talk called Business Basics for Beginning Farmers that I give a lot.
I do a lot of outreach. At Farm Credit East, our objective is to serve all of agriculture. So big, small, organic, conventional, different types, as well as forest products and fishing. So kind of the nexus of them is that they’re all natural resource-based businesses. Not everyone is aware of us, even though we’ve been around for a hundred years.
Maureen: Well, I think especially this side of the business, right? I think Farm Credit East is well known as a lender from the debt side of the business, but this knowledge exchange, and I know we’ve talked before, but I can think of a number of folks who are trying to take a side hustle ag business to full time, right? And they need this kind of direction.
Chris: I do a lot of outreach to try and make sure that people are aware that we’re here as well as just basic education for the financial management side of agriculture.
Not a lot of people get into farming because they love paperwork and record-keeping. That’s typically the core thing that they’re seeking, but it’s an essential skill to develop if you want to be successful in agriculture.
We leave the kind of bugs and plants to Extension. Extension has gotten a lot more offerings on business management than it used to have.
Maureen: You’re talking about, just for everybody on the podcast, he’s talking about Cornell Cooperative Extension resources, which are county-based and are around the state.
Chris: Correct. But when we began the program, we saw a gap in that financial management education piece. And we realized that as lenders, we saw more farmers get into trouble because of poor record keeping or poor financial management, more so than that because they were bad farmers.
Maureen: I would imagine that that’s true, especially for the generational community, right? That Gen 2, for example, right? It’s passed to Gen 3 and maybe Gen 2 did it with a notebook, literal pen and paper, right? Keeping track that way. And the next generation that’s coming in wants to take over and learn the operations but also wants to add their own spin to it, maybe modernize a little bit, take things into QuickBooks.
Those are different kinds of things that the previous generation can’t teach. They can teach, this is how I did it. And I can tell you this, but I would imagine that where Farm Credit really shines is having that agriculture expertise makes a generation that’s passing from one to the next, really trust you to guide the next generation coming in.
Chris: I guess that’s it in a nutshell of my position. I also do a lot of things like trade show events and things like that. And I was hired specifically for this role 13 years ago. And before that, I was actually a customer of Farm Credit East. I was in the greenhouse nursery business. I took a little bit of a winding path.
Maureen: I saw that in your history you grew up on a farm that did nursery.
Chris: I started out, my first job, if you will, was helping Grampy in the greenhouse. And my first job was checking for bugs. I think it was partly because I was very interested in bugs as a little boy. It would just occupy me for hours and he wouldn’t look after me. But he would set me loose in the greenhouse and see if he could find any bugs for me to look at.
And so I would do that. So I grew up around the family business and greenhouses.
My undergrad degree is in Horticulture from Cornell and I worked for it for 12 years. And then in 2006, [my grandfather] sold the company to another owner. So that sort of forced me to reevaluate my plans.
I ended up going back to school and getting an MBA at UMass Amherst and then joined Farm Credit East shortly thereafter. And since then I’ve got a second master’s degree in applied economics at UConn.
Maureen: Talk about that a little bit. Because you’re right, that is a very winding path from horticulture to economics, but we love a winding path. They make for great stories. So what is that like, in that shift?
Chris: When I started at Farm Credit East and started doing more like economic research and things like that and industry outlooks, I wanted to get a stronger background in economic theory.
I had some of that as part of my MBA curriculum, but Farm Credit East actually has a great tuition reimbursement program that I took advantage of to basically send me to school to get a master’s degree.
I went mostly at night in stores and took really just one class a semester to kind of get through it while I was still working full time. But I did a deeper dive into economics and got that degree.
I wrapped that up in 2020 actually. So, fairly recent and I was an older student taking the classes but it keeps you young I guess.
Maureen: I think it speaks to your interest in learning, which, for the role that you have at Farm Credit East, you kind of have to be a forever learner, right? Because things are constantly changing in what you’re educating the next up-and-coming generation of farmers to learn and know. I can see the trajectory for why you would want to continue to lengthen your experience in that field.
Chris: Thank you.
A lot of what I do is taking information from other sources and kind of trying to make it digestible and actionable to Northeast farmers. So I do a lot of looking into what data comes out of USDA and I’ll try to put my thinking cap on and think about, if I was a Northeast farmer, how would I use this information or how would this information affect me? And I try to write reports and articles and outlooks that reflect that perspective.
Maureen: And how can our listeners tap into that kind of content? Like where can they subscribe to get a hold of that when you put new reports out?
Chris: So farmcrediteast.com is our website. Frankly, I write most of the content that’s on our website, in terms of reports and whatnot. I don’t do the fancy graphic design, but I do the writing.
We have a blog that comes out typically once or twice a week called Today’s Harvest, which I contribute to quite a bit. And then also our monthly e-newsletter called The Knowledge to Change Partner comes out monthly and I am responsible for either writing that or commissioning someone else to write an article for it.
If someone wants to subscribe, they can check us out on the website or they can just shoot me an email and I’ll make sure they get added to the list. You don’t have to necessarily be a customer to get it.
Maureen: Cool, that sounds great.
I think that skill that you’re talking about, the ability to digest a number of different sources of information and boil it down to its most simplistic form that, like you said, farmers can apply to their own businesses or even understand how to apply.
I grew up on a dairy farm and so, one of the things that I think gives us an edge at Agency 29 is that I can go meet a farmer and we speak the same language, right? Because there’s an approach, right? You have to give it, give it to me straight, right? That’s kind of how the farmer wants it. They want to be able to very simply understand information. So that’s, I can see the value of that.
You’re also program manager for FarmStart. Can you talk about FarmStart too, a little bit?
Chris: We describe ourselves sort of as a Big 10 organization. We strive to serve all of agriculture and a big part of that means serving young beginning and small farmers.
That’s part of our mission as dictated to us by the federal government. And we have to report annually on both quantitative and qualitative goals. So like numerical goals of how many loans we make to beginning farmers and that sort of things like what outreach activities we did, what educational program we offered, that sort of thing.
A big part of our beginning farmer programs is FarmStart. It’s not the entirety of it, but it’s one of our focus areas. And what FarmStart does is it fills a gap that we saw in providing capital for startup or early-stage farms in that it provides an unsecured investment what that means is, if you want to buy real estate for example you could get a mortgage for that and the real estate secures the loan so you so the so the lender has security and that’s something that you can do if you know provide it you can afford the payments right but that gets you land.
You still need to maybe buy a tractor, buy some seeds, hire somebody, build, dig a well, what have you. So Farm Start was designed to provide that operating capital piece that’s hard to collateralize from a lender’s perspective because we saw a lot of beginning farmers either struggling to cover those expenses or doing things like maxing out all their credit cards or whatever else.
FarmStart provides an affordable entry point to get up to $75,000 in capital for unsecured expenses and they have up to five years to pay it back or roll it into conventional financing. Presumably after the end of five years, they’d be more creditworthy if you will. They’d be more able to get a traditional bank loan.
Farm Start requires no down payment and no collateral.
We’ve done almost 400 of them over the last 18 years now. And our success rate is very high. One of the reasons is that A, we try to pick winners. We try to pick people that have a high likelihood of success. And B, when you get a farm start investment, it comes with an advisor.
You’re expected to meet with your advisor at least twice a year and just check in on how things are going and be willing to make changes. Because in a startup or an early-stage business, which I’m sure you totally identify with, having started not too long ago yourself, it never goes completely according to plan, right?
Or maybe your plan was to market in one way, but you need to pivot to another market because things didn’t work out exactly right. And so that’s the purpose of that biannual check-in with your advisor.
Maureen: Yeah, I would imagine that the other benefit of that too is the Farm Credit East network is so knowledgeable about what may be available to you that you may not be aware of, too, right?
It could also be that maybe you’re a good candidate for a certain kind of grant funding that your advisor can bring to your attention, which is further going to benefit that farmer as well as the greater goals of the grant organization.
Chris: Whatever you’re doing, we’ve probably seen it before. You might be able to offer some advice or some perspective on what you’re doing. One of the things with FarmStart, by its nature, it’s a startup program, we’ve done a lot of unique and unusual businesses with FarmStart. So it’s definitely not limited to dairy or corn growing or…
Maureen: Right, like a straightforward farming operation.
Chris: We’ve done a lot of unusual businesses and we’ve also done some forestry and some fishing in there too. We’ve done a few lobster boats for fishermen. We’ve done some forestry people. We’ve bought skidders for a logger who wanted to do a custom skidder-for-hire service for a logging company. We’ve done a lot of things like vegetables and CSA and farmers market-type farms.
We even have one that’s a saffron grower in Vermont. I’ll admit that was one we did have to look up, because we hadn’t seen that one before. And we found out that, yes, you can actually grow it in a cold climate. It’s basically what it is. It’s like the pollen of a crocus bulb, a specific variety of crocus. And it goes for a lot of money.
But it requires certain skills and talent to produce it at scale. But we found someone that, or he came to us, a couple that wanted to do it, and they’ve managed to make it work very well, actually, so far. So they’re one of our best competitors.
Maureen: That’s great. And so, Chris, do you also do like, would you do a controlled environment agriculture type operation too?
Chris: We’ve done some of those shipping container farms where it’s like a converted shipping container and they have vertical farming equipment inside of it. And basically, what it is, you have to provide a pad and electricity and water, and they place it there. And then you go and farm it.
We’ve done a couple of them, and those have worked out pretty well. There are some large-scale vertical farms and greenhouse vegetable farms that have popped up to a lot like several of them around the metro New York City area at a larger scale, and we’ve done a little bit of financing work with them through our regular Farm Credit higher dollar loans also.
Maureen: Let’s go there for a minute. Can you talk about some of the kinds of traditional, more traditional related to what we’ve just been talking about, but approach and lending that Farm Credits does in general for farms?
Chris: We have a wide range of customers. I would say our median customer, if you go back to your college level statistics, you have mean and median or your average median. So the average gets pulled up because we have some large multimillion-dollar loans. But the median customer, like by number of loans, is a small or midsize farmer.
I would say that our mean median loan is probably a couple hundred thousand dollars, which for, as you know, a land mortgage, is not that big.
But it ranges from very small, even part-time farmers that have horses or grow some hay in the backfield and have a regular W-2 job to full-time farmers to large cooperatives that market milk or cranberries or what have you.
Dairy is our biggest sector by far, mostly because of New York and Vermont. I should mention that our service area is the six New England states and then New York and New Jersey.
Maureen: And that’s for your segment of Farm Credit East, but Farm Credit East has other chapters around the country, right?
Chris: The Farm Credit system is national and covers all 50 states plus Puerto Rico. And it’s made up of about 60 different independent associations that all have defined territories.
Our territory is the eight-state Northeast region. To the south of us is Horizon Farm Credit, which is like a sister to us. And they service PA, Delaware, Maryland, and part of Virginia is like their territory. And then everyone else has different kinds of different spots. So yeah, that’s our service area.
The whole system was created by Congress in 1916 to serve rural America. The American landscape looked a lot different. There was a lot of farming; it was much more prominent in terms of percentage of the population.
There weren’t a lot of bank loans available to rural businesses. Banks were concentrated in the cities and focused on industry and that sort of thing and so they saw a gap in service providing for rural America and that’s how we were created.
We were created by the government but we’re not a government agency. They kind of created us then spun us off and we’re now organized as farmer-owned cooperatives. So the farmers own us.
When you take out a loan from Farm Credit, it comes with stock and you become an owner of the cooperative and you can vote for our board of directors, you can run for our board of directors for that matter. And our board of directors is, I believe, a 16-member board that’s mostly farmers who are elected by their peers to oversee our organization.
Maureen: That’s great. I didn’t realize that detail.
Tell me about, and you talked about some of them, some of the most interesting projects you’ve worked on in your career. You talked about the saffron farmers, but what other kind of operations or projects have you worked on over the last 13 years, or even going back to the greenhouse and nursery days? What are some of the most interesting stories or projects from your career?
Chris: Some of the most interesting ones are definitely ones that are sort of outside the norm, if you will. So they’re not necessarily like I wouldn’t call them the average customer. But it’s kind of cool to say you did them or be able to talk about them.
We have one customer in Maine that’s growing kelp, seaweed. That’s kind of an emerging thing. And they’re growing that as a basically a food additive. There is a limited market for seaweed just eating it on its own food ingredient.
You can get a kelp burger that’s made of one of those plant-based burgers. It’s made with things like seaweed and mushrooms and maybe soybeans or something else and it’s supposed to mimic the burger flavor. So that’s an interesting one that we’re doing.
Maureen: I think kelp, because I recently looked into this because there was a company that applied for the Grow-NY competition and I did a first-round review of those applications. And there was a company that was doing kelp farming somewhere in the Northeast.
I wonder if it’s the same one, but I can’t remember the name. And I wanna say that they were also looking at the beauty industry for kelp as well, that there was some application there.
Chris: There could be components of the kelp that are valuable for cosmetics or something like that.
Another customer on the larger side of scale is a milk components company. What they do is they’re a farmer and cooperative. There were about a dozen farmers that came together and wanted to basically think outside the box in terms of milk marketing and not just serve the gallon jug market in the grocery store, but create some higher value products and go for export markets and more specialty products.
They basically take in raw milk from dairy farms, pasteurize it, break it down, and then they isolate the proteins for energy drinks, the whey protein can be used for that. They make milk powder for infant formula. They make you know various isolates for specialty cheeses and different products and it’s all very value-added and very niche products and a lot of and I would say more than half their stuff is exported to other countries like Europe or Asia.
That’s a million dollar company. So they’re on the larger side of the scale.
Well, there’s a lot of interesting different things that we’ve been doing.
Forest products are a lot of innovation there. We have one customer that’s an environmental sustainability and renewable energy and that sort of thing is a big part of the mix as well.
We have, for example, a sawmill that’s completely self-sufficient in terms of energy. They created a wood-fired power plant that powers their whole sawmill as well as they sell power to the grid from the waste wood sawdust and chips that the sawmill creates.
And so they’re powering themselves in a basically a totally renewable way because it’s all forest products sourced from the local forest which regenerates in Maine.
Maureen: Yep, that’s cool. I love the way that Farm Credit East thinks about things in terms of some of the challenges that you see and what could Farm Credit East do to solve them, like the Farm Start program.
I think it is a perfect example of that. We saw this need and we filled it. And so even if your answer to this is something outside of what Farm Credit East could do, what are some of the big challenges that you’re still seeing?
Chris: Sure, well, it depends on how you’re situated, for example. If you’re a beginning farmer and you’re coming into the industry from outside of agriculture, so you’re not inheriting a business, there’s a real challenge to come up with the capital needed to start a farm really of any size. And that’s a problem that’s not unique to agriculture. I mean, we talk about it.
Sometimes I think we forget that it’s not unique to agriculture. You know, we talked about I’ll be the beginning farmers or you know, it’s so hard. But it would be hard to start almost any business.
If you’re gonna start a I don’t know a car wash you’d have to buy land and build a building and you know everything else. So yeah to start a beginning farmer you have to secure real estate you have to buy equipment.
Maybe you have to buy stock for whatever you’re growing, all that kind of stuff. And the profit margins in agriculture mean that there’s typically a long payback period for that estimate, 20, 30 years to, to repay the initial investment that you have to come up with. That’s a real challenge.
I think there’s a lot of organizations that are working on helping that. Farm Credit East is working on it. With our Farm Start program, we also have, we collaborate with the USDA Farm Service Agency, things like loan guarantees, which can help make a deal work that might otherwise be too risky to be approved. We also collaborate with the Farm Service Agency on down payment assistance.
Typically, like most lenders, we would require a 20% down payment on real estate. And that’s a big nut to crack if you’re coming into agriculture from outside. But with the USDA down payment assistance program, you can get that down to 5%. And that’s a lot more feasible. And then the USDA, the portion of that, it’s sort of like 15% of the value of the land that goes from 20 to 5 that slice of financing is at a low interest rate and at a pretty favorable term so you can afford to do it.
You still have to cash flow the business and make sure you can make all your payments and everything, but it makes it a lot, it provides a much better entry point. For other farmers that are more established, the biggest challenge that we hear about all the time is labor and workers and both the cost as well as just finding them and keeping them.
I think all farmers want to treat their workers well and pay them well. But payroll is like the number one cost, the number one line item on the budget for almost any kind of agriculture.
Making sure that you can make that payroll every week can be a big challenge, especially if you’re a farmer where you plant in the spring and harvest in the fall and you get one check a year, trying to cash flow that for 12 months and make weekly payroll can be a big [deal] and that’s where like we do a lot of lines of credit for farmers where they’ll you know they’ll draw it down the first six months a year and then pay it back the last six months as the revenue comes in.
There are a lot of ways that we try to help meet those needs for agriculture.
Maureen: Last question for you, predictions on what’s next for the agriculture industry. What do you think are some of the big things coming down the pike?
Chris: Boy, that’s a big question. And that could be a long answer. But I think that there’s a lot, I’m bullish on Northeast agriculture. I mean, I think that there are challenges. And I think that, if you talk to almost any farmer, you’re gonna get a laundry list of complaints. But if you can get past that, you can realize that farmers are eternal optimists. They have to be.
Because to put a seed in the ground and bank on the fact that that’s gonna grow and then someone’s gonna buy it and pay you six months later, that requires a pretty wild amount of optimism.
If you can get past the initial sort of curmudgeon-ness that we all sort of have sometimes, and I have some of it too in my own personality, but I think that a lot of farmers are very excited about the future.
There’s a lot of new technologies out there. There’s a lot of new equipment and tech. I’m going to be speaking on a panel at Grow in New York next week about robotics.
Yeah, so we’re going to be talking about robotics and digital tech. We have some dairy farmers that are now using robotics and artificial intelligence while they use robotics to milk the cows and feed the cows. And then they use the AI to do things like monitor their health and activity. So if they see a cow that has a higher temperature or is moving around a lot, they’ll think something’s going on. Maybe I need to have my vet take a look at that animal.
In fruit, we’re seeing things like robotic pickers and pruners. And that doesn’t eliminate the need for the human touch. It just kind of augments it. And we’re also seeing some innovative marketing things going on. It’s not new, but there’s an ongoing push for more local stores and in institutions.
And so I think the Northeast is a great place to farm. We have the world’s biggest market right on our doorstep, so to speak. From New York to Washington, DC, is almost half the population of the country. And we have water. We’re not on fire.
Maureen: Yep, you better knock on wood, Chris, but so far, yes.
Chris: Sometimes we have too much water, to be honest, but at least we’re not in perennial drought the way some other parts of the country are. So I think there are a lot of reasons to be positive. I look forward to Northeast agriculture with optimism.
Maureen: That’s a great outlook. I totally agree. We’re continuing to see a lot of really interesting applied technology for both farms directly, as well as the whole ecosystem of agribusiness from supply chain and local sourcing and how to kind of prioritize local and optimize pricing and create efficiency and all of that.
Chris: Yeah, our CEO Mike Reynolds said to me one time that Northeast agriculture or Farm Credit is for 100 years old and we’re just getting started.
We continue to grow and come up with new programs and services and things like that all the time and add new customers and farmers are tremendously creative and innovative. So they always come up with new things for us to keep up with.
Maureen: Yeah, yeah, that’s a fantastic outlook.
Well, thank you so much for taking the time for the conversation today. Really appreciate your insights and your background and I’ll make sure that anybody that I come across that’s in the agriculture industry that’s looking to start something, I’ll send them your way.
I didn’t realize that all of those, the education that you’re doing is so approachable and valuable, especially like a lot of our clients are generational businesses that are kind of passing that baton from one to the next, as well as the beginning farmer stage. So that’s, it’s invaluable information to be able to, to have, especially from an industry expert like yourself. So thanks for taking the time.