UMass Loan Shows How to Keep Them Down on the Farm
As the cold, hard freeze eventually makes its way to New England this winter, some members are already planting stakes in summer fruits like plums, strawberries and watermelon.
Thanks to a niche loan program, the $347 million UMassFive College Federal Credit Union in Hadley, Mass., is helping members who are strong advocates of supporting local farms.
For the past three years, the credit union has offered its farm share loan. The way it works is a member who wants to buy their fruits and vegetables locally can purchase a share of a local farm. Once the fee is paid, a member can visit the farm, typically once a week during harvest time, to pick their selections.
Depending on the share and how often members are allowed to come to the farms, the shares can range from $500 to $800, according to Jon Reske, vice president of marketing at UMassFive. To help manage harvesting expenses, the farmers want the shares upfront and paid in full, he said.
To help members with the share cost, UMassFive’s farm share loan can spread the payments out over six months. The loan has no fees and zero interest. Reske said there is no cost to members or farms to participate in the loan program. However, an enrollment or renewal form from their farm of choice is needed at the time of request. The farm must also be a community supported agriculture farm affiliated with the Community Involved in Sustaining Agriculture program.
UMassFive will send share checks to the farmer and allow members to pay off the amount through the loan.
“Here in western Massachusetts, it’s more rural and agricultural. But over the past 30 years, development has crowded into the area,” Reske said. “People are concerned about farms going away and where their food is coming from. If you have a chance to get good food, and your only roadblock is not having the money, we want to be able to help.”
In the Pioneer Valley, there are about 50 farms in a 10-mile radius that offer farm shares, Reske said. Nonprofit groups like CISA have been out front encouraging people to buy local food, he added.
In 2011, UMassFive processed about 30 loans totaling $7,200. So far this year, the credit union has secured a handful. Members have yet to default on any of the loans, Reske said, adding the program is not a revenue builder but more of a service to the community. The share program has become so popular that some farms have reported three-year waiting lists, he noted.
Reske, who is a farm share owner, said the shares can also be used for farms that produce herbs, flowers, organic fruits and vegetables and those that specialize in winter fare such as squash. For convenience, some farmers will travel to places like the local hospital, pitch tents and display their wares for share owners.
The farm share loan is not the only niche offering the credit union is participating in. It is involved in Mass Save, a Massachusetts initiative that promotes energy efficiency. After a member gets a home energy audit, a list of upgrades are suggested. Once the pricing for the upgrades are secured from a contractor, the UMassFive can offer a zero interest loan up to $15,000 for up to seven years for financing. Reske said the credit union makes 2% on the loan and Mass Save pays the interest.
“A member actually brought this program to our attention,” he recalled. “They got the audit. They were upset that the credit union was not on the list of vendors. One month later, we got on that list. We’ve been participating for about two years.”
The credit union also offers an energy fuel and conservation loan, which can be used to pay fuel bills, high efficiency product or home improvements. Reske said the loan can help plan a budget for unusual fuels such as wood, wood pellets and oil. The loan can be financed up to $3,000 and has an annual 3.9% annual percentage rate.
“Our board sees the value in offering these types of programs and it’s what members need and ask for,” Reske said.