FondsGoetheanum: Economy



His summary of the use of money: "Just like dung, money starts to smell if it is not used."




Case Study: Effective financial relief – Interest-free loans and debt relief

For many years, the Bern Consumer Association and the Foundation for Man, Contemporaries and the Earth (Stiftung für Mensch, Mitwelt und Erde) have provided financial support for biodynamic farms. They use a simple but effective model: they lend money to farmers in the form of interest-free loans on condition that the loan is paid back after an agreed time.
The annual amortization rate is determined in discussion between providers and users of credit. Before the money flows, lenders visit the farm and get to know the situation and the people. This creates mutual trust. Interest-free loans are a great financial relief.
A similar model with an equally positive effect is used by the Foundation for the Promotion of Rudolf Steiner Education in Switzerland (Stiftung zur Förderung der Rudolf Steiner Pädagogik in der Schweiz).

Freed farmland.

The market value of a farm is about three times greater than its agricultural value. Read here about how, thanks to the solidarity of Freed Farmland, a family near Schaffhausen was able to acquire a farm, which they themselves could not afford.

For 14 years, Herman Lutke Schipholt and his wife Regina have farmed Randenhof near Siblingen, in the canton of Schaffhausen. They have the farm on a lease. At the end of 2010 a farm in the village came onto the market. The pair submitted an offer. Their lease together with the new farm gives a business size that allows for joint management with their sons, while also solving the problem of succession.

Farmer Herman Lutke Schipholt with some of his animals. The farm purchase was made possible by interest-free loans, loan guarantees and donations. A textbook example.

Purchase price three times greater than income value

The purchase price was approximately the market value, i.e. the expected value of the farm on the basis of current land prices in the agricultural zone plus agricultural buildings. Land is subject to speculation and is getting ever more expensive, also in agriculture. A farm is limited in terms of earnings. Based on years of experience, as calculated by the Swiss Agricultural Office, a farm can earn a certain amount of money. This forms the basis for calculating its capitalised value. Experience has shown that nowadays, the market value puts the purchase price at about three times the income value. In figures: If the value of a farm based on income is CHF 300,000 but the purchase price is around CHF 900,000, how can the farmer finance the difference of approximately CHF 600,000?

Revenues are not sufficient to finance current market values

Specifically, this means: If a farmer can buy a farm at its capitalised value, then the cost of capital remains manageable at a reasonable level. If, however, farms have to be bought for three times their fair market value, then only those who already have a considerable fortune can afford to buy them.
But why should this be? Every other type of production has to cover its costs and set its prices accordingly. If the prices of agricultural products met the actual cost of production, we would not have this unsolvable problem in agriculture.

The farm as pension fund

Matters can be even more complex. Consider the situation of farmers who have to sell their farm for reasons of age and because none of their children wants to continue it. The older generation of farmers with private farms rarely invested in a pension plan, but used any available money in the further development of their business. This can force them to sell their farms in order to finance their retirement.

70 people make the purchase possible

Herman Lutke Schipholt saw that he could only continue if he could finance the difference between the fair market value and the ‘free’ market value differently. He was lucky. About 70 persons from the vicinity of the farm provided long-term interest-free loans, guarantees and donations with which to buy the farm.
Two factors make reasonable economic conditions impossible for young farmers: land values inflated by speculation and constraints on the purchase of farms by foundations, associations, cooperatives, etc., even if to do so is in line with their purposes. Overcoming this could finance the difference between market value and income value. So that land could be freed from speculation and made available to young farmers to fulfil their dreams.

New insights gained

In dealing with these issues, through his many discussions with banks, foundations and also individuals, Herman Lutke Schipholt came to understand the various dimensions of money and to seek for solutions together with the Biodynamic Agriculture Association.
One thing became clear, that agricultural production follows its own laws. Plants depend for their growth and well being on their particular soil and climate – sun, rain, wind. All these are outside the sphere of human influence; the farmer can only take corrective measures. Similar can be said of animals. On biodynamic farms they are kept and fed humanely. They are not forced into high performance production. Their way of being is respected.
Another thing: Once his products leave the farm, the farmer becomes a distributor. Out of the sale of his products he must pay his rent or mortgage and loan interest, finance agricultural machines, fund the education of his children, and buy what is needed for himself and his farm.

Organic and Demeter farms escape speculation

If the organic and biodynamic movements are to grow in the future, farms must be protected from speculation. That is a task for everyone – farmers, consumers, banks and the authorities. All are called upon to find a solution together.
The land is not entrusted to us as a possession, but to be cared for and used. Where awareness of this grows, our attitude to trading and dealing with land will change. That will in turn enable change in agriculture.