Farm Irrigation & Financing Options for American Farmers

Farm Irrigation

With agriculture accounting for more than eighty percent of the nation’s water use, irrigation systems will continue to play a major role in American water usage and food production. Despite concerns about the overuse of groundwater and the draining of aquifers, the use of irrigation systems is still a necessary part of farm life. In particular, irrigation is a western concern. More than eighty percent of water withdrawals took place in western states and nearly three-quarters of irrigated areas are in the West. Nearly half of irrigation water withdrawals take place in four states: California, Idaho, Colorado, and Montana.[1]
With water resources scarcer out West, effective and efficient irrigation systems can mean the difference between a farm’s profitability or foreclosure. While most irrigated farms out West are small, the vast majority of irrigated farm sales come from that small minority of large-scale irrigated farms. Irrigation is singularly responsible for some of the most productive cropland in the country (in Arizona, an arid Western state, for example, irrigated corn farms have some of the highest yields nationwide, even beating some Corn Belt regions).[2]
Irrigation systems in the United States come in four major varieties. With surface irrigation, water flows directly across the surface of the land. These systems are capable of flooding entire areas if need be. Sprinkler irrigation systems use pressurized hoses and nozzles to spray water into the air, allowing it to fall on crops like rain. Trickle or drip irrigation systems apply water directly onto the ground or slightly below ground using emitters than can precisely control water levels. Finally, sub-irrigation systems artificially manipulate water tables through constructing or blocking pipes and tunnels that channel water to the surface.[3] Each of these systems works well for different kinds of crops. Surface irrigation requires less specific controls and is generally a simpler process (this system generally uses gravity to direct water flow), but leads to more water evaporation and tends to increase waste (a major problem for many western farmers). Drip system irrigation can seriously reduce water evaporation, allowing its reuse for other agricultural purposes and tends to work best for many fruits and vegetables, but requires more effort to manage than surface irrigation. Spray systems and sub-irrigation are even more mechanically demanding than drip systems (requiring large machines and demanding significant amount of electricity), but can efficiently water large amounts of land. What irrigation system will work best for your farm depends of the type of crop you’re growing as well as the geography of your farmland.[4]

Farm Financing for Irrigation of Agricultural Properties

Farmers looking for the money to irrigate their land have a number of options.  Farm Plus offers loans starting at $400,000 for members of the agricultural industry who already own and operate their own farm or ranch. In addition to our long term loans, Farm Plus Financial offers a farm operating line of credit to cover the operating costs and give farmers the extra injection of cash to help farmers to survive through rough periods due to drought and other unexpected events.  Our knowledgeable staff and competitive rates make us a logical first step for farmers looking to expand their existing operations.
In addition to Farm Plus Financial’s loan offerings, farmers without agricultural property to use as collateral, might consider assistance from the USDA.  Small federal farm loans for beginning or socially disadvantaged farmers or farmers with bad credit can be used for farm improvements and the purchase of farm equipment. A USDA direct operating loan can be as high as $300,000 and can help pay for new irrigation systems and equipment. Like all USDA loans, these funds are limited (so early application is a good idea) and tends to go towards farmers who would otherwise have a difficult time obtaining credit. Established and medium- to large-scale farmers looking to finance new irrigation systems would be better served by looking at private lenders. [5]
In addition to loans, farmers can receive grants from the federal government for efforts to improve conservation on their farmland.  A number of USDA conservation programs exist to help farmers pay for more environmentally friendly farm techniques. Of particular interest to western farmers tilling arid land is conservation funding set aside for protecting water resources. The USDA can help pay for irrigation systems that are more efficient and that generally reduce water consumption and water usage. Programs like the Environmental Quality Incentives Program, created in 1996, were dedicated to funding more water-efficient irrigation systems. Recently some controversy regarding irrigation funding has emerged as a result of studies suggesting that increased irrigation funding only leads to increased water usage (as the more efficient water usage allows for more planting), so farmers looking into conservation funds should be aware that USDA and FSA agents are more vigilant about water conservation and water system protection. Since 1997, the federal government has spent more than $1 billion on irrigation efficiency programs.[6]
All farm lenders take water rights and irrigation systems into consideration when determining your eligibility for agricultural loans. Since access to water (especially through irrigation systems out West) is vital to the profitability and financial success of a farm, potential borrowers looking to purchase land with limited access to water (either surface water or groundwater), with limited irrigation systems, or with water rights currently in conflict with other companies or businesses may find it harder to qualify for farm loans or difficult to obtain good rates on farm loans. Farmers looking for financial help from Farm Plus should take advantage of existing water support programs (either through federal grant money or through irrigation loans) in order to guarantee their access to water and to guarantee their ability to qualify for farm loans.

Resource Articles Related to Farm Irrigation

Should you find your farm operation needing additional long-term capital or a farm operating loan, call Farm Plus Financial toll-free at 866-929-5585 or contact us online to discuss your farm loan options.


[1] USGS, “Irrigation Water Use.”
[2] USDA, Economic Research Service, “Irrigation, Water Conservation, and Farm Size in the Western United States”; Environmental Protection Agency, “Ag 101: Irrigation”
[3] Ibid.
[4] USGS, “Irrigation Techniques”
[5] USDA, Farm Service Agency: Your Guide to FSA Farm Loans,” 12.
[6] Ron Nixon, “Farm Subsidies Leading to More Water Use,” New York Times, June 6, 2013.