San Diego — When Pete DeJung applied for a bank loan to start a dairy in 1951, he was turned down. "We didn't speak the language very well," recalls DeJung, who is Dutch. "We were very green in the ways of American business. But Mr. Butler - a citrus grower in Escondido, a very important man on the water board - heard of a family that was trying to get started. He didn't know us very well, but he just thought we were going to make it." Mr. Butler loaned the DeJungs around $11,000; together with their $7000 and the interests of the land's previous owners, they managed the $30,000 price tag and started Hollandia dairy on the corner of Center City Parkway and Felicita in Escondido. They had about 30 cows. The first day's receipts were around $21.

Today, Hollandia dairy claims 125 acres and 1000 cows in San Marcos, another 2500 cows in the Hanford area (in the San Joaquin Valley) and a daily production of 50,000 gallons of milk. Pete DeJung doesn't get turned down by the banks anymore, but things have only gotten tougher for the beginning farmer.

"Every year, the average age of the farmer in the United States gets older and older and older, because the biggest barrier for entry into agriculture is capital. Where are you going to get the money to get started? Who's going to lend it to you?" The speaker is Pat Carey, vice president and manager for the Escondido branch of Farm Credit Services of Southern California, a "for-profit, member-owned cooperative," which makes loans to farmers. Carey, bespectacled, well-trimmed, and solid, is all clear gaze and firm handshake, an ideal player for the role of loanmaker to the folk who work the land. But as he says, the folk are getting more venerable every year.

"Start-ups are difficult. To forecast the future, you rely on history, and if you have no history, and if it's raw land, then it's hard for me to forecast the likelihood of your success. I have to have some idea of the productive capacity of the land and of what you bring to the deal." Experience helps, of course. "Let's say you were brought up on the farm, and you'd been operating the family business for a number of years, and we had a pretty good feel about your management capability, as well as the productivity of the farm." Even if the bank knows you're good at what you do, there is still the matter of backing it up. "Maybe the family could help with collateral and guarantees. Or we've made loans where the parent agrees to subordinate his lien on the property, gives us the first trust deed. The money that's still owed to the father, it's family debt, and we don't see fathers foreclosing on sons too often. It mainly gets back to, you've got to have family support." It sounds like the worst kind of exclusivity. Unless you're fabulously wealthy or born right, you can't join the future farmers of America. There is hope, though, for the moderately wealthy, as Carey explains. "Let's say you come from the city, and you want to buy an avocado grove, and we know the property." Loans for avocado groves are a specialty of this branch. Others specialize in dairy loans, table egg loans, or loans for fat cattle. "Permanent plantings aren't as management intensive - you can hire a service to do that work for you and pickers, and there are any number of good marketing organizations. People buy ten acres to supplement their income, [enhance their] lifestyle, maybe build a weekend place. It's beautiful out there in those groves.

"If you came in today," Carey continues, "looking to buy an avocado grove, we would probably lend somewhere between 50 and 60 percent of the appraised value, and maybe up to three or four thousand dollars an acre. We would weigh those two, based on the historical production of the grove [good production is 8000 pounds to the acre] and the fair market value, driven by comparable sales. We would weigh those two with your overall position - non-farm income and farm income alike - and see what kind of loan we could write. It would probably be 15 to 20 years; rates are going to be in excess of prime, 9 percent, anyway. You have to tie that to the overall complexity of the deal. It's not like when you call [someone] for a loan on a house."

Before you jump at the chance to get back to the land, keep in mind the current crisis in the avocado industry, the issue of Mexican avocado importing. "We don't know what's going to happen with the avocado industry," Carey warns. "I think it places a cloud over things. I wouldn't think we would have a lot of people jumping in or out right now; they're going to wait and see."

Other problems plague the farm industry, problems that slow real estate sales and the loans that accompany them. "Water has had the greatest negative impact on us up to now," Carey reports. "Prices have nearly tripled in the last eight years. We've had farms that were not necessarily failing on our books, but if you had a marginal grove, and water was $300 an acre-foot, it won't work at $700 an acre-foot.

"Land use could have a big impact on us, zoning density. The endangered species act. The gnatcatcher, the kangaroo rat. Persea mite hit us badly, but we seem to have that under control right now." Not only do these things reduce the number of new loans, they can also make some standing loans look a little weak in the knees. "Ninety percent of our loans are what you call fully acceptable loans - they're paying, you're secured. That puts you with 10 percent [a high estimate] of loans that are struggling."

Struggling can mean anything from missing a payment to carrying a seasonal loan over to the next couple of years if the crop is short. "There are times when you need to forbear on a regularly scheduled installment. That's where customers look for you to be knowledgeable of their business, what their capabilities are." And while there are seminars and magazines and avocado societies, nothing tells you about the business like a visit to the land in question. "When you're out looking at your crops, that's an excellent time to be brought up to speed on issues."

By "your crops," Carey is referring to the crop as collateral. "You always note the condition of your collateral. That comes with the lending process. Or if we were doing an equipment appraisal, a tractor. How much rubber is on the tires? Number of hours on the tractor, the hydraulics."

Checking tractor tires is how Carey got into financing farmers. "Security Pacific bank needed a field man. On all their operating and crop loans, they would do the crop budget for the individual for the coming year. We would do equipment appraisal, cattle appraisal." Cattle appraisal?

"A cow is not a cow, okay? You have heifers which are young heifers, you have heifers which are bred heifers, and you have heifers that are up close - ready to have their first calf. You have relatively young milk cows and older milk cows. There's a lot going on out there. You can't just go out there and count the legs and divide by four. We verify numbers of cattle, we verify feed inventory. Look at the calves, how many calves, overall age of the herd, how many cows are milking, how many cows are in the hospital. Are they fleshy?"

Back to Hollandia dairy, to see if the cattle are fleshy. Starting at the corner of Mission and Mulberry, Hollandia first presents itself as a gas station/convenience store backed up against a trucking company (Hollandia is its own processor and supplier). The store is old white, trimmed with blue and rimmed at the base with brick. The only dairyish thing about the place is the sandwich board advertising fresh milk for $2.49 a gallon where you would expect an ad for beer and cigarettes. That and maybe the silos. Several of them rise up from behind the store. One has "We love San Marcos, Hollandia Dairy" painted on it. Behind these the asphalt stretches, supporting row upon row of trucks bearing the "Got Milk?" slogan. To the left is a filling station. Gray and dirty-white pumps and pipes, a rigid network of horizontals and verticals, hung about with the rubber moss of the hoses.

To the right and back, past a squat, square gray building and the pale olive offices, the cow pens roll slowly up the hill. The hill has two caps, both green, accentuated by low-flying white birds. The cow pens, filling the depression between the two peaks, are chocolate, crisscrossed with peeling white fences. There is no sound except for the blowing of a fan and the steady clank of metal as the cows raise and lower their heads through the feed rail. As I approach, they are all turned away from me, standing shoulder to shoulder at the trough. A fleshy bunch. They are cool in a way high schoolers can only dream of. As I come around front, they stare at me, supremely unselfconscious, not pausing in their sideways grind of a chew.

Inside the office, I meet with Klaas DeHaan, comptroller for Hollandia. A man of angles, rangy, with sharp features. Hollandia has been around since '51, Klaas has worked there since '58. Given the cost of loans, is a farmer automatically in for life? "Well, I don't know if you're in it for life, but you always have this idea of wanting to pay the loan off. You borrow the money, you want to pay it off." But one loan often leads to another. "Once, a 30-cow dairy could take care of a family," says Klaas. "If you have a 300-cow dairy now, you're going broke. You keep getting bigger and bigger, and your loans grow with your size. You might start off with $100,000, but because of the size of dairies, you're up to a million dollars. Every cow is $1400. I can't remember ever not having a loan. I know some farmers who have paid their loans off, but they can't grow much."

Hollandia does grow, and growing means buying cattle. "Most of what we use in farming now are called cow and feed lines. You've got so many cows, and you get a certain percentage per cow," explains Klaas. "If you have a line, and you have 100 cows, and the cows were $1000, and we lend on 70 percent, you can borrow $70,000 to buy cows. Feed is the same way, although feed is usually 100 percent."

Now that Hollandia does not have to rely on Mr. Butler, what do you look for in a banker? "A banker who understands farming. If they don't, they can't figure out your financial statements." Constancy is also important. "We used to have to deal with a bank, and they used to constantly change people, and you can't live that way. People don't know you, and you have to build up a history with them. You want somebody who's there awhile."