The Biggest Expenses of Starting a Farm (and How to Afford Them)
/
Photo by Skyler Ewing from Pexels
A farm can be a very profitable business, but it can also involve some very expensive upfront costs. Here are some of the biggest expenses and how you can more easily afford them.
Land
You can’t start a farm without farm land. Land can often be very expensive to buy. Some people are lucky enough to inherit land. For many other budding farmers, purchasing land using a land loan is the only option.
Land loans are much like mortgages. You’ll generally need to put down a deposit and you’ll need a good credit score. You may also have to show a plan of how you will use the land to make an income in order to win over the trust of lenders.
It’s possible to buy land with property already on it. This can be cheaper than buying land and then having to build property on it. That said, you may prefer to build your own structures if you have very specific needs.
Any land you buy needs to be suitable for your purpose so make sure to invest in a land survey. This involves hiring a professional to inspect the land for any problems that could interfere with your plans.
The area of the land that you need can have a big impact on the price. Some crops and livestock may require a smaller area of land, which could be better suited to those on a budget. There may also be tricks that you use such as vertical farming to maximize space.
Equipment
Farm equipment can also be a big expense. This could include anything from feeding troughs to tractors.
Most farmers cannot afford to buy all of this equipment outright and so buy certain equipment on finance. Used equipment is often a lot cheaper and may be all you need as a small startup. When possible, always check the condition before buying.
It’s also possible to lease equipment. This can reduce the upfront costs, but could work out more expensive in the long run. Often leasing a good way to access high quality equipment on a budget - if you’re setting up a specialist farm that requires top tier equipment, it may make sense to lease.
Crops/livestock
Next, you have to consider your produce. This can also be a big cost - while you can buy cheap seeds and cheap livestock, this isn’t going to do much for your business. A good farm needs good quality crops and good quality livestock to attract customers and make a profit, so it’s worth investing a sizable amount of money upfront into any crops/livestock.
It’s worth noting that certain types of crops and livestock are cheaper to acquire than others. Sunflowers, soybeans, mushrooms and poultry all have relatively cheap startup costs and can be very profitable in the long run. Produce such as saffron, courgettes, bamboo and beef/milk can require much higher startup costs (it’s worth noting that while the likes of bamboo can be very profitable, you may only just about break even when farming cattle on a small scale).
Always buy crops and livestock from a reputable seller. Make sure to invest in the health of your crops and livestock too. This will ensure that your produce is high quality, which will allow you to sell your produce at a higher price.
