How can you get into farming with these kind of land values?

[BrianV_]

Someday, I want to farm. But I don't think the economics will ever make that possible.

I am in my early 30s, currently self employed where I work from home in a field where I make a good enough income that my wife can stay home and raise our kids with a little extra to pay off lingering debts.

Unfortunately, I know my industry, and I strongly suspect that within 5 years, wages are going to go down as competition from 'offshore' / third world entrants increases. I don't expect this is a field I will be able to retire in, or support of family in past 10 years out.

So, I have been looking at the idea of starting to sideline into small scale grassfed beef. We have family experience raising (and eating) Dexter cattle, and I am convinced they can efficiently produce some of the best beef you can buy in our climate - they grow out before you have to feed them through a second winter. I have 3.25 acres of pasture, that will allow me to get a few cow / calf pairs. I plan to start this next spring after I get my fences built this summer. My goal is mainly freezer beef for me, with maybe a few extra sides to sell.

However, by the time I'm 40 (so say... 8 years?), I'd like to work on scaling up the business so that I can replace a portion of my current income with agricultural activities. And this is the step I'm finding the most difficult to plan out.

In this area (Eastern Ontario), land prices currently average $11k CAD per acre for 'average' land. So let's say I wanted to buy my neighbour's 30 acre field - the cost would be $330k, which I could finance privately at prime + 0.5% (so, 3.95% at the moment).

That puts me at ~$20k per year required to service the debt if I amortise over 30 years (ie, until I retire). It will cost more if and when interest rates rise.

My back of the envelope math tells me I can make something like $1k - 1.3k per acre per year with my beef plans, so $30-$39k per year. However, if the debt servicing eats up $20k of that, it means I am managing the cows for $10-$20k per year, plus whatever equity I earn in the land in that year.

That's fairly low return for the work involved, and primarily due to the amount of debt required to even consider going into the business.

How do people get started in farming these days with land prices where they are at? You can't compete with cash croppers who are willing to make razor margins on hundreds or thousands of acres just to scratch out a single family living.

 

[Ji Case 35172]

That?s exactly what I do you have to work and slowly grow your herd
and get more equipment. It?s not easy but once you start doing it?s
something that you like to do.

 

[BrianV_]

(quoted from post at 19:03:50 04/13/18) That?s exactly what I do you have to work and slowly grow your herd
and get more equipment. It?s not easy but once you start doing it?s
something that you like to do.

While I could grow the herd and equipment slowly, unfortunately the land debt starts out full sized if I buy a field. I would have to stock the land to more or less capacity to make a profit after paying the mortgage on it.

 

[flying belgian]

Welcome to farming! Seriously tho, you would have to look at renting some near by pasture.

 

[NY 986]

Land is priced mostly by purchaser's who have a high degree of equity and cash flow to overpay for smaller parcels of ground and have the mindset to play "keep away" which means pay more than what could be afforded based on production returns. It's nearly impossible to compete with that unless your non-farm income is pretty elite. It's very hard to come up by the bootstraps so to speak anymore. I heard of one example of keep away a few years ago where a farm family literally figured the year's profits from operations plus government payments then offered the sum as a bid on approximately 100 acres. They never looked at the proposition from any other vantage point such as expected economic return. The name of the game was bid the ground away from the other guy(s). These people farmed 5-6000 acres so it was a very large sum of money.

 

[BrianV_]

(quoted from post at 19:11:16 04/13/18) Welcome to farming! Seriously tho, you would have to look at renting some near by pasture.

I've considered that, and actually looked at local maps and driven roads. There's not a lot of established pasture left that's not tied to a dairy farm, but there's a few fields currently cropped in the area that still have fences.

How does rental for livestock typically work? I mean, it would require capital investment into fences, probably seeding into pasture (and establishing), and requires a few seasons to really get up to production. That's not something you can just rent season-by-season from what I can tell.

 

[carvel minne farmer]

brian there are a couple of guys on here from ont. bruce for one who would be able to give you some good insight on this. what do's farm land rent for in ont.? or how about a rental purchase agreement? just throwing ideas out there. john

 

[JD Seller]

Well trying to buy land to raise cattle on it never going to work with high value land. Cattle are rarely grown on high dollar land. That is why pasture land is usually not suited for other crops. So I would start out looking for pasture land to rent. Spend your money building a herd. Cattle do not care if you own the land or not. LOL

I know very little about trying to raise purely grass feed beef. I raise a lot of cattle finished with grain. I also know you need to research your market before you produce the first pound that you intend to sell. I find your income numbers to be well above those I would use when making any type of financial plans. This comes from being in the cattle business and being on the loan broad of a local bank for a number of years. I got to be involved with a lot of people's actually numbers not the ones talked about at the coffee house. Those numbers usually are way lower than the planned or talked about numbers.

So research your local market for the type of beef your wanting to sell. Use very conservative numbers when figuring your net/gross income. If your numbers work in "real" life then find some land to rent that works for the type of operation your trying get started. Slowly build your numbers up. Your going to do this in several ways with the most important being experience. Then second would be building a financial base to grow on. Wait on buy any land until the value cycles down.

Starting farming on your own is a slow process. A fellow once told me farming is like having a really little engine trying to start and turn a HUGE flywheel. It takes time and perseverance to get rolling but once it does get going it will roll along with less effort.

 

[Bruce from Can.]

Hi Brian, I am in South Central Ontario. I can tell you the easiest way to become a farmer,is to marry a
farmers daughter, but you said you are already married , so go to plan B. Not sure what your plan B will be
, as I have no knowledge of your ability or skill set. One thing that you should know and understand ,
farming is a mature industry . This is not the wide open frontier of 150 years ago. There is at this time ,
no shortage of any farm commodities , so there is no easy entry point. Unless you have large sums of money
, then no problem.
I don't think your "back of the envelope " math will hold up under real life conditions with cow calf
pairs on 3 acres. 3 acres would be more suited to sheep of goats, in the grazing/browsing , just not
enough room for cattle. Cattle would trample and crap on a large percentage of your ground. I don't have
any direct answer for you, other than to tell you that if you want to raise cattle , you will need to
obtain land that is of little use for cropping , to cut out the cash crop competition for land. And be able
to purchase land for less $$. Many folks are looking hard at the clay belt near New Liskard , or near
Cochrane. Land prices are also lower in other provinces , but sometimes cost to ship to market can be
higher.
I started myself into dairy on a rented farm in 1981 , at the age of 20, and everyone told me I wouldn't
last out 2 years.Well I proved them wrong, and I have out lasted many that though I would fail , and you
could too, but you will have to find a niche market to exploit . What that market would be .... I can't
say, but on that small land base , you will need to have some kind of high value direct to market item.
Best of luck. Bruce

 

[Duane WI]

I am not a farmer but know enough about business to know that startup companies in highly developed, investment heavy industries, don't go in trying to compete head to head with the big players in the industry. You don't decide to make cars and compete with Ford or GMC. You decide to make car related products that not many other companies make. So don't start farming and raise the same crops or livestock that the big farmers do. Raise something more specialized. People don't go into business with saying they are going into business. They go into business to make a product. So don't go into farming by saying I want to go into farming. Decide what to raise first and then figure out from there.

 

[BrianV_]

(quoted from post at 19:25:37 04/13/18) Well trying to buy land to raise cattle on it never going to work with high value land. Cattle are rarely grown on high dollar land. That is why pasture land is usually not suited for other crops. So I would start out looking for pasture land to rent. Spend your money building a herd. Cattle do not care if you own the land or not. LOL

I know very little about trying to raise purely grass feed beef. I raise a lot of cattle finished with grain. I also know you need to research your market before you produce the first pound that you intend to sell. I find your income numbers to be well above those I would use when making any type of financial plans. This comes from being in the cattle business and being on the loan broad of a local bank for a number of years. I got to be involved with a lot of people's actually numbers not the ones talked about at the coffee house. Those numbers usually are way lower than the planned or talked about numbers.

So research your local market for the type of beef your wanting to sell. Use very conservative numbers when figuring your net/gross income. If your numbers work in "real" life then find some land to rent that works for the type of operation your trying get started. Slowly build your numbers up. Your going to do this in several ways with the most important being experience. Then second would be building a financial base to grow on. Wait on buy any land until the value cycles down.

Starting farming on your own is a slow process. A fellow once told me farming is like having a really little engine trying to start and turn a HUGE flywheel. It takes time and perseverance to get rolling but once it does get going it will roll along with less effort.

All the above is well-taken advice. A lot of what you are saying is why I intend to start small on my 3.25 acres first and do that for at least a few years before going larger. That will go a long ways to helping me nail down my numbers, routine, and expectations before I invest 'real' money into it.

A lot of my income expectation is based on raising a bit more of a speciality product, and marketing it directly rather than sending my livestock to the sale barn. We are just outside the city of Ottawa along one of the main commuting routes into the city from the south, so there's lots of exposure to commuters who may want real good, fresh steaks for the BBQ that night.

A longer term idea is to create a sales and marketing program similar to the Certified Angus Beef program for Dexter cattle. But that's well down the line.

My main concern eventually is finding land close enough to be workable. If I have to drive 15 minutes each way twice per day to tend to the cows, that adds a lot to the labour bill.

 

[tractorsam]

Hi Brian, it sounds like I'm in a similar boat to you
right now although I'm out east where land comes a
little cheaper and the population is a bit thinner on
the ground. Everywhere has its advantages and its
drawbacks, you just have to find the ones you can
make work for you. Perhaps you'd send me an
email and we could discuss this further, Sam

 

[BrianV_]

(quoted from post at 19:46:19 04/13/18) Hi Brian, it sounds like I'm in a similar boat to you
right now although I'm out east where land comes a
little cheaper and the population is a bit thinner on
the ground. Everywhere has its advantages and its
drawbacks, you just have to find the ones you can
make work for you. Perhaps you'd send me an
email and we could discuss this further, Sam

Thanks Sam - I'll follow up via email in a while.

In other news, did some looking and average rents at this area are reported to be $300 - $350 per acre per year, which would be $875 / mo for a 30 acre field instead of $1500-$1600 to buy. That makes it more feasible, even though you don't build any equity at that.

 

[BrianV_]

@bruce:

If I went into any kind of beef farming 'for real', it would be on 30 acres or more. The 3.25 acres is just my current property and that would only be about putting beef in my freezer and selling a few extra sides to family and friends if / when they come available.

I agree about not competing with cash croppers, however, that may require me to move. Unfortunately, I live smack dab in the middle of a beautiful agricultural area, with at least a 15-20 minute drive to get to sub par ground.

 

[CBBC]

Hey Brian.
I'm on the west side of the country. Prices for Ag
land in the Metro Vancouver area which is
Richmond ( where I'm from and my parents farm
still is ) all the way out to Chilliwack, this is all the
called the Lower Fraser Valley. Land prices range
from $80,000 to 150,000 per acre ... so your 30,000
looks pretty good. Our costs are fuelled largely by
off shore investment. You don't grow soy or corn
here unless its feed for your dairy.
Not a bad thing if you want to retire but bad if you
want to start farming or expand.

I actually live on Vancouver Island and come over
for 2-3 days a week to keep things rolling at our
main farm. My farm is smaller, 45 acres vs 80 at my
parent place. We are Cranberry Farmers ... so it is a
specialty crop... however as of late our industry is
now basically a commodity with prices flat to
declining.

That's my background. The reason I moved to the
island was economics.... 15 years ago the price was
80,000 / acre on the mainland and I could buy on
the island for 4,500. Yes it's a bit of transportation...
but even with high fuel prices it's still cheaper and
now my land is worth significantly more.

My advice is look a little further away. You're still in
southern Ont and the price will keep going up.
Farming doesn't often make economic sense. You
will work for little but gain alifestyle. You run your
own business so you probably will understand that
part of what you do.... but margins will be tighter. If
you have $100 in the till maybe $3-10 will really be
yours. Don't be surprised by this.

Having said that, I would say stick to small scale
high value crops. Look to the farmers markets. They
are already being over run with salad greens and
tomatoes and corn... look for other weird things that
you don't see at the markets.

Keep the beef on a small scale, maybe look to lamb
and goats and a couple litters of wieners a year.
For veg look to the shoulder season ... early or late
and take off the middle of the summer.... sort of
anyway.

As Bruce said the surest way to get into farming is
marrying an only child farmers daughter ... or to
make a million dollars is start with two million. Likely
neither option will work for you so just be prepared
to work a lot and hopefully your wife doesn't get too
mad.

Good luck. Grant.
Yellow Point Cranberries

 

[ajl]

You need to hope interest rates keep going up for while yet. Interest up, land down is how it works and vice versa obviously. That is why
land is in such a huge bubble right now. Canada has a long history of using printing cash and inflating asset bubbles. When I started from
scratch in 1999 rates were 8-9% and there was land for sale. Since then rates have been cut so I got an equity boost out of no where since
then. The actual farming has been marginally profitable at best but land speculation is where it was at. Today is the opposite land can't
go anywhere but down as interest is forced up by inflation. Inflation was 10% percent in 1981 and that is what forced rates higher leading
to a great time to start farming in the late 80's as assets were for sale at a reasonable price. Today nothing is for sale so there is no
opportunity. Keep looking for rented pasture as land will do the same thing as Toronto house prices. A year ago nobody thought that was
going down either.

 

[AmosMoses219]

I've been in cow / calf side of it for a long time , run avg.400 head cows. I wish I'd sold out in 2013 I'd a been way ahead of the game and
never would a looked back or ever wanted another one . And I own my land give 500 dollars a acre for it , and it's longs since been paid for .
Only time I ever made any money on um is 2012 and 13 at 1600 head on 750 wt. steers , you can go on that now . Cut that back to today's
prices and previous years to that it ain't near as much fun as what you may think if your honest with cost of production. $1600 and $800 are
long ways apart. There go's your profit. Were they to high then in 12 and 13 maybe so . If you think so , run 3 or 4 hundred head a cows a few
years , sell calfs off um at cost of production , like they are now . You'll scratch your head and say why am I doing this . Answer will be is
cause you LOVE it . There's no other reason i can figure out.

 

[Bob]

Can you go into town and buy out the Ford car dealership or the John Deere store?

WHY is buying a farm supposed to be any different?

 

[paul]

And then you have to say, thank goodness you aren't in dairy right now.....

It's a crazy game. Big bucks, with small margins, this farming.

I bought a little bit of land just before the high crop prices a few years ago, that paid off in 6 years, county values it at three times what I paid for it. Bought a little more 2 years ago, near the high for land prices, figure I need to average myself out with some overpriced stuff, that might not pay off in a long time. And then I went and tiled it last year, another $800 an acre spent on it.....

Paul

 

[JCCWI]

If you want too farm and have to do it on your own.......as in no family farm to grow into.....first get a good day job !! Small acreage tends to go to small livestock operation as in sheep , goats or possibly vegetables. While doing this DON'T quit your
day job ! Also land 15 min. away is like in your backyard.....Big dairies " here " can and do have land spread over 25 miles from one end to the other. BUT doing anything small in too days agriculture will mean you are always going to need a good
DAY JOB !!!

Ask me how I know....as in Been There...Done That !!! Good Luck

 

[BrianV_]

Hmm, folks seem to think I want to walk into a large farming operation and buy it, which I don't. Others seem to think I want to replace my current salary with a single 30 acre field, which I don't.

The main thing I want to do is buy a small field, and make enough profit on it to justify my inputs and time. I can always build from there if it provides a positive cash flow.

As much as I would would like to replace my income 100% with farming, I know that's not realistic in the short term. My goal right now is to diversify my efforts, rather than putting all my eggs in one basket (my day job).

I think the bottom line is that this isn't the time, maybe in a few years once interest rates creep up. I did more looking, and was able to identify two pastures (14 acres and 9 acres) locally that are currently unused, but fenced. If I can rent those out in a few years, that may be the best option to get started.

 

[Andy Martin]

You've received some excellent advice on this. Usually there is more diversity of opinion. Good to read each response carefully. The key points are that farming is a mature industry however there is money to be made in specialty areas. You will be able to market the Dexter beef to a select customer base.

Renting the smaller fields is a great idea, as is growing slowly and making sure you don't get overextended. It would be great if you find a farm family willing to lease/sell because they like you and want to see the land kept in farming. Those people do exist but they are few.

A potential downside is that rented land vanishes after a few years due to some kind of development which brings in land buyers at high rates and you are left with having to liquidate your herd. This can also happen with a congenial landlord who dies and the heir just want fast cash.

Nothing ventured nothing gained. You may raise cattle on your own for a couple of years and decide you don't want to put out the effort after all, but you'll never know that until you try. I love raising cattle but hate marketing so I don't make any money but can't quit.

 

[BrianV_]

(quoted from post at 06:16:15 04/14/18)
A potential downside is that rented land vanishes after a few years due to some kind of development which brings in land buyers at high rates and you are left with having to liquidate your herd. This can also happen with a congenial landlord who dies and the heir just want fast cash.

That's my one fear with rented land - it puts the long term viability of the operation out of my hands. At a minimum, I'd want to set a minimum term (5 years?) on any lease I would sign.

Nothing ventured nothing gained. You may raise cattle on your own for a couple of years and decide you don't want to put out the effort after all, but you'll never know that until you try. I love raising cattle but hate marketing so I don't make any money but can't quit.

That's the attitude I am trying to take.

As far as marketing, it's something I do a lot of through work and as I said in one of my original posts, I'm just off a main commuter route into Ottawa. I have it in mind to open a small on-farm retail shop to sell eggs, chicken and some of the best beef you can buy either in retail packages or pre-sell by the side / whole. Luckily, I have enough flexibility in my work that I could walk out to the 'store' if and when a client drives up the laneway.

 

[DoubleR]

Can you start your business of specializing in selling your Dexter beef to private sales and buy your feed for them? I like you always wanted to get into farming but liked having money in my pocket. I worked a off the farm job in trucking for 35 years and sold freezer beef on the side. I have a established clientele of people that buy from me direct. I found land prices around me were too high so I just decided to do my farming on what few acers I had. I raise about half the corn I use and buy the rest. I have also found I can buy my hay cheaper than I can put it up myself. I also buy straw and resell it off a wagon-stand in front of my house along with 25# bags of corn. I plant about four acers of pumpkins which I sell direct from my stand. I figured all the farms around me have turned into subdivisions and golf courses so I might as well take advantage of the population increase around me. I do ok and it does keep me awful busy in my so called Golden Years. But I'm doing what I want to be doing.

 

[BrianV_]

(quoted from post at 06:42:20 04/14/18) Can you start your business of specializing in selling your Dexter beef to private sales and buy your feed for them? I like you always wanted to get into farming but liked having money in my pocket. I worked a off the farm job in trucking for 35 years and sold freezer beef on the side. I have a established clientele of people that buy from me direct. I found land prices around me were too high so I just decided to do my farming on what few acers I had. I raise about half the corn I use and buy the rest. I have also found I can buy my hay cheaper than I can put it up myself. I also buy straw and resell it off a wagon-stand in front of my house along with 25# bags of corn. I plant about four acers of pumpkins which I sell direct from my stand. I figured all the farms around me have turned into subdivisions and golf courses so I might as well take advantage of the population increase around me. I do ok and it does keep me awful busy in my so called Golden Years. But I'm doing what I want to be doing.

Thanks for sharing your experience!

I agree about hay - I've looked at the costs, and in *most* years, it's cheaper to buy than to put up myself. If I scale up, my thought would be to graze the rented land in the summer (with a pass or two through my own land), then bale graze on my 3.25 acre property over the winter. If I am going to be importing nutrients, I want the waste and manure to be deposited for the long term gain of *my* land. There's a several operations here who will deliver and place wagon loads of round bales for less than I estimate my own production cost would be on rented land.

I like your approach to diversifying the farm offerings at the retail level. That's something I would want to look in at. I'm planning on eggs and beef with some maple syrup and honey, but would also want to look at opportunities / niches like you've discovered.

 

[rrlund]

That's what I said when land values hit $600 an acre. Last I bought,I paid $1000. I said I could never pay for anything if I gave more than that. I've rented any more than I've needed since then.

 

[blue_tractor_man]

Brian, welcome to the forum. There is a lot of wisdom
and experience here. A lot of things done right, some
wrong, dreams realized, and dreams dashed. Money made,
and money lost. Busted knuckles and showstoppers. My
post is is a little long, but it might be helpful. I was
born in 1962, the son of a veterinarian. My dad was the
first in our line to finish college, much less become a
doctor. My family has been in the same area just north
of Memphis since 1817. I was born in Illinois while my
Dad was straight out of vet school working for the USDA
testing cattle for brucellosis (bangs). We were not up
there long then my dad came home and opened a very small
clinic with the help of a wealthy uncle. My dad bought a
John Deere 110 mower with an 8 horse Kohler engine. I
loved that machine and my dad bought me a John Deere
hat. I wore it 24-7. We would go to the tiny dealership
in our little town (back in those days there was a JD
dealer every 10-20 miles around here) and I would pick
up sales brochures out of the rack and read them over
and over. Back then, around here, there were lots of 40
acre farms with 20 cows and people running 40-80 hp
tractors. I think around 1972 my dad took in a partner
who had inherited a couple hundred acres and so we
became real farmers. We had a JD 3010, 4020, and 6020.
We grew beans, cotton, and hay. Back in those days there
were a lot of show horses around here and clean bermuda
hay was in high demand. Somewhere back then soybeans
went to $12 a bushel and the government told all of the
farmers to tear out every fence, borrow lots of money,
and buy all new equipment. My dad and his partner must
have seen the train wreck on the way, so they rented out
the land and stopped farming. So, as a 16 year old,
after school and during the summer, I went to work for a
relative who farmed about 1,000 acres and had a seed
cleaning operation. He ran 8 row equipment with JD 4840,
Case 1370, and IH 1466. Notice how quickly farm size
grew. Now we have local farmers farming 10-20 thousand
acres. So, I set my sights on farming. I went off to
college to get an ag degree. I can remember being in
class at Mississippi State University and my professor
said "Boys if you aren't farming, don't start. If you
are farming, get out". That was really good advice back
then. Interest rates had gone up to over 20%, and all of
those farmers who had listened to the government and
borrowed a lot of money were in foreclosure as crop
prices collapsed. We had already had the Soviet embargo,
hostages in Iran, boycotted Moscow olympics, etc.
Farmers were killing themselves and Willie Nelson
started Farm Aid. It was a really bad time to farm. My
Farmhouse fraternity brother's family ran an auction
company and he spent every weekend selling off someone's
dairy herd. Dairies were in freefall. So, I got out of
college and started a lawn care fertilizer and weed
control company and now I have 50 employees farming
5,000 square feet at a time, along with several thousand
miles of rural county roads. I buy over a million
dollars worth of herbicides and fertilizer each year. My
dream had to be adjusted to the reality at hand. Now I
have 100 acres of timber, 10 acres of hay, 2 horses, 5
chickens, and 30 bee hives. I am the "Gentleman Farmer".
I pay no attention to commodity prices. Matter of fact,
the worse it is for the farmer, the better it is for me
because my chemical and fertilizer prices go down.
So, back to Brian. There were several people around here
who rented and begged small pieces of ground that had
been too small for the larger equipment. They bought
older, smaller equipment and patched it up all winter.
They found markets for hay and peas and turnip greens
and sweet potatoes and sweet corn. Their wives had jobs
in town and got them health insurance. Some of these
guys also had jobs in town or did custom baling or
harvesting. They kept out of debt or kept it to a
minimum. They kept their ear to the ground for bargains.
They are scratching out a living and raising their
families on the farm.
As you should know, agriculture is very cyclical, boom
and bust. And as someone said "The cure for high prices
is high prices, and the cure for low prices is low
prices". It is also said that is is better to go broke
farming on paper than it is to go broke in real life".
Lastly, get lots of good advice, save your money, bide
your time, plan ahead. Trust me, those ridiculous land
prices will fall. Equipment will be liquidated. But,
there will always be niche markets you can fill. Don't
go head to head with the BTO's. Nibble around the edges
like a little mouse. Be nimble.

Good luck.

 

[DoubleR]

I might add that I also do eggs and raise some turkeys to butcher every year and sell. Those and the eggs mostly are sold to the people at my church. I could sell allot more of both if I wanted to expend in those areas.

As far as my stand out front goes I have a box to put the money in and is self serve. It gets a little crazy in the fall when I'm selling the pumpkins and such so I try to make sure I'm around most of the time in October.

My whole concept is direct sales and people like buying direct from the producer. But you do have to get established in a given area such as I have.

 

[Bruce from Can.]

There is another route that can be taken to entering
into farming that I know two families have taken.
And that is to buy into a partnership with an existing
farmer, that has no one wanting to continue the
farm. Many times farmers, not unlike myself, have
put in 30-40 years farming , and have no children
interested in taking over the farm, don?t want to quit
themselves, but don?t want to keep on working as
much as they have in years gone by. And many just
hate the idea of the farm they worked so hard to
build up, just being broke into a few more fields for
some cash crop farm to grow corn on. These kinds
of opportunities are out there, and I would never
enter into any business agreement with out a legal
partnership agreement, complete with an escape
clause. The one family I know has now completed
the transition, after 20 years, and they are now the
soul owners, and both parties are very happy and
well satisfied with how things worked. Just another
approach.

 

[ss55]

In the USA some bankers are advising farmers signing up private investors to help buy additional farm land. That is not a sign of great confidence.

It sounds like you are already aware of economics, high risks and low returns in starting a farm. Have you identified the personal reasons you are attracted to farming? There may be other ways to meet those desires with less investment, less risk and maybe better income: work part time for another farmer during the busy seasons; grow some of your own food and meat on your acreage; learn a skilled trade or a management specialty and sell that service to local farms and businesses; do some farming as a hobby with no expectation of making a living and maybe not any profit; continue an off-farm job until you build up a nest egg large enough to buy a farm. If you have a really good idea for profitable farming, can you partner with another farmer or hire another farmer to raise the crop/livestock? If you enjoy the manual labor it may be more profitable to find someone who will pay you for your effort.

Try talking to a farm banker to find out what they need to see before they will make operating loans or loans to buy farmland.

 

[Super H Mike]

I have been where you are. I always wanted to farm but couldn't "break" into it. My father got out just before I wanted to get in so I missed the chance to take over his operation, even though it was small by todays standards. So I farmed part time with a good paying off the farm job in my 30s. I was lucky enough to get cheap land rents or even free by taking real small parcels nobody else would fool with. I bought older equipment cheap and fixed it up. I got help and advice from retired farmers and my father. I bought calves cheap from local dairy guys. I sold beef and pork direct to buyers, corn to wildlife feeders, hay to horse people, manure to gardeners, eggs , etc. I have to say that I enjoyed those years. BUT, in the end I was losing money. It was a tax benefit for me then though so I kept at it for about 10 years. For what its worth, here is the downside as I experienced it. It is a tremendous amount of work for the return. Something ALWAYS goes wrong. Weather, disease, breakdowns, prices too high or low, you name it . It takes way more time than you might think it will. You will work nights and weekends at it , holidays sometimes. I had small kids at the time and missed some good times. With a job, I was often at work when the time was right for harvest or calving or whatever. Nothing more frustrating than being at work on a sunny day with hay down, and then it starts to sprinkle on your drive home. So, now I am self employed and hobby farm a little , and it is nice. Best of luck to you in whatever you choose to do !

 

[oldtanker]

I've been reading this with interest. Seems that people are ignoring the 3.5 acres. Well with 3.5 acres and 2 cow calf pairs you are going to have to supplement the pasture with hay even in the summer. Using standard markets it's going to be tuff to make it profitable. Going after the niche market as some would call it or even then some call it a fad bay be the only way to make it consistently profitable providing you can keep prices down. And 3.5 acres? You ain't going to get many cow calf pairs in there before it starts looking more like a feedlot. Starts looking like that and there goes the specialty market.

So you are going to have to look at more land just to keep it from looking like a feed lot. As others have pointed out land prices are crazy if you are buying. Just ain't going to work out well as it has to be paid for. So renting is your only option. The rest of us on here? We have no way to help you on the price/availability of rent or buying land. For those of us who own land, well to a certain extent we like to see land values go up. For guys trying to start out? Well it sucks to be you. Sorry, just the way it is. Others have given you any idea for starting out that I've ever heard of short of robbing a bank or selling controlled substances. And IMO you really don't want to go down that road!

Good luck

 

[carvel minne farmer]

BrianV I have been reading and following this post with interest, the members advice and your responses, I think you are right on the money with your long term plans and goals. you have several advantages in your favour here brian, the biggest of which is time, you are already working for yourself (which speaks volumes for your work ethic and business sense) both of which your going to use in getting your farming operation up and running. as you know in running any business having a good relationship with your customers is key. use that same skill set to establish a good relationship with whom ever you rent from, go that extra mile in making improvements or repairs that need to be done. (don't think for a minute the landowner won't see this, and it could well work in your favor in buying that land!) TIME you have the time to look for that pasture land, to look for the right set up for your operation, as both AJL and BLUE-TRACTOR-MAN said land prices are going to fluctuate up and down. look for that farm or land that is way over extended, the banks are foreclosing on, the guy that went in way over his head, the BTO that did the same betting huge on one commodity and crashed, his operation being broken up and sold off, slide in there and buy that one 30 or 40 acre field from the creditors that fits your plan. the moves and the plan you have in place are setting you up to do this brian, buying and fixing up older equipment, (no payments!) setting up your road side store to sell fresh eggs, beef, and produce (don't forget to go organic :lol: ) BE AN OPPORTUNITY BUYER build up a nest egg (tax free savings account) squirrel away cash to have on hand so that when your at an auction, see something on kijiji, hear about something at your roadside store going for a steal swoop in there and grab it up. I have run my own business now for 25 years brian repairing and building welders it is my bread and butter, it's allowed me to buy this 4 acre piece i'm on now and slowly start my little haying operation, I love working on older iron, I picked up 2 Minneapolis Moline m5 tractors and a 24t j.d. baler (barter deal) my friend borrowed my yanmar excavator for 2 sewer jobs for the summer, in trade for the equipment. (his wife wanted the stuff gone to clean up the yard) opportunity again brian, when you see it move! my neighbor and friend a mile west has gone into local politics and he has 4.5 acres at his home place and can't be bothered with haying it any more, we have been talking and setting up to hay it for him with a percentage split, opportunity and my ear to the ground. all this long rambling brian leads to my point that you WILL make it you will get there, it just takes time and opportunity! my moneys betting on you brian, just go get it.

 

[BrianV_]

(quoted from post at 08:35:35 04/14/18) I've been reading this with interest. Seems that people are ignoring the 3.5 acres. Well with 3.5 acres and 2 cow calf pairs you are going to have to supplement the pasture with hay even in the summer. Using standard markets it's going to be tuff to make it profitable.

Thanks for the thoughts. Just as a side note - the breed I am looking at (Dexters), cows max out at 600-700lbs, and Bulls / steers at ~1000lbs. They are about half the size of what most people are thinking of when I say 'beef cattle'. That said, they have excellent feed conversion numbers, reach maturity at ~18 months.

I'm confident I can keep two cow / calf pairs on 3.5 acres from May to November. I know of local examples that are able to successfully stock at even heavier rates. Obviously, I'll need to bring in hay for winter.

It sounds like you are already aware of economics, high risks and low returns in starting a farm. Have you identified the personal reasons you are attracted to farming?

Here's why I want to farm:

I run a decent services business, but the problem is, it's only as valuable as the time I put in (for which I charge hourly). The second I stop working, for any reason, my business has no value. Now, that's true with farming to a certain extent, but I want to build a business that has assets and value of it's own.

Secondly - my day job keeps me tied to a desk. I break away as often as I can to work outside to improve my small patch of dirt. I love working outside, regardless of the weather or job. But I want to start turning my 'escape' time into a profitable endeavour. If I can move cattle and feed them twice a day, that works well with my schedule.

Third - to a degree, I know what's involved with raising beef. My parents had a small hobby farm and raised Dexters for a while. Unfortunately, there was no opportunity for me to take that over, but I know enough about managing beef to know I have an interest and would enjoy it. I plan to get a few cow / calf pairs on this property to 'test' the waters, but I want to have a plan to do more in a few years.

Finally - I am a software developer. For many years, I've made a lot of money fixing 'offshore' projects that went poorly due to businesses only seeing cheap rates, and not understanding cultural and communication issues involved with working with these types of teams. Now, I can see that education and communication in the third world are improving rapidly, and competition is increasing from people in countries who are willing *and able* to do the work I do for 20-30% of the cost. The clock is ticking on my industry, and I want to use what time I have left to start shifting into a second career that I *want* to do.

 

[BrianV_]

As I didn't respond individually to everyone who replied to my questions, I just want to give a general 'thank you' to everyone that has responded so far.

All these responses have given me a bunch to think about. I think my plan is now shifting to leasing rather than buying land for obvious reasons. This is still a ways down the road as plan #1 is to get my existing property in shape and test the waters with my own beef cattle first before I start expanding, but this has gone a long ways towards helping me see the way to get there.

 

[Nick m]

I started about 10ish years ago. 35 yrs old
now. Growth is very slow. Started with a
couple steers and rented 20 acres and put
that to alfalfa. Land isn't quite that
crazy here, central lower Michigan, but
runs in the 4-5k/acre area currently which
is down some. Growth is slow and have
always put every dollar back into it. We
now farm about 160 acres of
hay/corn/wheat/soybeans, own 40 of it, and
still finish a few steers per year which is
pretty much a favor for friends and family.
I'm just now to the point where all I hire
done is spraying. Probably could grow more
at a faster rate, but I like the majority
of the equipment paid for. What I've done
isn't necessarily the way to do it, but
been comfortable. I guess what I'm getting
at is it can be done, but slowly, in my
area anyway.

 

[JD Seller]

Brian the best way to rent pasture ground is to pay X dollars a year per acre. Some places they go so much per head per month. I never saw any advantage to the producer doing it that way. So If I rent pasture I pay X dollars for a year of use.

As far as fencing. If there is fence there than it is normal for routine maintenance to be done by the renter. Replacement by the land owner. If there is no fence then it is more than likely not going to work. Any type of temporary fence is generally too costly to make it work while renting.

 

[ss55]

Farming and farm services will become more and more automated in the future. As a software developer you might have a great head start on learning to troubleshoot farm automation like: robotic milkers, automated grain handling systems; fertilizer mixing systems at farm co-ops; herbicide and pesticide mixers; GPS controlled sprayers and fertilizer spreaders; large planters; combines; etc. One late night service call could pay better than a month of feeding cattle. Two service calls a month might pay for any farm hobby you might want.

 

[Traditional Farmer]

#1 before you go and produce anything is to determine where who will buy your product and at what price.Its easy to sit and make up figures and figure 'someone out there' will buy what you have for sale at the price you want to charge,that thinking is the root of many failed businesses and many a bankruptcy.You need to determine who you will sell to and how much they will pay
in your area hopefully from someone that is doing what you are going to try.Then you can decide how much or how little money you can invest in land and other capital expenses.If you can make over
a thousand$ an acre on cattle I want you to tell me the secret.

 

[Determined]

I will share our story, it is by no means a recipe for success, just some encouragement for you that it can be done.

First do your homework after that don't be scared to take a chance.

Remember farmers are the biggest gamblers there are.

I started out at a similar age and situation as you are in.
A young family, with my wife at home taking care of them.
Successful shop in town and a liveable fixer upper home on some land out of town.

Did that for 10 years, made good money but had no life.

Between equity built up, increase in value from renovations and a peak in real estate at the time it was our time to plug and jump in headfirst.

Sold our property, closed the shop and started shopping.

Ended up moving about 400 miles to an area that property was affordable.

Bought a nice home with a little less than 1000 acres, paid off all our debt and had enough left over to start a herd.
This was shortly after BSE hit and although there was not much money to be made in cattle at the time it was the perfect time to grow a herd with very little capital investment.

Best move we ever made and we have never looked back.
Great life and a great place to raise a family.
Yes lots of hard work at times but if you are scared of that then farming never will be your place.

Put up with rag tag old equipment until you can afford better. Do not overspend on the good years and it will carry you through the lean years.