The Future Of Farming As A Business

Back to blogPosted by First National BankPosted on Agriculture

It is believed that farming first began nearly 23,000 years ago, according to Farming is one of the oldest and most valued past times of the human race. Even the largest of operations carry origins stemming from small and in some cases, ancient practices. How has farming changed over the years and what is still to come?

Starting Out

The most important element of farming is land. You need wide open spaces to farm cattle or grow crops. Farming requires lots of space for plants and animals to grow and thrive. Farming is not always passed down through generations in the family. Sometimes, you have to start out on your own. Acquiring land may seem nearly impossible as you don’t know where to look. One of the simplest places to start is by looking at rental properties. Farmers age and they sometimes have no one to inherit their land or manage it for them, at that point, they may look to someone outside of their family to take over their farmland. Renting farmland is a great way to get your foot in the agricultural door. Land trusts are also another viable option. Land is purchased in large quantities and kept secure to sell to local farmers at a fair price. This helps prevent small farm owners from getting pushed out by a larger and wealthier farm operation. You can learn more about land trusts and where to find them here.

Land transfers is another way one can gain farmland. Often times, Farmers’ children are not interested in following in their parent’s footsteps. This often leads to farmers looking for someone else to hand their operation over to. Typically, the farmland owner will train the transferee and when they feel they are ready, they will sign the property over to this individual. Whether you have worked for this farmer for years, or only a few months, you may be considered as a viable option to take over if you are willing to work with the farmer and show them you are wanting to build on what they have started. This type of arrangement involves a great deal of cooperation and trust.

The last way to acquire farmland is through farm management. Just because a farmer is aging and may not be able to do as much, they may not be willing to totally sell off their land and call it a day. Hiring someone to manage the day-to-day operations of a farm is another great way to cultivate professional relationships and help that farmer feel comfortable enough to eventually hand off their land to someone they believe is ready to take care of it. 

Farm Machinery

One of the trickiest parts of owning your own farming operation is deciding how funds should be allocated. One of the biggest investments you will have to make is on your equipment. Owning your own equipment can save you in the long run, but the initial cost is great. Whereas renting machinery is lower risk, but often ends up costing more. You can also finance your equipment and pay it off over time, however, if something happens to that equipment it is up to you to pay for it. The value of the equipment may also depreciate more quickly and put you upside down on your loan. These are all options to consider when looking at equipment for your operation. What makes the most sense for your business in the long term? Another important factor to consider is the cost of maintenance or repairs on these vehicles and equipment. What would it cost to perform regular maintenance on these vehicles? If an accident occurs, would you be able to cover expenses out of your own pocket to make the repairs? Again, these are major factors to consider when making these decisions. Here is some more helpful info to help you consider what is best for you and your business.

Building Your Legacy

The land and machinery are obviously some of the most important elements of your operation. However, what would you like the future of this operation to look like? It is important to map out long term plans and goals for your farm. Is there someone you trust who could take over for you when you are ready to retire? Will you be the only farmer in your family? These are all important ideas to consider before entering into this type of venture. Although your farm does not have to be passed down through generations, it does help to know you have that option. If passing it down is not an option, you may have a farmhand who you believe would be best to take over. It is important to begin grooming that person early on to understand how things run and what you would like it to grow into in the future. 

Starting your own farm is a lifelong commitment. You should fully understand all that it requires before you enter into it. Take time to do research and make sure that you are educated in your options before diving in.