Need some advice on starting farming

[BuckeyeBoy11]

I am 25 years old and my family owns a farm that my dad rents out, around 500 acres of tillable plus 100 acres of pasture in southern OH. I really want to start farming next year and want to go about it the right way. We own an old tractor, some barns and some bins. Everything else I would have to buy used or be paying for some custom work. I have been doing tractor work on the farm for the last 6 years but have no experience farming. I enjoy working in the dirt in the garden and raising my free range chickens.

I know it wouldn't be hard on getting a loan or grant for beginning farming. I have a full-time job making over 24,000 but I just want to know if I could really make a living on 500 acres 10 years down the road. I was only going to start out on 150 acres and work my way up but don't know if that is smart to start out on just the 150 acres.

Any advice would be greatly appreciated, even if it doesn't answer any of the above questions

 

[ncridgerunner1]

Don't know if OH has local agricultural agents that you could meet with, but if one is available he/she would be a valuable source of information and assistance. Local farmers could also be a great help and be a mentor as they know the farming do's and don'ts in your area. Good luck!

 

[Recoveryhill]

Farming is first and foremost a business and as such, all the rules for starting and running any business apply.

The first steps are to define the market you wish to serve, evaluate your capital costs to begin production, evaluate your operating costs to produce and evaluate your income derived from your sales. These are the bones of a business plan from which flows something called a pro-forma income statement. If you are going to borrow any money for your start-up, such a plan will be required by any lender.

Your advantage seems to be the acreage that is owned by your family but that is only one piece of the pie. You need help from the Ag side regarding which crops are profitable in your area and need to think outside of the box regarding niche markets which may be a better bet than commodity crops. You also require someone to assist you with putting together the business plan.

Oh...and you need nerves of steel and relentless drive focused on hard work for any start-up. I say, "Go for it".

 

[Gary Fowler]

Good advise so far. It takes a boat load of money to get started from scratch in farming with very little return on investment. Farmers must have a love for the life because most of them just barely make a living doing it, so don't expect to get rich doing it. At best it is a break even scheme after business expenses and a meager living expense. Small farms like your Dad's 500 acres is just about an extinct business in todays world of half million dollar pieces of equipment which is why most land owners now prefer to just rent out their land for cash and avoid the gamble which is what farming is, A BIG GAMBLE.

Your best bet in getting actual farming advice is to talk to a local farmer, preferably one that farms over 1000 acres. They can advise you of all the Ag programs that you need to enroll in, which crops can be profitably raised in your area, advise on crop insurance (this is required by many lenders) and size of equipment to lease or buy. Most larger operations just lease their equipment and swap it out every 2-3 years so there is never any major maintenance cost.

 

[OldMcDonald]

Do it or you will always regret it. It is of course possible that you will regret it after you have started doing it, but that is life.

I have not farmed in USA, but I have farmed my own land in England, Australia, Scotland and Portugal. Kept most forms of livestock and poultry, and grown an extremely large range of crops. Every farm is different, but as advised already, seek local advice. You will find many people will tell you that it cannot be done. Balderdash. They have been saying that to young blokes for centuries, and many of us started out with nothing. You have the fantastic advantage of 600 acres. Is it being transferred to you, or will you be renting?

If at all possible do not borrow, and do not give up your job. Not easy, I know, but you can use your job income to pay contractors. This might mean that you cannot utilise the whole 600 acres to begin with, and I do think it would be sensible to start smaller. It might be easier to start with the grazing land only. The costs of cropping 500 acres is quite substantial, whatever you grow. I started small (could not afford more land) and increased acreage as I moved, owning over 3000 acres at one time and renting another 2000, but I eventually decided that I am happier on less acres. As also advised above you will not get rich whatever you do, but that is not necessary. If you want to farm and can survive on the place, what more do you need? I live exceptionally well, have done all my life, but have no investments apart from my farm, live and dead stock. If you can provide a reasonable amount of your own food, a roof over your head, a vehicle and enjoy what you are doing, then profit is not so essential as it is to those who have to buy everything.

Best of luck and please keep us posted.


Edit: I meant to add that if you do try to make a good living, or worse, try to become rich, you will almost certainly fail. You must start small without risking more than you can afford of your own money.

 

[hunterridgefarm]

Some good advice here. Also take a look at this Agricultural Marketing

 

[The Famous Grouse]

Buckeye, everything depends on what your goal is.

A. Is your goal to make a living from farming?

B. Is your goal to farm because you like farming, but you will "keep your day job" or have some other source of income?

I have been around farms and the grain and cattle business my whole life. My grandfather ran grain elevators and I have a close uncle who farms 1200 acres and my father (retired from his career job) helps my uncle. I know the business side of farming.

IMO, the economics of farming make it VERY, VERY difficult to start crop farming from the position where you stand. You will not be able to make a living given your current position. Flat out: There is no way you can get the equipment you need (or custom hire out what you can't do) AND make anything near $24k per year on only 500 tillable.

The whole system now is one of scale and integration. You need big equipment, high-cost inputs, and spray to be efficient and you must be efficient or you will lose money. Farming is not a play job and there are very few bad operators left in farming becuase a bad operator goes broke very, very quickly these days. How many $100,000 checks have you wrote in your life? In farming these days, an operation that's big enough to make a living off of writes 100,000 checks all the time. Seed, fertilizer, equipment, buildings, etc, etc, etc.

This isn't a joking-around matter. If you take over the 500 acres and lose money, you will have lost twice: You will have lost money and lost the income that could have been produced by the cash rent. Farming involves risking large sums of real money.

My advice is that if you want to farm, hire yourself out and LEARN about farming from the best operator you can get to take you on. Save your money and learn all you can for at least the next 3 full seasons. Remember, you need to learn not just about what goes on in the dirt, but what goes on in the office as well.

I'm not saying don't do it. I'm saying do it smart. In your current position, you don't know enough and you're not financially ready. That's a setup for a disaster. Learn, get experience, and if you decide to go for it, you then go in with your eyes wide open.

Grouse

 

[cowski]

answer some questions.what is the old tractor?can the 100 acre pasture be row cropped?is the 500 acres touching?do you have a pickup? is any of the cropland hel?what kind of rent will you have to pay?

 

[Gator6x4]

A major undertaking in this economic age. The three major crops in Ohio are, corn, wheat and soybeans. Ohio Agriculture from StuffAboutStates.com

I would first meet with the Agricultural Agent in your area and ascertain the acre yield per acre for corn, wheat and soybeans.

Then you will need to determine how many acres can be planted, who will plant, who will spray and who will harvest. Don't forget with the wheat you have the straw to bale. Clean dry wheat straw in the field in this area is going for $3.00 per bale. Wheat straw can be rowed for bailing with the combine but you will have to either bale or have someone bale.

Talk to an accountant, preferable one who is a CPA who is very familiar with farms. He will be able to advise what can be ducted as a tax write off and what can't. He can also advise on equipment depreciation and how to stage that to obtain the maximum results. Obtain a Farmer State Tax exempt ID number from the state if Ohio has such, most states do. This alone will save you a lot of money when making equipment, seed, fertilizer, herbicide and pesticides purchases.

Talk to a banker and ascertain what you will need to show when developing a business plan. And don't try to fly by the seat of the pants and not develop it. You will need at least a ten year plan, outlining your goals, objectives for crops the first through tenth years and the projected cost and income expected for each year.

Find out what custom work cost for, planting, baling, harvesting in your area.

Will you be able to encumber the 500 acres for equipment purchases? This will be the most deadliest of pitfalls. A lot of ex farmers did this. Avoid the easy 0 percent loans on equipment and only consider as a extreme last resort. If you do decide on a 0 percent loan for a piece of equipment let that be the last purchase. Lenders today tend to look at those as maxed out credit loans.

Goof luck and many happy hard work days.

 

[TripleR]

Buckeye, everything depends on what your goal is.

A. Is your goal to make a living from farming?

B. Is your goal to farm because you like farming, but you will "keep your day job" or have some other source of income?

I have been around farms and the grain and cattle business my whole life. My grandfather ran grain elevators and I have a close uncle who farms 1200 acres and my father (retired from his career job) helps my uncle. I know the business side of farming.

IMO, the economics of farming make it VERY, VERY difficult to start crop farming from the position where you stand. You will not be able to make a living given your current position. Flat out: There is no way you can get the equipment you need (or custom hire out what you can't do) AND make anything near $24k per year on only 500 tillable.

The whole system now is one of scale and integration. You need big equipment, high-cost inputs, and spray to be efficient and you must be efficient or you will lose money. Farming is not a play job and there are very few bad operators left in farming becuase a bad operator goes broke very, very quickly these days. How many $100,000 checks have you wrote in your life? In farming these days, an operation that's big enough to make a living off of writes 100,000 checks all the time. Seed, fertilizer, equipment, buildings, etc, etc, etc.

This isn't a joking-around matter. If you take over the 500 acres and lose money, you will have lost twice: You will have lost money and lost the income that could have been produced by the cash rent. Farming involves risking large sums of real money.

My advice is that if you want to farm, hire yourself out and LEARN about farming from the best operator you can get to take you on. Save your money and learn all you can for at least the next 3 full seasons. Remember, you need to learn not just about what goes on in the dirt, but what goes on in the office as well.

I'm not saying don't do it. I'm saying do it smart. In your current position, you don't know enough and you're not financially ready. That's a setup for a disaster. Learn, get experience, and if you decide to go for it, you then go in with your eyes wide open.

Grouse

Excellent post, my wife retired from USDA and was involved in farming and farm loans, I grew up farming and farmed part time with one of my brothers while in college. We have seen family farms lost, some sold at public auction on the courthouse steps and my father in law even bought one to help a friend out. We make more money renting our land out than we ever did farming.

Several times over the years we have kicked the idea around and even have some equipment, but it just didn't make financial sense for us.

Good luck whichever way you go.