How to Start A Farm Business
In most countries, small farms are considered the backbone of the agricultural industry, with 97 percent of all U.S. farms being family-owned.
This is because your motivation for starting a farming business is the thing that will directly impact your strategy.
Starting, running and maintaining a farm business no doubt requires a lot of work to eventually make a heads way and here are some basic things to consider in the effective running a Farm business:
Get some real-world experience
For many modern-day farmers, especially those running large commercial farms in the Midwest, skills have been passed from generation to generation.
This isn’t the same for small startup farms. These farmers have had to acquire their skills in order to learn how to start farming, and they’ve either done so by apprenticing with other farmers, going to farm school, or doing some intense self-directed study.
If you are willing to put in the time, and learn the necessary farming and business skills to become the profitable small business farmer you know you could be, there’s good news. It’s doable!
Decide whether you’re starting a business or a hobby farm
If DIYing your farm learning experience is something, you’re more interested in, hobby farming could be a better fit for you, and there’s nothing wrong with that.
Hobby farming gives you the opportunity to experiment on a micro scale first.
For example, before you plant an acre worth of vegetables, plant a much smaller patch, and take the time to address and learn from problems as they arise.
After a while, you’ll have developed the skills you need in order to expand.
Identify your niche
Even if you know exactly what type of farm you want to start, diving head first into just doing it is never a good idea.
A lot of times, farmers run out of business within just one yield, you’re out of business and all because they didn’t know where their target market was located, or what their values were.
Don’t skip the market research phase
Learning to do market research is that step you really can’t skip, because while it certainly helps if you know what you want to grow, you’re still going to need to know who is going to buy your products, where you’re going to sell them, and how you’re going to do this, all while taking competitors into consideration.
Even if you know nothing about formal market research practices, you can do your own research by getting out to learn more about your customers, distribution channels, and about how to start a farm.
If you are already interested in a particular product, learn more about your local market. Check out farmers’ markets, meet other local producers, speak to customers as you shop. Better yet, survey farmers’ markets to see if any crops or products are under-represented.
Keep an eye on emerging market trends as well.
Find the right land
Once you’ve figured out what you’re going to farm, you’re going to need to decide whether to buy land or lease it.
If you buy land, you’ll have complete control over its use, but you will also assume financial risk for the success of your enterprise.
This is one of the major reasons leasing land is a popular option for many new farmers. It minimizes financial risk and requires reduced capital at the outset.
Research your funding options
Once your business takes off, you can buy the things that will make life easier. And even if you don’t have a lot of cash on hand at this later date, a bank will be more likely to give you a loan if they can see you are running a profitable operation.
For anyone seeking a loan, writing a business plan is going to be essential. This isn’t any different for an aspiring farm owner.
Even if you’re not seeking a loan, a business plan is a useful tool to help you figure out which of your ideas are feasible, and to remind you of your goals.
Market and sell your products
There are many different ways to market your farm products. While farmers’ markets are probably the most obvious example that comes to mind, there are a number of other channels you can use to market and sell your products.
If you have enough traffic nearby, you might find that a produce stand or farm shop right on your own property is a good option.
Another trending model is to sell your products through a CSA (which simply stands for “Community Support Agriculture”), in which patrons purchase a “share” of the season’s yield for a set price in exchange for regular deliveries of the products as they are ready.
This model is especially popular because you receive payment at the beginning of the season, which can help reverse the notorious cash-flow issues faced by most farm businesses.
You could even find a local growers’ cooperative that allows you to team up with other producers to sell your products under a united brand.
Finally, even though the age of the supermarket has made retail sales of farm goods more difficult, there are still plenty of small, local health and natural food stores with whom you could partner, with the advantage of their often fiercely loyal customer bases.