How To Start Your Own Modern Farming Business
Farming has been a major part of American history, with 1935 being one of the most vibrant years for the industry. At the time, there were more people engaged in the business and about seven million farms. Fast forward to 2022, and there are about two million farms in the US. Despite what seems like a sharp fall in the industry, the sector contributes $1.055 trillion to the US economy. This significant amount indicates how lucrative the business can be. So, these guidelines may be useful if you’re looking to start a modern farming business.
Find your niche and research it
Farming is a broad name for the industry. With some research, you will find a host of sub-divisions and niches within the sector. Just like any other business, it is important to determine how different you want to be. This involves being unique and, more appropriately, finding your niche. It should also be based on your passion and the impact you wish to make.
First of all, you should be convinced about the type and how large you intend to grow your farm. Every size comes with its pros and cons. Usually, a small farm is defined as one that earns an annual gross income not exceeding $250,000. Therefore, anything above that figure is categorized as a big farm. As you take time to decide on your niche, how about conducting research into the sub-divisions that exist.
One area to consider is dairy farming. As of February 2020, there were 31,657 dairy farms in the United States. This number captures only the licensed dairy farms in the US. So, you can imagine the total number of unlicensed ones that were added. With that said, it is advisable to establish a modern dairy farm that is duly recognized by state and national laws. As long as you intend to set up a dairy farm to sell products to the market, the law requires that the right thing is done. Again, you will need specific milking equipment approved by the federal government. Moreover, all dairy farms are not the same. This sets the foundation for the multiple profitable systems used by different dairy farmers.
Crop farming is another lucrative venture. Growing fruits, vegetables, or grains can be rewarding if you stick to the standards. If crop farming is your thing, you will need to create a diversified list of farm products you can handle. According to research, most US farmers find sticking with one type of crop safer. This is common among large-scale farmers with corporate deals. On the contrary, diversifying the produce list may be best if you intend to start small crop farming.
Other types to consider are poultry farming, orchard or vineyard farms, and flower farms.
Develop a business model
Your farm business is not likely to take off without a business model. This is basically the plan for the successful operation of your farm. A business model also determines the groundwork for profit-making. In more practical terms, a business model is the multi-pronged analysis of your idea, from the customer base, type of farming, and relevant equipment to marketing, etc. A few categories that will determine your model are whether you will engage in share farming, custom farming, or leasing and renting.
Planning for the various functions of your farming business is crucial to your success as a commercial farmer. Experts say paying particular attention to operations, marketing, and finance sets you on the right path. More importantly, in plotting your business model, you will want to focus on whether you want to supply directly to consumers (B2C) or other businesses (B2B). That sets the groundwork for your modern farming business.
Secure the farmland and conduct research
When it comes to farming, you can either buy or lease the land. A tip worth knowing is that some established farmers keep some extra land they may be willing to lease or sell outright. Experts also say it is better to opt for a direct buy. This eliminates all potential inconveniences that renting agricultural land may present.
After securing your farmland, locating a facility that offers agriculture and crop protection research support is advisable. This way, you can ascertain the health condition of the soil you intend to start farming on. The last thing you want is to procure farmland only to realize that it has poor mineral composition. Something like that will increase the cost of farming because you will have to spend more on fertilizers and other soil additives to aid crop growth.
Plan out your production system
In planning your farm production system, experts say, do not forget to define your inputs, outputs, and agricultural methods to use. Note that the production system is an entire value chain that cannot be overlooked in a farming business. Furthermore, your production system will often be defined by your state. Regulations may vary slightly from state to state. The usda.gov website says agricultural production systems in the future will be largely influenced by how technologically-minded farm owners are. It will be in your best interest to factor in this element as you start your modern farming business.
Make relevant local connections
Networking as a way to grow is necessary for business, and farming is no different. So try to build connections with other farmers, especially those within your niche. Having relevant local connections in the farming sector can be beneficial as you plan to start yours. They become the crucial professional network you will rely on for their experience and expertise. It is in your best interest to reach out to local farmers to learn vital things about their operations and challenges.
Even better, they can provide insight into the local landscape relevant to your niche. For example, if you are venturing into crop farming, information about the soil quality in the area would be vital. Additionally, please do not overlook the importance of learning about weather patterns in the area and how they impact crops or livestock. You will be amazed at how established commercial farmers are willing to share their knowledge.
Agricultural service providers, extension agents, and suppliers are examples of people you should talk to. They will provide varied perspectives on subject areas you may not have considered on your own. Apart from establishing contact, it would be helpful to maintain these relationships for many years to come. That is how to build a strong and vibrant network within the agricultural community.
Think about the legalities of the farm business
Before your farming business starts to operate legally, it is vital to define the structure. This is needed for tax purposes. Whether it is a sole proprietorship, limited liability, partnership, corporation, or cooperative, you cannot commence operations without identifying with one. Each business structure type allows certain freedoms to some extent. For instance, in a limited liability structure, you get to protect personal assets against liabilities. However, this does not apply in the event that your farm business is sued for a wrongful act.
A sole proprietorship allows you full control of the farming business. In other words, profits and assets are under your personal management. On the other hand, you will be solely accountable for all debts and legal liabilities leveled against your business. Indeed, the size of the farm and the type of operations will determine the most suitable structure for you. Thankfully, on the USDA website, you will find detailed information on different licenses given to farms. No two federal licenses are the same, so it is better to access this digital platform to learn about the distinctions. Again, because there are variations based on the state you’re in, it is advisable to check the website of your local Department of Agriculture.
Secure funding
The US makes it possible for farmers to have options when they fail to obtain commercial credit from the bank. You can do this through the Farm Service Agency (FSA). However, this option is more favorable for family-sized farmers and ranchers. You can explore other avenues if you plan to start a large-scale farming business. There are conventional bank loans, the USDA, and other places to secure funding. When you opt for a conventional bank loan, you should be ready to present collateral. Some banks may use the farmland as collateral until you pay off the loan with interest.
Did you know that grants exist for people venturing into farming in the US? You may want to look up the USDA Agricultural Marketing Service for this. They are known to offer countless grants for existing farmers and those desiring to start. Unfortunately, the only downside is that these grants require several applications.
To conclude, farming can be very rewarding, especially financially. Indeed, it sounds like a lot of work to do, but in the end, you would have learned a lot of things relevant to your farming business. You would also be contributing to feeding the nation.