Buying a small farm – starting out

 “What can I do with my small farm?” is a question I’m regularly asked. My response is usually: Well, what would you like to do and what will your farm  allow you to do? If you are thinking of buying a small farm, you should always have a vision of how you would like your prospective farm to look.

You should also have an understanding of the livestock or enterprises that you would like or are capable of running. Purchasing a small farm and realising later that it won’t suit your needs due to its location, resources or climate can be a costly and disheartening mistake.

Things to consider before buying a small farm

Before you purchase a farm – but also if you already own one – it’s worthwhile to consider the following:

  • Farm resources (water, soil, climate, vegetation)
  • Goals for the farm (hobby or lifestyle, supplementary or sole income)
  • Farming skills and knowledge you and your family have (business, marketing, tolerance to risk)
  • Clearly assessing the farm’s physical resources as well as your skills and knowledge is important when deciding if this mix is capable of achieving your desired goals.

If the farm’s resources (water supply, soil type and location) are limiting and you haven’t purchased yet, keep looking. If you already own a farm, work  towards an upgrade and don’t make the same mistake twice – make sure you get exactly the farm you want the second time around, particularly if you are  looking for a reliable small farm income stream. It is important to be realistic. Farming is a tough game and being unrealistic about your level of farming  skills or your farm’s resources will only make it harder and less likely that you will achieve your desired goals. 

Farming as a hobby or lifestyle 
Small farms provide a great place for families to live and relocate to.

A small farm purchased as a lifestyle provides a family with a great farm experience without the farming pressures associated with relying on making a living from the land (e.g. fluctuating commodity prices, increasing inputs costs and extreme weather).

Many lifestyle farmers successfully achieve a self-sufficient lifestyle by producing their own food, energy and fuel. 

Similar to buying a small farm for a change of lifestyle, farming as a hobby is a recreational pursuit with no intention of making money. There is often an  overlap between lifestyle and hobby farmers. In both cases, income is derived from off-farm sources with no pressure to make money from the farm itself.  Both farming as a hobby and as a lifestyle can be easily achieved from a farm as small as 1 hectare (2.45 acres). A farm of this size can produce  vegetables, fruit, berries, nuts, and some meat along with the potential to sell excess produce.

Small farm income: Supplementary or sole income source
If the reason you decide to start farming is to provide supplementary or a full family income, then this is serious business. Setting up or running a small  farm should be approached like any other business: It requires thorough preparation and planning and you must be able to dedicate sufficient time and  money to the farm with the intention of making a profit. It is important to be realistic; in farming, there are more aspects than in most other businesses that  are out of your control – such as weather, markets and input costs – and that can adversely impact future earnings. 

Land prices of small and lifestyle farms are often disconnected from larger farming land. With farm returns averaging 1.5-2% per annum (excluding capital  gains) it is unrealistic (although not impossible) to expect your farm to generate enough money to pay for the land, let alone the house and other farm  improvements. The area of land needed to make an acceptable living from your small farm income will depend on the farm’s resources (irrigation, soils,  infrastructure), climate and enterprise type. For extensive grazing and grain production, a minimum area of 408 hectares (1000 acres) would be required  plus some supplementary income. In contrast, running an intensive farming enterprise that value adds and sells its product direct to consumers – such as  flowers, chickens and fruit – can be viable on a land area less than 10 hectares (25 acres).

Where to from here?
If you are looking at buying a small farm and are unsure about whether it suits your needs, we recommend you get one of our experienced farm consultants  to conduct a pre-purchase inspection.

About the author
The author Charlie Roberts is one of the FarmStyle Australia experts, he has a Bachelor of Farm Management and is currently also a Masters of Business Administration. He has worked for a number of agricultural companies in both New Zealand and Australia. He has a wealth of experience working with farmers in a range of environments.

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