Be it farming or any other business, it is important to know about the capital that needs to be invested in it.
Estimating the cost to start a farm differs depending on the type of farm and the scale of operation.
For starting a farm, you need to keep into consideration several variables that can increase or decrease the starting cost.
It is not easy to get into farming and requires a huge investment. A multitude of factors should be considered when starting a small or large-scale farm. Learn the difference between farm and ranch.
Besides capital, a farm owner has to incur running costs as well because the business would not be profitable right away.
Cost of Starting A Small Farm
The capital or the starting cost required to start a small farm is more or less $600-$10000. Location, type of equipment, farm size, type of labor required, crop and livestock a farmer intends to keep, and other variables affect the aforementioned estimated starting cost.
Adequate investigation and proper forecasting are required to make this endeavor profitable.
Firstly, it is important to decide what kind of farming you want to get into; grain farming or homesteading.
So, to give you a better understanding and know what to expect financially, let’s break down the start-up cost further.
For livestock or agricultural farming, a farmer needs to purchase or rent farmland. The size of the property determines the cost of acquiring farmland.
If you are purchasing the land the prices range between $5000 to $10000 per acre whereas the annual rental would be about $150 to $350 per acre.
Farm equipment can be extremely expensive, however, you may not need many tools for small farms.
It usually includes a shovel, bed rake, digging fork, stirrup hoe, standard rake, farm jack, wood chippers, farm hats, wheelbarrow, chainsaw, containers, farming gloves, and others. Set aside $700-$1000 for purchasing necessary equipment.
Getting farm machinery costs a fortune and it is not a good idea to invest in heavy machinery just when you are starting out.
You would have to employ manual labor or use rental machinery that may cost about $1000.
For livestock farming, expect higher initial costs. For instance, a dairy farmer would be paying about $2000 per cow, so even a small herd of 100 cows would cost about $100000.
Seed, Soil Preparation, and Water
Normally, you can plant 12000 to 34000 plants per acre. Pay about $400 to purchase seeds for 80000 plants. Soil testing and preparation expenses also add to the initial cost.
If the soil lacks essential nutrients, buying fertilizer to treat the deficiency also costs hundreds of dollars.
Water is an ongoing cost that gets pricey quickly. The cost of installation of a drip irrigation system is approximately 1000$/acre.
Yearly operating costs include insurance, electricity, vehicle costs, maintenance, depreciation, property taxes, and dues.
A farmer will also be expected to pay other direct costs such as animals, feed, fuel, fertilizers, insecticide, growing equipment, and wages. These expenses may cost thousands of dollars annually.
Cost of Starting a Large Farm
The cost of starting a large, commercial farm requires a huge investment, not affordable for small farmers. It takes close to one million dollars to start a farm.
A farmer would need more acres of land and advanced pieces of equipment for meaningful turnover.
For larger farms, it takes about 500 to 1500 acres of land. The land acquired for these farms is of high quality, therefore, has a higher purchase price or rental rate.
When purchasing, it costs millions of dollars, or else pay the hefty annual rental.
Machinery required for larger farm operations include tractor plus accessories ($125,000), all-terrain vehicles ($10,000), Grain truck ($60,000), Sprayer ($35,000), Grain drill ($40,000) Field cultivator ($25,000) Planter ( $75,000), and Miscellaneous Tools ($15000). These are estimated machinery costs, the actual cost may vary.
Set aside an amount for monthly, quarterly, and yearly expenses. When planning a budget, take into account unexpected expenses and catastrophic events.
Factors Affecting the Starting Cost of Farms
The aforementioned costs are not finalized and vary depending on the country and the market. Some other factors can also impact the starting cost of a farm.
- Costs vary depending on the country and state you are living in.
- The size of the farm and the scale of the operation can increase or decrease the initial and running cost. The smaller the farm, the lesser the capital required.
- The type of equipment and machinery needed for the farm is the determining factor when it comes to start-up costs
Opening a farming business requires huge investment, therefore, after proper research and forecasting, if you have decided to go for it, these aforementioned estimated costs will help you plan a budget.