well if you want to be a grain farmer im not the guy to ask.
I know it takes 1,000 acres to support one person, or so im told. You can make less work, but 1,000 is comfortable. And really when it comes down to brass tacks, 1,000 acres isnt a lot of work, but it is a lot to purchase/rent.
You dont need to own all of the land, i dont know of any farmers that own all of their land. The 2,000 cow farm down the road runs 3,000 acres but owns about 700 of them.
If you want to get into dairy farming but your dad or close relative doesnt already have a dairy farm, good luck. Im not saying it cant be done, but if you ask many dairy farmers, accountants, and economists they will tell you that you cant start dairy farming just out of the blue. The problem with dairy farming is that its very capital oriented. Meaning you have to have a lot of "stuff". If you want to be a grain farmer you have a tractor or two, some tillage equipment, a combine and a shed. If your a dairy farmer youve gotta 100 times more than that and its not like the milk price is that good. Currently milk is at about $13.50/cwt. We're getting around $19cwt i believe but we milk jerseys so they produce less milk but its worth more money because of the solids, since 98% of milk gets made into cheese.
So as you can see, if you didnt already know, with farming you are always in big debt. I guess i should put it a different way, successful farms are always in big debt. But i suppose that too could differ on a persons ow personal opinion. However my point is that having money laying around is not a good thing, because you have to pay taxes on that money. This next part may not make any sense to a lot of people, but economically a successful farm runs at 30% profit, 70% debt. Actually you can go a touch lower too but most stay around 40% profit and 60% debt. Im still getting my mind around how that works but it does make sense. You can see why many farms expand constantly, because in order to stay in debt you have to keep buying things. But you cant just buy new tractors every year, they have to be smart things that make money directly or inderectly. I know some farmers who tried running their farms debt free, and many either went out of business or gave up on the idea. The main reason, taxes kill when you have no debt and millions of dollars worth of assets.
Make no mistake though, i do know many smaller farms that run debt free and stay the same size and are successful but they usually do specialized things for niche markets. Joe the farmer and his 50 cows typically arent going to support a family of four. Unless he farms with old super H internationals and milks his cows by hand.
Another thing to note too. If you want to get into any sort of farming short of a hobby farm with two cows, you need to learn about marketing. If you want to be a grain farmer learn grain marketing. If you want to be a beef farmer learn beef and grain marketing, if you want to be a dairy farmer, learn milk, grain and possibly beef.
If the terms Hedging, Puts, Calls, Short Hedge, Long Hedge, Futures, Options, Basis and contracts, sound like french to you, you need to take a marketing class.
Yes you can run a farm and just sell for cash, but they reason any farm gets really big, is by "Hedging The Market". By doing this you are taking big risks, but with big rewards if things go right, or a chapter 11 bankruptcy form on your counter. Its completely up to the farmer himself to decide how big of risk he wants to take.
Now all of this is probably scaring you away from farming. Its scary for me too and i know how it works, but im beginning to get the hang of it all. I dont like owing money. I hated owning $10,000 on my truck and to go into farming and owe millions is a task im not up for yet.
But make no mistake, anybody can be a farmer its just a lot of work. I know of many people who just started farms out of the blue. The farm i helped chop with was started by a couple who got married at 18 and had three kids right away and no they are very successful with a 900 cow farm, and their custom harvesting business, they were named National Outstanding Young Farmer of the year awhile back, which is actually how we know them, they are very good friends with my parents who were also named Narional outstanding young farmer of the year back in 98 i believe. Another farmer who was nominated for the national young farmer had no farm background and now milks about 1,500 cows. However he was an accountant before and knows all things money. he runs his debt-profit margin extrememly tight. Theres also a local kid whos now 25 and started his own jersey dairy out of the blue with 20 cows, hes now up to about 60 cows and doing alright for himself.
The bottom line is yes you can start a farm out of the blue, if you have a good banker and dont mind working from 6am-9pm everyday for the first few years.
Since theres only an elite few people who can accomplish this task, there are other options.
The best thing you can do is to get a job with a small local farmer whos getting older with children who aren't interested in the farm. Explain that you really want to learn a lot about farming and put in a lot of time and effort at his farm. Down the road if he would like to, you can work on a transition where things slowly transition into your hands until you are the owner. This way you dont have to go to the local bank and ask for a $2,000,000 loan.
I dont know what land goes for in your area but around here land is very expensive because it is some of the best in the state and in high demand.
