Farm to Market: Farm Real Estate Tips for Farm Owners
The United States is a versatile country, with plenty of room for different vocations. The USDA reports that there are 911 million acres in America. Farmers own about 61%, and ranchers rent or lease the remaining 39%. Other operators hold 8%, retired farmers 21 percent, and non-operating individuals get 10% of the share. Corporations make up only 2 percent, while trusts/partnerships account for 4% in total.
It’s not just the farmers who are benefiting from farmland investments. Non-farming investors have been snapping up small slices of this country’s agricultural land, and now those stakes too.
Why invest in farmland?
The primary reason behind many investors investing in farmlands is due to the long-standing history of solid returns. These returns come from increased land values and crop yield or cash rental earnings.
In the last 50 years, American farmland has been on an incredible rise. Not only is its value at an all-time high, but investors can expect a great return. Over this period, there were only five down years in which to invest, and even when unfortunate events occurred in the past, returns remained positive mainly because of cash rent yields. In 1991 alone, farmland produced 12% annual compound growth rates.
Tips for Farm Owners
Whether you’re a pro or just at the starting point, these tips will guide you to ensure that your farmland venture becomes a worthy investment.
1. Identify your niche
You may have a good idea of the products you want to grow, but without proper research, your investment will likely become a failure. For example, you finally decided to grow passion fruit in Florida, but you weren’t aware that the demand for this fruit is in Southern California. Everything you worked hard for will turn into waste only because you are not aware of where your target market is.
Make sure to do your market research. The way to get started in farming is by getting out there and learning more about your customers, distribution channels, as well as how you can start a farm. Even if you already know how to grow your products, knowing exactly who will buy them is equally important.
You can also consult your local extension. The extension service provides a localized resource for most aspects of gardening and small farming. For example, Oregon State University’s “Small Farms” portal allows you to learn more about crops that are grown in different areas as well as information on grains and livestock.
2. Find suitable farmland.
You can use different guides to find the perfect farmland based on your needs. Some people may choose to buy land and then lease it out, as the option of having complete control over its use with minimal financial risk is appealing. This way, they can continue farming while still making money off other ventures like selling produce or renting rooms in their homes.
3. Research for your funding options
In the event you are looking for financing options to start up your own farm business, Cornell University has a great guide. It will help walk you through different types of loans and how they can be used wisely when funding is limited or not available, where they provide guides on self-financing options.
If you are planning to do a loan, writing a business plan is essential. When you create a business plan, you can determine which of your ideas are feasible and remind yourself of what your goals are.
4. Market and sell your products
There are many ways to market your farm products, and while the most obvious option is probably running a farmers’ market, there are also other channels that you can utilize.
If you are located in an area where there is good traffic, you can consider opening up a produce stand or farm shop.
You can also sell your products through a CSA, in which patrons purchase shares of the season’s yield for set prices. The main reason for its popularity is that the farmer receives payment at the beginning of the season, which helps overcome the notorious cash-flow problems faced by most farms.
Partnering up with local growers and finding a cooperative that allows you to sell under one united brand could also be an option for those who want their own space in the market.
Finally, you can partner up with small local health and natural food stores and take advantage of their loyal customer bases.
If you’re looking for a long-term investment that can provide steady returns, then investing in farmland may be the perfect opportunity. These investments come with their own set of risks and rewards, but if you are able to manage your risk well enough, there is potential for high return rates over time. To learn more about how these investments work or which land developments might suit your needs best, don’t hesitate to reach out to the Midwest Farm & Land Co.