Tuesday, March 04, 2008

Buying the Farm

Owning a farm is harder than it seems. First there is the purchase of the land. In most areas this is prohibitive for most people looking to get into farming. One of the primary reasons for this is that most farms are being sold at developer prices. That is they are being sold as if they were being sold to developers, which should and will pay much higher prices for land than a farmer, especially new or beginning farmers can afford. Besides the land there are all the other parts that have to be purchased. To operate a fair family sized dairy, one that would be profitable enough to provide sufficient income to support the operations of the dairy, and produce a small profit to the farmers, would require more land and equipment than most farmers can afford. At prices like $1,000.00 to $2,500.00 or better an acre, the need for about 200 acres for a decent multi-discipline farm that includes a profitable dairy operation, would cost $300,000.00 alone for land, and that's bare land. Never mind the cost of a home (about $150,000.00), the cost of a dairy barn (parlor and milk house) (about $350,000.00), and the cost of other equipment and operational cost. The price of an operating farm (dairy) at about $1.2 million is fair and reasonable in most cases as building such a farm and getting the cattle up to the point where they are earning money takes two years, not counting any time that would be taken transitioning the farm to organic form if that is desirable. There is a premium on organic milk at this time, and for the foreseeable future, so this would be desirable, but it takes three years to certify the land and then another 18 months to transition the herds. This means the farmer would have to wait almost five years before they could begin to earn the premium price for their milk.