Buying A Small Farm __HOT__
1. WHY do you want to buy a farm? Are you interested in farming as your livelihood or just as a lifestyle? Might it be better for your farm enterprise to lease farmland instead of purchasing farmland? Though it might be a bit dated, this easy to read resource from ATTRA entitled Finding Land to Farm: Six Ways to Secure Farmland offers a quick overview.
buying a small farm
4. WHAT ARE YOUR FINANCIAL RESOURCES? What you could pay for a mortgage payment for the next 15 to 30 years! Remember that buying the land is only part of your farming dream and farm improvements such as a farmhouse, barns, and other infrastructure must also be considered as you budget your farming operation.
The National Young Farmers Coalition created a Finding Farmland Calculator that can help farm seekers explore methods to finance their farm purchase. Be sure to check out the videos series on this tool, beginning with Finding Farmland Calculator Walkthrough: Introduction.
Despite the work it took to land the property and receive the warranty deed in the mail, I have learned a tremendous amount about buying a small farm and in turn, it has helped in my work as a small farm extension agent. Many of the inquiries I receive are from people who are interested in buying a farm (or who already own one) and they do not have the knowledge necessary to make appropriate decisions. Now, I have experience and knowledge to draw on when I give advice. I was in the same boat as many new landowners when I started, but it was only because of due diligence that we were able to work out many of the hidden challenges that went along with buying a small farm. Here are some of the things I learned along the way.
Many real estate agents are knowledgeable only about city property and turnkey house buying, so find an agent who knows about farming and the details that are important like soil types and water rights. A good real estate agent will take the time to seek out critical information and guide you in decisions regarding zoning, easements and other complicated issues. Rural real estate is complex, so finding a good agent experienced in land purchasing is a necessary investment.
2. Proximity to MarketsHow close is the farm to your local markets and distribution channels? If you have to drive fifty miles before you reach your local farmers' market, is it worth the cost, energy and time associated with the distance? Are there other farms in your neighborhood that also have to make the commute?
3. Land History-Cultural and PhysicalWhat sort of people lived on the land and what are the stories associated with the buildings? For instance, our farm is the location of an old ghost town, an early stopping place for horse teams that found its place in our pasture and on our hills. See if you can find out about the previous land management practices. From a local neighbor, we learned the history of the water usage, flood irrigation, cattle and hay ground. As well, scratched into a cabinet door in the barn, we found an old recipe for mixing DDT-"good for lice and flies." The stories we inherit with the land influence the way we engage with it.
4. InfrastructureIs there a barn or other outbuildings on the property? Does the farm come with any equipment or fencing? It is important to know what your investment will be once you buy the place, i.e. will you have to fence the pastures or build a barn? Our farm came with fenced pastures, a barn, irrigation pumps and seasoned firewood. These are all assets to your new home and workplace.
5. Site EvaluationIf possible, visit the farm a couple of times while in escrow to evaluate the site for your farming purposes. Check the slopes on the land, which will in turn affect your management options. Does the farm have good sunlight exposure? Is the farm located in a high valley that has its own microclimate? What about flood zones? If you are thinking you want to grow fruits or vegetables, you'll want to know that you have solid ground with access to full sunlight for production of your crops.
8. Tax Status & ZoningWhat are your property taxes per year? What is the farm's zoning class? We ran into big problems on this front. According to local zoning laws, our farm is exclusive farm use, which means the farm falls into a special tax assessment program, which has us paying less property tax per year than other properties. This special tax, of course, is dependent upon active farming. Unfortunately, the previous landowner had stopped farming the property and the farm fell out of the tax program. We can reapply for the special tax assessment as long as we prove that we are farming the property once again. In general, it is tough to permanently lose the special farm tax status unless some drastic changes were to occur on your land. The lesson is to check in with your county tax assessor to see where you stand and know the limitations for development or use depending on your zoning status.
9. SoilsAccessing your soils information before closing on the farm is also a good idea. The NRCS web soil survey is available online and is very easy to use. You can type in the farm's site address and bring up an aerial map of the property. From there, you can view all sorts of information related to your soils including classification, type, drainage class, and yield data for various crops and livestock (hay, animal units per acre, vegetables, etc.). It is a tremendous resource and important to know what your soil limitations may be before buying your land. Also, if you are interested in organic production, it would be wise to test your soil for residues and other heavy metals that may inhibit your ability to grow organically. This can be expensive but worth the investment.
10. WaterIf you plan on farming, this is by far the most important resource to consider before you buy a farm. Water rights law is very complex and making sure you understand your rights and usage is extremely critical. Talk with the water master in your county. Read the water certificate and understand what it means in terms of usage of water and area allowed for irrigation. Know if you rights are currently valid and active. Landowners must irrigate at least once every five years in order to retain the validity of their rights. Also, what are the water sources on your property? Do you have an irrigation ditch and an association that manages the water? It is also important to know what year your rights date back to. Senior water rights always get the water first. Do you have ponds, creeks, or wells that you are legally able to irrigate from? Many landowners do not know that you can only irrigate up to a acre from your well for residential purposes only. Also, what is your drinking water source? If from a well, test your water for metals and other contaminants. Your water may be high in lead or arsenic and treatment may be necessary. By far, the most common problem in rural real estate transactions is when a buyer does not understand the complexity of water law.
Get a farm internship. Go to the NSAIS website and check its national list of internships; also check regional and state sustainable agriculture organization websites for additional opportunities. World Wide Opportunities on Organic Farms offers paid and unpaid apprenticeships on farms around the world.
Enroll in classes on sustainable farming, including the business aspects. These may be available through nonprofit regional or local sustainable agriculture organizations, through state extension and universities, or through private colleges.
Small and midsize producers provide new opportunities for American agriculture across the country. This page provides small and midsize producers valuable resources and program information about access to capital, land management and conservation practices, managing risk, finding local markets, and other educational resources.
USDA has made changes to the Farm Storage Facility Loan (FSFL) Program to help small and mid-sized fruit and vegetable producers access the program for cold storage and related equipment like wash and pack stations. Diversified and smaller fruit and vegetable producers, including CSAs, are now eligible for a waiver from the requirement that they carry crop insurance or NAP coverage when they apply for a FSFL loan. FSFL can also be used to finance hay barns and grain bins.
Funding for producers under the popular microloan program. USDA launched the Microloan Program to allow beginning, small and mid-sized farmers to access up to $35,000 in loans using a simplified application process. In November 2014, the loan limit expands to $50,000. Since their debut in 2013, USDA has issued more than 8,400 microloans, with seventy percent of these loans going to beginning farmers.
Cost share support is also available for farmers pursuing organic certification. Organic farming can integrate cultural, biological, and mechanical practices that foster cycling of resources, promote ecological balance, and conserve biodiversity. Not all small and mid-sized farmers are organic. However, USDA is ready to support those who are interested in the certification process.
USDA is developing tools to help small and mid-sized farmers and ranchers make sound financial decisions as they plan for their future including a whole farm insurance policy that will better meet the needs of highly-diversified producers, particularly small and mid-sized fruit and vegetable growers. Using new tools provided by the Farm Bill, USDA is working to reduce crop insurance costs for beginning farmers and ranchers. And organic producers will benefit from the elimination of a previously-required five percent surcharge on crop insurance premiums.
USDA's Farm to School Program has put seven new Farm to School Coordinators on the ground in regional offices to help build direct relationships between small and mid-sized producers and school districts. One priority area for Farm to School is creating more opportunities for small and mid-sized livestock and poultry producers. Since 2013, USDA has invested nearly $10 million in Farm to School grants that support schools as they purchase from local and regional sources. In the 2011-2012 school year alone, schools spent nearly $355 million on local and regional food purchases. 041b061a72