How do I calculate the cost of starting a farm?
To estimate the cost of starting a farm, the following factors should be considered:
- Price of land,
- Geographical location,
- Cost of equipment and,
- All other running costs.
How much does it cost to acquire farmland?
Land is the fundamental resource you need when starting your farm. You can either rent and make it an input cost every year or you can purchase one with your capital or mortgage it. It is difficult to estimate the specific fee for a piece of land and the size of land required to establish a farm. To get a price you will need to investigate prices of land in the location you have chosen. In the US, the average annual rent per acre ranges between $150 to $350, while purchasing land costs between $5,000 to 10,000 per acre. Therefore, the size of your farmland will determine the total cost required to acquire land.
NOTE: The costs of any buildings such as barns, silos, etc., that you will need on your farmland should also be estimated.
How much does acquiring farm equipment cost?
Typically, farmers with a lot of experience buy too much unnecessary equipment. Equipment can be awfully expensive, therefore, you have an option to either buy, rent, purchase used equipment, or hire a contractor with specialized equipment as needed (it saves money in the over time). You should note when considering buying a piece of used equipment, that it may require more frequent maintenance and repair, therefore, ensure you budget a higher maintenance cost.
What are the other running costs?
In your yearly operating budget, you should consider the following costs:
- Insurance,
- Electricity,
- Vehicle Costs,
- Maintenance,
- Depreciation,
- Property Taxes,
- Dues, and
- Professional Education
Other direct costs to include are animals, feed, fuel, seeds, fertilizers, insecticide, growing equipment and wages for any labor you hire. Starting a farm might be a bit overwhelming, but it is worth it in the long run if you research, plan and budget properly, you can make your farming experience a beautiful success story. Contact our team at QT Business Solutions to learn more about how we can help you cover the costs of starting your farm.
