How to buy farmland: a definitive guide

guide to buying farmland

photo by werner22brigitte on pixabay

One of the hardest things to do as a farmer is get land. This is particularly the case if you are a young or new farmer. I mean let’s think about this. A farm is going to set you back somewhere in the $500,000 range depending on what type  of farm, and where it’s located. If you are a farmer in Canada there are some ways that you can get money for it, which I wrote about in the how to get money for a farm post.

However, this post is about buying land specifically.

Determine the location

Location is extremely important when it comes to farming. The place can decide whether you are a successful farmer or not. Location can mean the difference between being in the red, and being in the black. You get the idea. Location is important for a farmer. I am looking in the Kawartha Lakes region, which is Northeast of Toronto.

Your future piece of land can depend on what type of farming you want to do you, and how much you can afford. If you are in British Columbia, the price  considerably higher than in most provinces.

If you are a new farmer, you may want to look at areas that far from cities.

Determine usability of the land

One topic that came up a lot in my research is, “what are you going to use the land for?”

Depending on what you want to use your land for will decide what type of land you are going to buy. If you want to buy farmland that you are going to use for livestock, you are going to have different “must have” items than if you just want crops.

Let’s look at using land for livestock

When you want to have livestock there are two very important points to think about:

Fencing: After speaking to a couple of farmers, one of the points that they stressed was fencing. Fencing is important because you want to keep your animals contained. You are  liable if your livestock gets loose and causes an accident, so it is very important to look for good fencing when buying farmland. Also, the type of fence is important. Horses tend to chew on fencing, so having metal fencing might be better.

Barn type: The barn type that is on the land is going to make a huge difference. With horses you want a taller barn, for example. When the barn is in poor shape, you don’t want to put your livestock in it. Your livestock is your money, and you don’t want them to suffer because of the condition of the barn. Take this point into consideration when you are looking to buy farmland. Newer barns tend to drive the price of the property up.

Buying farmland for crop use

When you want to buy farmland for crops only, there are many things that you want to think about. By far the most important aspect to consider is, “will the farmland produce a good harvest?” This question is always on the minds of farmers. When land doesn’t produce, it puts farmers in a tight place.

I asked my sister in-law who is a young farmer, and one thing that she mentioned was, “how much money do you have to put into the land before you can make it profitable?”

Here’s what you need to consider:

 Soil types

Determining the soil type on the farmland you want to buy is important. Different soil types react in different ways, so you want to make sure you get the right kind for you.

There are three basic types of soil:

  • Loam: is a balance of all soil types. It is the ideal type of soil for most  farmers. It holds water well so your plants will get the nutrients they need.
  • Clay: holds the most water. Clay isn’t ideal for most farmers.
  • Sand: doesn’t hold any water. In many cases sand is mixed in with other soil types.  It isn’t ideal for farmers but you can make do with it.

These are just the basic types of soil and is in no way a complete list. It gives you an idea about what to look for.

Ideally,getting the soil tested is the only sure-fire way to find what exactly you have to work with. If you want to get your soil tested, go to a local soil expert. The idea type of soil that you want for most crop types is clay loam, which  is well structured topsoil that allows water to pass through it easily, and has lots of nutrients in it.

One thing to note is, your crop will depend on what type of soil you have.

To learn more about soil check out USDA website about soil health.

Drainage

Drainage is also very important when you are looking to buy farmland. One thing to note is that you want natural drainage because if you decide to get tile drainage down the line it is way cheaper.  You want to make sure that the piece of land that you are looking at has proper drainage, or you could be running into flooding problems. Farmland that already has a good irrigation system in place will make a big difference. If you are young farmer, it make not be possible to afford land that already has something like tile drainage. Tile drainage will drive up the price of the farmland.

For some more information about drainage check out the Drainage eReference tool by the Ontario Ministry of Agriculture, Food and Rural Affairs(OMAFRA).

Field history

Another aspect to consider when buying farmland is field history. This was an interesting point that Lyndsey Smith and Amanda Brodhagen mentioned.

Field history is important to know because you need to know what type of herbicides have been used there before. Also, you will also find out what types of crops were planted there as well. Some crops don’t work well together. If you plant one crop followed by another crop, what can happen is an increase the number of diseases or weeds.

Consider what crops were grown in the particular field you are looking at.

What do farmers say about buying farmland?

I talked to a few farmers in a Google hangout. I had Lori Furguson(@Aprilfuel) a farmer from Kawartha Lakes, Ontario. I also talked to Patricia (@milkmaid58) a dairy consultant in Iowa. I talked Amanda Brodhagen(@AmandaBrodhagen) who is the Assistant editor of www.farms.com, but wasn’t able to make the hangout herself.

I wanted to get their opinions about what to look for when buying farmland.

I asked them a couple of questions.

  1. As a farmer, what do you look for when looking to acquire farmland?
  2. What advice do you have for young farmers who want farmland?
I did ask them a couple other questions along the course of the conversation, but the above were my focus.

Here is what they had to say.

One thing to note is that when I talked about how much land costs in Amanda’s answer, I made an error. Some farmland in Ontario is going for  $10,000-15,000 an acre.

Don’t over extend yourself

One piece of advice that is particularly important is to have a financial plan. Multiple people expressed not to over extend yourself.. It is fine to have debt, but don’t over extend yourself. It will put you in a bad situation. If you are a new farmer, make your decisions carefully before taking on more debt.

Renting vs Buying

As a new farmer, you shouldn’t discount renting. Renting land can give you a foot in the door, and will give you more access to areas. The price of land varies a lot. As a rule of thumb, the better the land, the higher the price.

Other questions to consider

  • What is the tax rate?
  • What is the cost of the land in the area I want to buy in?
  • Can I afford the land if interest rates increase?
  • What is a good price for the land?
  • Is there a road that goes to the piece of property?
  • Is the land prone to disasters?

Conclusions

Buying farmland is serious business. You need to make sure that you check every aspect before you make a decision. Determining the site, the usability of the land, and asking fellow farmers about the land are key. Lastly, don’t over extend yourself financially.

Further reading for new farmers

Do you have any more information that you think needs adding?

 

Comments

  1. Hi thanks for the great resources! I am looking at the possibility of farming in the next 5 years once I’m done with some commitments. I was exploring the possibility of purchasing the land now and leasing it out till I’m ready. What are your thoughts and how do you recommend I do this?

    Thanks!

    • My suggestion would be to scout out a few areas. Find out what the latest and is like.

      From there I would find out what you can afford.

      If you want to rent out the land get to know the farmers in the area because you will be dealing with them. Also find out what the the normal rent per acre is.

      A lot of this comes down to knowing the farmers in the area.

      Let me know your thoughts.

  2. New Farm Entrepreneur says:

    I want to be a farmer/rancher is it possible to do it full time instead of picking up a job as well to pay off loans, bills and rent? (If buying and renting land?) Or even just buying and farming 500 acres or less. (Talking cattle here) Also do you have any information on Cattle farming? Beef and Milk?

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