Debt Free Farming and Ranching?

[CrashTestRanch]

Debt Free Farming and Ranching - By anokagrassland

What is your opinion?

Is it doable?

How about starting it off debt free?

What tax implications do you see? Increased/decreased?

[Patt]

I know lots of people who are, we didn't start that way but we are now.

[rancher1913]

how much money do you have to start with. are you going to work off farm full time to keep bills paid.

[Heritagefarm]

Debt free... I wish. *goes into a corner and cries*

[rambler]

It's a real good goal.

I'd say debt for the land is ok - long term asset.

Those first 5 years I donno how you really start out - lot of fertilizer, seed, machinery, buildings to deal with. Those will be paying you back over a decade or more, so - not sure where you get the cash cow to start.

But once you are up and running, it's good in 5 years or so to be aiming to be debt free.

Depends a bit on the scale of your opration - an acre or 30 of hobby farm, or 500-2000 acres of real farming, or something in between with garden marketing and a lot of labor & sales needed.

--->Paul

[geo in mi]

CrashTestRanch,

Don't know anything about ranching, but to farm, you will need:

1) Land
2) Water
3) Equipment and buildings
4) Startup capital--seed and input money
5) Labor
6) Time
7) Health
8) Knowledge
9) Market for your products
10)Favorable weather
11)Ability to eat and live while you are producing your product, without expending your capital(this is why so many businesses fail in the first year..90% if I remember correctly)

Now write your own personal resume to address these conditions.....

geo

[oneokie]

How many of the bells and whistles are you willing to do without?

Tax implications: without outside income, none. With outside income, show a profit every 3rd year, or lose the ag deductions.

[Shrek]

BISF no till truck patch farming on 5 to 10 acres is a good no debt farming option.

[FarmboyBill]

No debt. I wish, Goes inna same corner and crys. Actually alla the debt I got is the land. Everything on it is paid for,

[texican]

I don't think they really addressed the debt of purchasing a farm... more like dealing with non-farm debt. It's very hard to pay off a farm, if you have to buy it, and pay interest... a person is lucky if they can make enough profit to cover the interest.

One of my uncles is a full time farmer/rancher. He's bought several large tracts of land, on credit. He devotes almost every cent of profit he makes on cattle and hogs to making huge land payments. He paid off 250 acres in 10 years, selling cattle, hogs, and wild hogs.

I'm debt free... except for three more payments on my 'atv', a suzuki samurai. It's backed by a cd, so it's really paid already.

It is a sweet feeling knowing all I'm responsible for is property taxes each year.

[CrashTestRanch]

Originally Posted by rancher1913

how much money do you have to start with?

$0.00

Originally Posted by rancher1913

are you going to work off farm full time to keep bills paid.

Nope, everything is from the farm/ranch

Just keeping this interesting in this topic, as it expands I may share the nitty-gritty details, but for now I would like to see the OP questions answered

[CrashTestRanch]

Originally Posted by geo in mi

1) Land

85+ acres

Originally Posted by geo in mi

2) Water

Well and Zone 5b

Originally Posted by geo in mi

3) Equipment and buildings

Tractor w/ some implements, trailers, chainsaws, generators, construction equipment, tools, etc.

Originally Posted by geo in mi

4) Startup capital--seed and input money

Everything is owned outright. Have some money for seed.

Originally Posted by geo in mi

5) Labor

One man operation

Originally Posted by geo in mi

6) Time

If the good Lord is willing.

Originally Posted by geo in mi

7) Health

Decent shape.

Originally Posted by geo in mi

8) Knowledge

Can you expand this?

Originally Posted by geo in mi

9) Market for your products

Everyone has to eat, right?

Originally Posted by geo in mi

10)Favorable weather

Zone 5b, and God's in charge of that area, can't write that into a farm/ranch/business plan

Originally Posted by geo in mi

11)Ability to eat and live while you are producing your product, without expending your capital.

About 3+ years worth of food storage
A 30' RV for shelter (owned outright)



So, how's this look so far?

[pancho]

Like any other business. Start small, keep costs low, save every cent possible, invest all profits in the business, work long and hard.
It is possible but would take longer than most people would invest in.
Those who start any business like this are far more likely to remain in business.

[FarmboyBill]

CTR What are you hopeing to do, farm, ranch, or some of both. U have 85 acres. How much is gonna be crop land? What crops are you going to have? What livestock do u intend to keep? Will u have a cash crop beyond the crops raised and used for your livestock? How many acres will u be seeding, and in what crops? Do u have the money for ALL of the seed? Do u have money for All of the fertilizer. Do u have all the money for herbicide?

Beyond a tractor, and what hp is it, and what age? What impliments do you have, and what impliments do you need? Can you afford to purchast these impliments at least 2 months before needing to use them? Is all the equipment that you currantly own in running shape, or nearly thereabouts, without major money and time spent to make them so? Will you need another tractor? If so, can you purchase it at least a month before needing to use it?

If you are going to raise livestock, do u have hay storage? If you only have 85 acres, then you are not going to be able to afford to waste `15% of each round bale to rot from setting outside. Do you have a 1 ton truck, with stock trailer to buy and sell livestock with? If you are going to go with big round bales, do you have a GOOD running bailer, AND a tractor big enough to operate it. If you are going to go with small square bales, Do you have a GOOD bailer, and people enough to help you get it in the barn?

[rambler]

So, you have the land & a few implements paid for? If I understand your replies.

Now, what is the 85 acres suited for? Shallow ground, dry ground, rock layer ground, poor ground, tree covered ground?

Or rich fertile stuff?

One does well to get $100 an acre return on typical farm row crops - corn, beans, wheat, etc. That really doesn't cut it.

Farmer's market sales of garden stuff can return a lot of $$$ per acre, but requires a lot of labor - both growing & sales. _Lot_ of labor. You sure won't have an 85 acre garden on your own! And you need a market - larger city with good farmer's markets or the like. Can make a few $1000 per acre, but will be killing yourself to keep up with 5 acres on your own.....

Remember, insects, drought, or flood is going to hit you every 10 years or so. Gotta have a plan to get over those years.

Health care is a big deal. Can't afford your own insurance, you kinda like to have a real job to provide such benefits & seed money to get past the rough years.

Just some random thoughts.

Define what kind of farming you wish to be doing here, livestock, grains, garden greens?

--->Paul

[indianheadranch]

I thought this was interesting, does have some good ideas for those wanting to start,

http://agbiopubs.sdstate.edu/articles/EC922.pdf

[geo in mi]

Originally Posted by CrashTestRanch

85+ acres



Well and Zone 5b



Tractor w/ some implements, trailers, chainsaws, generators, construction equipment, tools, etc.



Everything is owned outright. Have some money for seed.



One man operation



If the good Lord is willing.




Decent shape.



Can you expand this?



Everyone has to eat, right?



Zone 5b, and God's in charge of that area, can't write that into a farm/ranch/business plan



About 3+ years worth of food storage
A 30' RV for shelter (owned outright)



So, how's this look so far?

85 acres of zone 5 land in Arizona may be quite different from Ohio or Illinois, but if you grow wheat, corn, or soybeans, here are some fairly basic things:Plug this site in and go to the markets section. Then put in your zip code to get your local market prices and locations.http://www.agriculture.com/

If you do not find these three for your area, then you will know there is no market there and you will not be able to grow them. Looking at ftp://ftp-fc.sc.egov.usda.gov/AZ/NRI..._by_county.pdf should give you some idea of the crops you can grow in your own county. I would guess that growing many of these will take specialized equipment, special knowledge, irrigation, and membership in a growers' co-operative to get a contract. In this area, grapes and apples are usually done by co-op contract(think Musselman, Lucky Leaf, Welch's and so forth)

As for water, you should study carefully the water rights for Arizona Here's a website for starter information: http://www.azwater.gov/AzDWR/WaterManagement/AMAs/ I think water and irrigation could be a showstopper for you, but you should study that situation very closely before committing.

A tractor and some implements may or may not be big enough or of the right kinds for the ag application you go into, but you might be able to use them for trading stock to get what you need.

Some things will take two men(or a woman), or hired labor.....Arizona?...Uh..... Applictions like laying plastic with a tractor and plant seedlings, potato seed pieces, etc. Hay baling of grasses( say for horses) are much easier with a stacker behind the baler, rather than picking it up from the ground....

Capital....if you don't want to go into debt, then you'll have to have an outlay of cash for your inputs before you start a crop--seeds, fertilzer, special supplies, soil ammendments. If you are going in for a loan, your lender will want a pretty good business plan, with collateral(your land and equipment)

Time....If you are raising dogs, ponies, horses, for fun rather than profit, then you'll have to subtract that time from field/farm time. Same for gardening, motorcycling, politics, socializing and girl friend(if applicable), TV, eating out, vacation, fishing, water skiing, Casino diving, Sunday football, NASCAR...

Health also means allowance for aging(maybe not a problem yet), and sunburn, broken bones, sprains, cuts, burns, so forth. Health also means nutrition and sleep--sometimes, if you are on a tight money budget and schedule, you may not eat or sleep right....

Knowledge. Of agronomy and soil conditions, fertilizer and pesticide usage(licensing required)--or if organic, knowledge of growing organic, and USDA ORGANIC rules and regs, how to grow your plant crop, how to harvest and when to harvest, diseases, weeds, and pests and how to combat them, welding, piping, and electrical, equipment repair, government regulations.

Everyone has to eat--right, but they are eating, now, and without you or your product. Think like a food wholesaler--shelf space in the retail grocery store is everything. You'll have to compete your way in......

Yes, God is in charge of the weather, but the state tracks it, and you will want to cooperate with the Plan, rather than go counter to it....http://azclimate.asu.edu/

Three years worth of stored food will either get you by until you gain enough success, or allow you to sell the RV if you go bust and have to look for a job

"So, how's this look so far?" I hope this gives you food for thought for something that is your own decision and responsibility. Hope this will help and encourage you in making it.

geo

[geo in mi]

OH, and I didn't even discuss livestock operation. That would be a whole 'nother thing.......
geo

[uncle Will in In.]

Debt free farming is the way to go. The only debt free farmers I've known personaly inherited the farm from their parents who had worked a lifetime to pay off the debt. Most of these people lived on the farm and kept it opperating the same as they grew up helping their parents with the farm work. The third generation most often think their dad and grandparents were skin flints who didn't really know how to go big time with the place. They mortgaged the home place and went at it like the "Big Boys". By the time the 4th generation is getting old enough to farm,, there is no family farm. Grandpa makes it. Dad lives off it, and grandson pours it down the drain.

If you have a million dollars in your pocket you can buy a farm large enough for a small family to live off the income. But youll need another half million to get equipment and a start in whatever livestock the farm would profit from raising. You'll still need 200,000 to put in the crops. Oh yes, you'll have to have some groceries, and medical insurance. Fire insurance, Auto and truck insurance. Basically one years living costs to keep you solvent until you can sell whatever you produce on the farm.
Starting out debt free would be a fairy tale.

[Terri]

Have you read Joel Sallatin's books? As an instructor once said, "Marketing, marketing, marketing!"!

Because, while everybody eats, most people buy food from people who are not you. If you want them to change this, you will need to have your ducks in a row. Salatine managed to do this and he explains how in his books. You can get the books from the library.

My husbands Uncle farmed without a loan: he had a few Mother cows and he supplied himself with most of what he needed off of his own land. As a young man with a mortgage he also had crops, but, I only knew him when he was in his 50's and older. He had a small truck that he took his calves to market in, and when prices dropped in the 1980's he also used his truck to haul plants for a nursery.