Tag Archives: ranching

Tradition vs Innovation Paradox

Another great blog from Ranch Management Consultants (Ranching for Profit).  If what you are doing regularly is only a tradition – start questioning why you continue and if the practice is still effective for today’s economy, whether for your home or business.

sunset cowboyAgriculture is steeped in tradition. These traditions serve as a source of pride and continuity which help make us who we are in agriculture. However, these same traditions create a paradox of sorts when it comes to managing the business of ranching. Balancing respect for traditions and fostering innovation can be tricky to navigate. Another complicating factor in ranching is that business leadership is often slower to transition than most. Generally this is because the decision making is in the hands of a generation that would have retired 10-20 years ago in any other industry. This generation is often making decisions from a place of risk minimization … rightly so from their perspective. However, when Junior is wanting to expand the business to support a growing family this can pit two very different business strategies against each other which often creates conflict on the family ranch.

I think there are some traditions on a ranch that need to be challenged to position the ranch to be successful in the coming decades. Each operation will need to find its own balance between tradition and innovation. Having clear goals will help determine the appropriate balance of risk management and growth strategy for the business.

Below is a short list of common ranch traditions that I suggest you look at and examine why you are doing what you are doing, then put some numbers to what it might look like if you did things differently. I’m certainly not suggesting everyone must change these traditions but have a discussion with your team about the pros and cons of staying the same or changing.

  • Grazing management
    I see far too many ranches where tradition determines the grazing plan rather than good planning. Effective grazing management is one of the most powerful economic levers you can pull. Does each pasture get adequate rest for plant recovery after every grazing? Are your animals in a pasture long enough to allow a second bite? I have never visited a ranch that couldn’t improve their grazing which would allow the ranch to increase carrying capacity, often as much as doubling historic stocking rates, while still improving the condition of the land. Often the driving force for not improving grazing practices involve hanging on to old traditions. Many equate better grazing with more fences or more work. Neither of these must be true.
  • Needing lots of stuff to ranch
    Here is an interesting thought experiment. Make a list of every piece of equipment on the ranch and what it would be worth if sold today. Total up the dollars and now pretend you have that money as cash in your hand and you have no equipment. Paint a picture in your mind of the type of business you want to build. Now, ask the question, “How would we best deploy the capital we now have to create the business we want?” Would you spend it all or save some for a cushion? When times are good on the ranch, we often fall into the trap of upgrading tools that make our lives easier. It is very difficult to go backwards in creature comforts once we step forward. However, from the numbers I’ve seen it is the rare piece of equipment that creates more cash flow than it costs in depreciation and repairs. Tradition might lead us to believe that we need all this stuff to ranch, but economics might be telling us that all this stuff is part of what makes ranching so financially difficult.
  • We should be running cows
    But we have always run cows! What is the purpose of your ranch? Is it to create opportunities for owners to do the things they enjoy or is it to create cash flow and profit to support the owners and provide opportunities for others? Might these two things be in contrast? I’m not saying you can’t run cows and be profitable, but often I observe ranchers who see no other alternative to the current enterprise structure on the ranch. I also don’t believe it is a problem if ownership sees the ranch as a place to allow them to do the things they enjoy – such as running cows. I do see a conflict when the ranch isn’t creating the outcomes required and people are unwilling to look beyond traditional enterprises. Might it be that the ranch could be an even more enjoyable place if it were highly profitable?

Following that line of thought, what other traditions should be challenged on your ranch? Which traditions must be held on to? There are some traditions that are core to who we are, let’s be sure we don’t jeopardize those in pursuit of profit. Balancing the paradox of tradition and innovation is part of what makes this business so interesting.

Watching Grass Grow

Thank you to all of you who take the time to ‘like’ or read or view my blog postings.  Goodness knows, some of them are pretty specific to ranching and farming, but since we all eat then, perhaps in a small way, nearly all of them relate to all of us – so, just maybe not really interesting.  These videos are great illustrations of why growing grass, then properly managing it for optimum animal, soil, forage, water, and ultimately human health is so important.  If you are into the carbon credit, carbon sink, carbon sequestration thing, this is the heart of the matter.  So, here we go…..!  Thanks to On Pasture for finding and sharing great information.

Let’s Watch Grass Grow!

By   /  January 20, 2020  /  1 Comment

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You know how we always tell you that leaving more leaves of grass results in quicker recovery, and quicker recovery means more forage for your livestock?  If you’d like to see that in action, here some videos you’ll like.

This first video is a comparison of the difference in response between Orchard grass continuously grazed to about 1″ height and rotationally grazed Orchard grass left at 3.5 inches tall. It’s taken over a 5 day period.

Here’s the last picture in the series to give you a closer look:

This second video does the same comparison with tall fescue. The grass on the left was grazed continuously to 1″. The grass on the right was rotationally grazed to 3.5 inches.

Again, here’s the final picture in the time-lapse:

It’s also interesting to compare the responses of different grasses. This last video compares Orchard grass on the left to fescue on the right. Both were “grazed” to 3.5 inches once a month. The video takes place over 7 days.

Here’s the last picture from this time-lapse series:

What kind of ideas do these videos give you?

Of course, time of year that grazing occurs and the amount of rest between grazings all factor in to the complex task a grazier has of managing stock. For more, check out this two-part series from Dave Pratt about grazing heights, rest and recovery times, and seasonality.

This picture links to an article by Dave Pratt talking about why it is one of the most important words in a grazier’s vocabulary if you want to build capacity on your farm or ranch.

This week he applies his principle of “leaving more leaves” to show how this works as forages change through the growing season.

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ABOUT THE AUTHOR

Publisher, Editor and Author

Kathy worked with the Bureau of Land Management for 12 years before founding Livestock for Landscapes in 2004. Her twelve years at the agency allowed her to pursue her goal of helping communities find ways to live profitably AND sustainably in their environment. She has been researching and working with livestock as a land management tool for over a decade. When she’s not helping farmers, ranchers and land managers on-site, she writes articles, and books, and edits videos to help others turn their livestock into landscape managers.

1 COMMENT

  1. CURT GESCH says:

    The photo time lapse sequence is great: clear and convincing (if we needed any convincing). It’s also something we could do at home in pots, but maybe better than that in a field with a rest for a stationery camera. I would like to see 1″ versus 6″ on Orchard grass. Maybe I’ll try to set it up?

 

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Mob stocked paddocks with heavy utilization followed by a long rest.  Proven practice that builds soil, forage diversity, healthy livestock diet, deep roots providing protection against soil erosion of all types.  View of Fundo Panguilemu.
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Proper land management results in this sward!  My camera does not do justice to the beautiful example coaxed by Jose and Elizabeth, (owners of Fundo Panguilemu), with the use of their cattle and sheep.  Contact Jose in Chile to help develop your plan or in the States, Jim Gerrish, American Grazinglands Services, LLC
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This kind of grazing management (short duration mobbing, long rest period) is what creates magnificent sward of healthy soil and forage.  Thanks to Elizabeth Barkla de Gortazar for this illustrative photo.
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No bare soil here!
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A luscious sward for beauty and health.

Waiting

Whilst waiting for my next flight out of Santiago and no internet the next couple of days, i’ll post a quick blog that is a reminder that farming and ranching is not the glamorous career choice some think.  Now, my photos are tiny inconveniences.

 

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Scooping out a water tank that filled with mud

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170 cows with calves can make a quick mess even on top of the hill after only a 2 inch rain when there is frost in the ground.
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The cows rolled a small bit of hay over the fence and smashed it – Unfortunately, one of these posts broke at ground level, so i had to replace it.
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But with a viewshed like this…..
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And evening sunsets like this….. i have no reason to complain.

Cheers!

tauna

RMC’S Sustainable Management

You  may not agree with every precept promoted by Ranch Management Consultants (Ranching for Profit) or those of any expert in the ranch/farm management or sustainable/regenerative camp, but fundamental thoughts work for nearly any endeavor.

RMC’s Ten Fundamental Truths of Sustainable Ranching

  1. TRANSFORMING your business BEGINS WITH TRANSFORMING yourself

    Transforming your ranch into an effective business involves changes in land management, animal husbandry, money management and in the way you interact with the people in your business. But the biggest change isn’t to the land or the animals. The biggest change is in you.

     

  2. IT ISN’T SUSTAINABLE if it isn’t  PROFITABLE

    Profit is to business as breathing is to life. A ranch that doesn’t produce an economic profit isn’t a business. It’s a hobby … an expensive hobby.

     

  3. FOCUS ON effectiveness NOT EFFICIENCY

    Efficiency and effectiveness are not the same thing. It doesn’t do any good to do things right if you are doing the wrong things! If something is efficient, but not effective, stop it immediately!

     

  4. GET IN SYNCH with nature

    Most ranch businesses are structured to fight nature. That’s expensive and exhausting. Businesses that match enterprises and production schedules to nature’s cycles are more profitable, less work and more fun!

     

  5. YOU DON’T GET harmony WHEN EVERYONE SINGS THE SAME NOTE

    In any business, especially family businesses, there are bound to be differences of opinion. Our decisions are improved when we bring different perspectives and ideas to the table and engage in constructive debate, as long as we agree that, at the end of the day, we all ride for the brand.

     

  6. WORK LESS and  make more

    Unsustainable effort is unsustainable. Period! Planning is the key to simplifying enterprises, increasing profit and reducing labor.

     

  7. RANCHING is a business

    We often act as though we have a choice between ranching as a lifestyle or a business. The lifestyle of ranching improves when the ranch is a successful business first.

     

  8. WORK ON YOUR BUSINESS two mornings a week

    It’s not enough to work IN your business, you must work ON your business.

     

  9. WEALTHY on the balance sheet & BROKE AT THE BANK

    The misallocation of capital is the biggest financial problem in ranching. At the Ranching For Profit School you’ll learn how to capitalize and concessionize assets to increase profit and improve the financial health of your business.

     

  10. RANCHING FOR PROFIT is NOT an oxymoron

    Many ranchers seem to think that profit is dictated by prices and weather…two things beyond our direct control. Ranching for Profit graduates prove every year that the key to profit is management.

    Blessing!

    tauna

Top 5 Business Management Actions on the Farm/Ranch

This reblogged from Ranch Management Consultants.

Top 5 Business Management Actions on the Farm/Ranch

by Dallas Mount

As we wrap up 2019, I want to share with you what comes to the top of my mind as actions that farms and ranches take when they are serious about their business management. If you are hitting the mark on these, well done! If not, then what will your strategy be to improve in 2020?

1.Effective Communication –
Have regular WITB (operational) meetings and WOTB (strategic) meetings. For WITB they should be brief, focused and end with something written down in a visible spot, listing who is doing what by when. For WOTB meetings they need to be focused with limited distractions, allow for creative thought, be inclusive and also end with an action plan.

2.Clear Roles and Accountability –
Are all the roles of your business being filled? Is ownership clearly setting the mission and vision? Is management developing plans that include strategies with contingencies and communicating those to everybody? Is labor effectively balancing all the duties and working with the end in mind? Most farms and ranches are owned and labored while few are effectively managed.

3.Plans Developed and Communicated –
Does your business have the following plans written down:
Economic plan showing the projected profit for the coming year.
Financial plan which shows the projected cash flow for the coming year.
Grazing plan that shows where the animals will be, for how long, planned rest periods and planned stocking rate.
Disaster plan for drought, fire, blizzards, or floods.
Organization structure listing who is responsible for each aspect of the business.

4.Professional Development – What is the plan for the coming year? What areas does the business need training in? Each key person should develop their own professional development plan for the coming year and get buy-in from the business leadership.

5.Healthy Balance of Work and Life – If you are spending all your time putting out fires in the business something has to change. Sure, we all go through periods of super-human effort, but if this is the norm it isn’t sustainable. If you want different results, you must take different actions.

From all of us at RMC, thank you for your support over this past year. We are so blessed to get to work with some of the best people in the world who are taking care of God’s creation and feeding the people.

Best wishes for a joyful and prosperous 2020!

 

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Ranching in the Future

Here’s an excellent article explaining the impossibility of entry level ranchers and farmers.  Unless land and agriculture prices come to a reckoning, land will be owned by the wealthy and worked by those with a passion for land management.  We are headed that way culturally rapidly given the advanced age of current land owners.  With few heirs waiting to farm or ranch, the land will sell to the highest bidder far above its production value.

Shalom!

tauna

Ranching in the Future – What Should Young Ranchers Expect?

By   /  January 7, 2019  /  4 Comments

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I recently received a note from a young friend (let’s call her Peggy Sue) who desperately wants to be a rancher. Since her childhood she has dreamed of working with animals. She has learned about marketing and economics. She’s studied hard and become a competent grazier. She’s done some hard work. But she’s getting a little impatient.

“So, I’ve been looking at real estate ads all over the country, studying up on productivity of land in different places, trying to look up how many acres per cow it takes and how much each acre costs, and I just can’t figure this thing out. How are people doing it? I mean, how are people able to buy a ranch and pay for it by raising cattle?”

My immediate answer was not what she had been hoping for:

“I don’t know of anyone in America who is buying a ranch and paying for it by running cattle. This doesn’t mean you can never be a rancher—you can be. But going forward, you will only be successful as a rancher if you accept the realities of the current world. You must be able to adopt a definition of ranch and rancher that fits in the economic universe in which you currently live. And guess what? This is true for every other new rancher, too.”

Sorry, Peggy Sue.

Past, Present and Future Ranching Models

Both my wife’s and my own family trees are well stocked with hopeful people who put together ranching operations 100 or more years ago. First was homesteading, and later on there was picking up the pieces from other folks whose homesteads had failed. There was hard work and sacrifice. Fundamentally, the ranches of 100 years ago were founded on using land to grow grass and cattle. Land values were tied intimately to productive value of the land and the then-current values of the cattle market. And so, our ancestors built successful ranches.

Those days are over. The conditions under which our ancestors operated no longer exist.

Today, properties do not become available through homesteading or abandonment, and in general, ranch land prices have very little relationship to productive value. Other influences such as hunting and fishing, scenic view, and privacy are the determining factors in land price. The model described above: working hard to build functional ranches by acquiring and paying for land with cattle, is apparently not possible in today’s world.

In our own little valley, even though there is virtually no influence by hunting or fishing values or high mountain views, the value of land has now risen to the point where pastureland prices are clearly irrational. Turns out, there are plenty of people with plenty of money who just want to live in the country, and they will pay whatever it takes. In the 1980s, I told Ranching for Profit guru Stan Parsons that my chief concern with becoming a rancher was that land in my area was selling for $5,000 per cow unit. Currently, that value is more like $20,000. At $20,000, the land overhead PITI (Principle, Interest, Taxes, Insurance) is something like $2,000 per cow per year.

It should be mathematically obvious that the current land value situation absolutely precludes the possibility of becoming a rancher, if you think ranching has to look like it did 100 years ago.

So, is it possible for my young friend to become a rancher? Absolutely. But that will require her to accept a different definition of what ranching looks like and of what being a rancher means.

Going Forward: Ranchers of the Future

A principle of motion discovered by Sir Isaac Newton over 300 years ago applies directly here, I think:

I believe the trends that we have witnessed in ranching over the past 100 years or so will likely continue. These trends will determine what ranching will look like going forward, and the possibilities for present and future ranchers.

Here are some current trends to consider:

Land Prices

I believe the price of land will continue to escalate and will have less and less relationship to productive value. This means new ranchers will need to seek models that do not include “buying a ranch and paying for it with cattle.”

Other Input Costs

The cost of oil, iron, processed feed, and other inputs will continue to advance relative to the value of traditional ranch products. Future ranchers need to design models that place less emphasis on these things.

Technology

Our industry has become highly dependent upon technology. Whether this is a good thing or not is hard for me to tease out. That said, ranches of the future will surely include more technology. Ranchers of the future should build business models that take advantage of new technologies. This is certainly critical for businesses that involve direct marketing.

Societal/Political Change

There has been sweeping change in the relationship between urban and rural populations. Our urban neighbors are ever more interested in ecological issues, animal welfare, food safety, transportation, and on and on. Going forward, this trend will result in a higher degree of regulation of ranching activities on all fronts. Young ranchers should plan accordingly.

Diversity of Products and Services

Increasingly, ranches have become more and more involved in producing things beyond just meat on the hoof. Young ranchers of the future should consider business models that include providing even more diverse products and services. Growing hamburger is a low margin enterprise. Providing sites for weddings, hunting, vacations, etc. can be very high-margin enterprises. Like it or not, this may be what opportunity looks like in the future.

The Decline of the Rugged Individual

It seems to me that image of the rancher as a rugged, independent operator has always been a bit overblown. My great grandparents (and every generation since) were highly dependent on cooperation for survival. Going forward, I believe ranching will look more and more like other industries, with intensely complicated, inter-dependent systems of producers, suppliers, marketers and customers. Ranches will offer a wider and wider range of services, and they will serve a wider range of customers. No ranch will be an island unto itself.

(The exception to this will be the ranches that are owned outright by folks who have un-limited assets, and so, can do anything they want. These may be ranches, but I question whether they are Ranch Businesses.)

The Big Question: To Own, or Not to Own

Oregon author William Kittredge wrote a fine biography called “Owning it All”, a story about growing up in the big ranch country of the American West. I think young ranchers should consider exactly the opposite course: Owning almost nothing. And here’s some of what that might look like:

Owning portable fencing, corrals, and water equipment. Renting or leasing grass that land owners don’t want or don’t know how to manage. Same goes for livestock. Selling your expertise and skills as a grass and property manager. Becoming expert in managing the accessory enterprises that ranches will contain in the future: tourism, education, entertainment, recreation, sport, etc. Note: be sure to make enough profit to fund your own retirement, as you will not be accumulating any real estate.

Decisions, Decisions.

I could be wrong about all of the predictions above. Maybe land costs will magically revert to align with productive value. Maybe young ranchers will be able to enter the industry, buy some land and livestock and make out just fine. Maybe. But I doubt it. I think young ranchers would be well advised to conjure up a business plan that includes the parameters and limitations we now operate under, and think carefully about what the future might look like.

Best wishes to Peggy Sue in the coming year. Oh, and to the ranchers of the next 100 years, too!

Happy Grazing, Happy New Year, and a Happy Future

John Marble

Stay tuned for future articles with examples of how young farmers and ranchers are building their businesses.

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  • Published: 2 weeks ago on January 7, 2019
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  • Last Modified: January 7, 2019 @ 8:40 am
  • Filed Under: Money Matters

ABOUT THE AUTHOR

John Marble grew up on a terribly conventional ranch with a large family where each kid had their own tractor. Surviving that, he now owns a small grazing and marketing operation that focuses on producing value through managed grazing. He oversees a diverse ranching operation, renting and owning cattle and grasslands while managing timber, wildlife habitat and human relationships. His multi-species approach includes meat goats, pointing dogs and barn cats. He has a life-long interest in ecology, trying to understand how plants, animals, soils and humans fit together. John spends his late-night hours working on fiction, writing about worlds much less strange than this one.

Too Many Farmers & Ranchers?

In these slow times made so by inclement weather (snow, cold, ice, wind, mud, rain), my energy level increases because i’m not working as physically hard.  These past couple years, too, i’ve begun going to our local YMCA at 5am to walk and lift weights for a couple hours.  All this contributes to a restless feeling that i’m not accomplishing all that i can.  My children, now grown, are good at reeling in my ambition and crazy ideas a bit, which is good because i have a natural tendency to get too many irons in the fire.

However, the perspective of age has tempered and honed those expansive ideas as either increasing work or increasing investment.  The latter is much more attractive to me now as my physical strength wanes.

All that shared to relate an irony of agriculture in the United States.  Although, some would cry ‘save the family farm’ few actually have a real look at what the family farm is.  Are we dooming the modern family farm by idolizing the farms of the past?  or those small holdings in distant lands?  The reality is that farming/ranching has never been financial lucrative in the sense of ‘getting rich.’  Margins are slim, startup is pretty much insurmountable now, and i never thought i’d say it out loud, but i fear there are too many farmers/ranchers in the United States.  That is to say, that despite the average age of farmers is 58 or 59, farming of the agrarian sort (actually farming/ranching – not some related field) is more competitive than ever!  Outside investors and to an even greater degree, neighbouring prudent and successful farmers with disposable income bid up land to amounts beyond production value which keeps new farmers from entering.  Oh, yes, i know that mantra is that you don’t have to own land to start in farming, that is absolutely true, but at least here in north Missouri, you’ll be hard pressed to find anything to rent – pasture or crop land.  And, to be honest, most of the land in our county is not crop land, yet it’s been under the plough for decades and much has washed down the creek.

How did this happen?  Technology, bigger and better equipment, government support programs, and the never ending pressure to produce food cheaply.  All these contribute to fewer farmers necessary to farm the massive number of acres to produce crops with slimmer and slimmer profit margins.  Often, the only profit is the check collected from the federal government (you, the taxpayer).  But don’t blame the producer!  It’s just our system.

For some time now, interest rates on saved income has been lower than the inflation rate, resulting in outside investors hoping to get some return on their money, whereas farmers buy land to spread out the equipment costs.  Consider that for a row cropper here, land to purchase (it’s a rarity to find) will cost upwards of $4000/acre. (a small parcel just sold in the county next to us for $8000/acre!)

Thank A Farmer Kitchen Farms wheat harvest in Missouri by Finney Aerial Photo

There are a few farms asking less than that, but most are worn out (soil loss, erosion, and fertility may take decades of proper farming/ranching to reverse or restore) and should never have been cropped in the first place (steep slope, poor production indicators, etc).  Yet, the asking price is out of reach for anyone wanting to raise livestock.  One such farm near me would take at least $400/acre up front cost to restore it to even marginal pasture.  Add that to the asking price, and already it’s over $3500/acre! (Racks & Tracks listing)

So, is land more expensive now than in the past?  Consider my property just across the road from the above listing and of similar topography.

1857 – $1.83/acre – Today’s dollars = $53.19/acre

1870 – $13.41/acre – Today’s dollars = $258.87 (this buyer lost the farm)

1872 – $3.90/acre – Today’s dollars = $80.84/acre  (appraised value was $64.67/acre)

1875 – $4.79/acre – Today’s dollars = $110.12/acre

then several surveys and set aside for Morris Chapel Church and cemetery – finally back together in 1945

1945 – $11.97/acre – today’s dollars = $168.17/acre

1949 – $26.95/acre – Today’s dollars = $286.36

1966 – $92.81/acre – today’s dollars = $724.39*

2018 – $3100/acre – today’s dollars = $3100/acre (asking price of farm across the road)

Working backwards – what would a $3000/acre farm bring in 1949?  $282.34

*1966 is when my grandparents purchased the farm, it shows, too, another reason land owners won’t sell property – basis.  Since this farm was gifted to me, the basis from 1966 remains in place.  In other words, if i sold the land for $2100/acre, capital gains tax would be paid on the difference between $92.81 and $2100.  This tax could be as much as 23.8%!  However, if i die and the land passes to my heirs, it can be appraised and establish a new basis.

Tenants compete for acres by bidding up rental fees because of their massive investment in machinery.  Absentee farmers and investors generally accept the highest rent bid (which is usually the one that will least take care of the soil) and hope the fertility and productivity outlives them, then the property will sell.

Change comes one funeral at a time.

Rather than me stumbling about putting together numbers, here’s a great article written in 2017 with sample startup costs for someone wanting to start and make a living farming.

Cheers!

tauna

HOW MUCH $ DOES IT TAKE TO BECOME A FARMER?

THIS IS WHAT IT TAKES TO GO FROM ZERO MONEY TO A FARMER.
I was talking with a couple of farmers recently, discussing the barriers to entry for new farmers. Some numbers were thrown out as to how much capital it would take for a young man or woman to get started into farming.“$1 million, $2 million, more” were amounts bandied about. This made me curious, so I decided to drill down on the actual capital requirement.

First of all, we need to decide what kind of farmer we are talking about here. For this article, I’m assuming someone with no family farm who wants to become a full-time grain farmer in Iowa, Illinois, or Indiana.

The first thing a budding farmer might do is get a degree in agriculture, since he/she would not have learned farming on the family farm. This will cost somewhere between $20,000 and $120,000, depending on where he/she goes and what scholarships are available. The average of those two numbers is $70,000, which will require student loan debt for most young people. Of course, a degree is not required, but it might come in handy for convincing banks to loan money or landlords to lease cropland.

The equipment requirement could be an extensive discussion; however, I’ll try to keep it as short as possible. One could buy all new machines, but to get started, let’s assume the acquisition of decent used equipment – about 5 to 10 years old.

The basic list would include: a combine with corn head and grain platform for $175,000; a big tractor for plowing and planting at 125K; a grain truck for 60K; a planter that runs about 75K; a grain drill for 40K; a disk at around 30K; a chisel-plow for 30K; a field cultivator at 25K; a pull-type sprayer costs 35K; a grain dryer is 30K; a utility tractor for brush-hogging/ditching/grading at 35K; a grain cart for 15K; a trailer at around 15K; an ATV for 10K; and a full complement of tools costs 15K.

The building requirement probably includes a couple of metal buildings ($200,000) and at least a few grain storage bins to hold 75,000 bushels, about $75,000. There is no hard-and-fast land requirement. However, the farmers I spoke with said that someone would need at least 500 owned acres and 1,000 leased acres to make a living.

The quality of the land certainly affects those numbers. For this article, let’s assume 150-plus corn bushel-per-acre land for about $7,500 an acre. If you bought 500 acres as a base of operations, the total land cost would be $3,750,000.

Add it all up, and we arrive at $5,157,500. Wow! That’s a big number, and it’s out of reach for most young entrepreneurs.

Because of the cost of land and equipment today, some farmers are concerned about who will be able to follow them into the industry. How will they fund the enterprise, even with family land and equipment?

Because of greater access to capital, more corporate farms are likely.

The problem is not just start-up capital but also surviving drought years and low commodity prices until they turn around. Unfortunately, even though you are already a biologist, engineer, equipment operator, accountant, carpenter, and mechanic, you have to become an expert financier, as well, to get into farming and stay there.

Written by Shawn Williamson, Certified Public Accountant (CPA) MBA in Missouri and Illinois. This article is designed to be a commentary on the amount of capital required for a row-crop farm in the Midwest. It is not meant to be a guide on how to get started in farming.