How to buy a farm II

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I leased farmland for five years before buying property. Renting gave me access to land I could not afford otherwise. It allowed me to grow my operation slowly, learning from mistakes along the way. A lower lease payment freed up cash to invest in livestock and equipment. Over five years I built a solid customer base and good relationships with local businesses and lenders that supported me when it came time to buy a farm.

How to buy a farm offered tips to successfully finance a farm. How to buy a farm II proposes alternatives ways young farmers can access land, and tells how formal agreements benefit both farmers and landowners.

Consider other options

Farm real estate, pasture and crop land prices hit an all-time high in 2015 according to a report on farmland values by the USDA National Statistics Service. Here in the Corn Belt farmers saw some of the highest prices per acre in the entire U.S.

Finding affordable land is a significant challenge for young farmers and ranchers with lean start-up budgets. Other options to access farmland may provide a solution. Short and long-term leases, cooperative ownership or partnerships, crop sharing, and rent-to-own agreements are alternatives to buying a farm outright.

Farm link programs connect beginning farmers and land seekers with retiring farmers and landowners. Young farmers can use land link programs to scout property and potential partnerships.

Five land links that serve Ohio:

Put it on paper

Whether you lease land or buildings, rent-to-own, or promise to purchase land at a future date, a formal agreement between landowner and farmer is critical to protect both parties. I learned a hard lesson on handshake deals, sinking blood, sweat, tears, time and money into good faith agreements that did not pan out.

It may feel uncomfortable to ask a landowner to sign a formal agreement when you have a friendly relationship with him or her. It may help to explain the document will serve as a reference to remind both parties of the terms of the agreement. Often the landowner respects the young farmer’s dedication and appreciates that a formal agreement reduces risk.

Ag Lease 101 provides free templates. All stakeholders and their spouses should sign the agreement to ensure everyone is on the same page. Depending on the timeline, scale and scope of the agreement, it may be necessary to involve an attorney well-versed in agricultural law to draft or review a contract.

Related Content

References

  • “Land Values 2016 Summary.” (August 2016). USDA National Agricultural Statistic Service. Report ISSN: 1949-1867.

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