You’ve decided you’re finally ready to get your agricultural business started and have received that preapproval letter from your bank. Now it’s time for the fun part: shopping for the perfect parcel of land.
While this is undoubtedly one of the most exciting parts of the process, there are some things you need to keep in mind during your search, or you could end up with a business that is doomed from the start. Here are five things you should consider before buying land for your agricultural business.
One of the most important considerations to make when purchasing agricultural land is the availability and quality of water, and the infrastructure in place to support the distribution of water. Without a good availability of water, your irrigation system won’t matter. A substantial water supply will ensure that your crops and livestock aren’t put at risk in the event of a dry spell or drought.
In addition to quantity, the quality of the water supply is also important. Some salts and heavy metals can damage your irrigation system and affect the success of your crops. Make sure you have the water tested before purchasing land.
After water source and quality, the health of the soil is one of the most important factors in the purchasing of farmland. The type of soil affects the value of the land and influences the type of crops that will grow. You should know in advance what you plan to do with the land so that you know precisely what soil pH you need.
Although you can improve the health of your soil and amend the pH after purchasing, this will cost you both time and money. Save yourself a headache in the long run by testing the soil before making the commitment.
While that piece of land you’ve had your eye on seems like a great deal, if it doesn’t already have the appropriate infrastructure in place, it could end up costing you a lot more than you planned down the road. Make sure you have a clear budget in mind before you start shopping so that you know whether you’ll need to look for a property that already has an irrigation system and essential buildings, or whether you can afford to build these yourself.
You can always hire water bore drillers to develop wells and an irrigation system, but keep in mind you’ll need to get a licence first.
Business plan and goals
At the end of the day, you need your agricultural business to turn a profit. While you shouldn’t expect to see a high return on investment right away, your business plan should clearly outline what you need to accomplish to achieve your short and long term goals. This list of tasks will enable you to develop a checklist of exactly what you need in a property to make these goals happen.
Having a clear understanding of your growth strategies for your business upfront will ensure your first few years go as smoothly as possible.
Leasing or purchasing
Though you intend to purchase agricultural land, have you considered leasing instead? Buying land is expensive, making it difficult for many to find the funds needed to buy all the machinery, equipment, and livestock post-purchase. If you’re just getting into farming for the first time, leasing might be the better option for you.