How to start a farming business - Step By Step Guide

 

Since becoming a farmer without any experience isn't easy, this guide will help you come clean and understand the basic steps you need to take to do so.

First of all, it is important to understand what farmers do in the first place.

What does a farmer do?

Farmers are all people who work in the primary sector and keep living organisms either for the production of food or raw materials (e.g. cotton) and thus generate an income. Farmers are closely connected to nature and spend most of their time out in the fields, either cultivating crops or raising animals.

Today, however, this is only partially true. Modern greenhouse operators, for example, often spend the whole day indoors in their plants. Farmers usually do not have fixed working hours. Because they are dealing with living organisms, their schedule often gets thrown upside down. It's not that easy to have a structured work schedule. Some of them don't even have holidays or days off. To be successful in farming

Step 1: Decide what to grow and in which field - Can I make a profit?

Choosing the right crop

First of all, you need to decide what you want to grow. Even if this sounds easy at first, it is the most complicated decision. The type of crop (or livestock) you choose is perhaps the most important decision you will make. Depending on the type of production, we divide agriculture into the following categories:

Farming

Arboriculture (commercial cultivation of fruit trees), vegetable and fruit cultivation, timber production, biomass production, grain cultivation, green forage cultivation, herb cultivation, viticulture (grape cultivation), berry cultivation, special crops such as cotton, etc. Most of these crops are grown outdoors.

However, some can also be grown indoors (greenhouses) using soil or air/water as a substrate.

Animal husbandry

Farmers keep animals here mainly for their milk, meat, or eggs. Some examples of this are cows, sheep, goats, pigs, and poultry (chickens, ducks, etc.). Some authorities do not consider poultry farming as livestock but as a separate category.

• Beekeeping: Beekeeping is a special form of agriculture. Farmers breed honey bees from which they collect honey, pollen, royal jelly, or wax.
• Snail Farming: Farmers breed snails, either for their meat or for their jelly-like excretions.
• Worm Farming: This is a special form of farming where farmers breed worms to convert waste into organic fertilizer.

Before you begin, you should do thorough research on the culture or animal species you prefer. Once you have selected 3-4 potential crops, you should contact local growers and agronomists to learn more about the types of plants and varieties that will thrive in the area in question.

The right crop for the market

First, you need to define a customer profile for a specific culture. Who will buy your products? How many potential buyers are there in your region for the crop in question?

Do you pay cash or by bank transfer? When do you buy the product? Do you need storage facilities so you have more time to negotiate a better price? Can you export your product and find buyers in another country? Is there a specific demand for the product you have chosen?

A common mistake made by new farmers is that they start growing without considering any of these points first. If there is no demand for your product, you will quickly go bankrupt, even though you may have created an excellent product. It's best to start by making a list of crops and researching the potential markets for each of those crops. You may then need to exclude those crops that you are unsure about selling the end product.

In some cases, new entrants can join a group of local farmers (eg an association) to exploit synergies. Incidentally, in many countries, farmers who grow the same crop join together to form an association. The association usually establishes a marketing department and hires staff to be responsible for finding markets. All farmers pay a fee and outsource sales and marketing activities, giving them more time to focus on their core business. But even in this case, you must always have a basic understanding of the target market and be ready to find an alternative if necessary.

Choosing the right field

The topography of the area, the type of soil, the environmental conditions, and the climate are crucial factors that every prospective farmer should be aware of. The location of your field can drastically change your business plan and daily routine. For example, ranchers in areas with rich and diverse flora are more likely to feed their livestock using pasture land. In contrast, in areas without rich vegetation, ranchers have to purchase additional feed, which undoubtedly increases costs.

You cannot start your agricultural business without a field. There are two scenarios when choosing the field: If you own the land, it's easy. However, if you don't own land, you have to lease the field or fields from someone else, which can be problematic.

You should keep in mind that there are some types of plants that you are better off avoiding if you don't have your own property. For example, perennials are not suitable for many reasons. For one thing, if you want to lease a field for many years, the costs could be high. On the other hand, when it comes to commercially available types of fruit trees, you need to know that most trees only bear fruit after 6-7 years. In this case, you would then have to pay rent for a few years without generating any income.

There could also be legal issues here: you might sign a contract that allows you to use the land for 30 years or more. Within such a period of time, however, the legal framework can change quickly. In some cases, you could then be forced to destroy your crops and leave the country without receiving any compensation.

If you and your family do not own land, it is best to avoid long-term commitment cultures. Perennial herbaceous crops persist for 6-12 years. Grapevines and fruit trees are usually productive 7-8 years after planting and can bear fruit for 30-60 years or more. In contrast, most vegetables can be harvested as little as 3-5 months after planting or sowing and thus generate income quickly.

Grains (wheat, barley, corn) and cotton can be harvested 6-9 months after sowing, but these crops are considered raw materials. This means that their price is mainly determined by processors and buyers depending on local supply and demand, making it very difficult for a new farmer to make a profit in the first few years of activity. However, in some areas, it can still make financial sense to start cultivating commodities.

In any case, your field should be suitable for the culture you have chosen. It is your responsibility to check the condition of the field, the pH, and the history of the cultivation. You should definitely take 3-4 soil samples from different parts of the field and send them to a laboratory. A licensed local agronomist can tell you if the soil is suitable for the crop in question. He can also advise you on what actions to take to restore soil fertility.

Finally, you need to know the annual rainfall in your area and the dates of the first and last frost of the year.

Another crucial factor is whether the field is adequately supplied with water. Most commercial crops require irrigation to produce acceptable yields. If you choose a field that does not have access to a water source, you must use water tanks that are filled at the nearest source. You will need to purchase tractors to transport the water tanks, which could add to the cost and hassle.

Compare total costs to projected total revenue. Will I make a profit?

By now you have a limited number of alternatives on your list. It is now time to create a business plan by examining the potential income you will earn from each of the alternatives based on the revenue and the projected costs. The way to do this is simple: get in touch with successful farmers who have years of experience with the crops you want to grow.

If they are honest and willing to provide information, they are the best source of information about market prices and actual costs. However, if you want a more scientific opinion, agricultural advisors can also help you by considering all the parameters and making a business plan for you.

 How much can the cost of growing a crop be?

• The setup costs, For example, the cost of building a greenhouse can be very high since a lot of expensive equipment is needed (frames, covers, fans, heaters, lamps, etc.).

• Soil preparation costs: plowing, leveling, or restoring soil fertility

• Cost of buying seeds/plants

• Cost of Irrigation: Most crops need irrigation to produce an economic yield. Therefore, for commercial cultivation, you will need to install an irrigation system in most cases.

• Protective nets and covers: some plants are sensitive and need protection in certain environmental conditions.

• Fertilizer Costs: In commercial cultivation, most plants need to be fertilized to achieve an acceptable yield.

• - Pesticides: Farmers who practice conventional farming may need to purchase agrochemical products to protect crops from pests and diseases.

• Labor costs: These are the most important costs for a farmer. They cannot do the work alone, but have to hire helpers at least in the critical phases of cultivation (e.g. harvesting).

• Machine Cost: Some types of crops require special machines to be able to sow or harvest.

• Storage costs: Farmers may have to set up special storage facilities for produce that is not brought to market on the day of harvest. These rooms are equipped with sensors that control temperature, humidity, and CO 2 levels.

• Transport costs: These can also represent an important part of the total costs that a farmer has to bear. Where is your buyer located? Do you have to pay transport costs?

• Costs for crop failure insurance

• Payments for various experts and scientists that you may consult

For the expected earnings, we usually need 3-4 parameters. First, we need to calculate the total area of ​​our acreage. Second, we need to determine the average yield of our crop in our region.

Multiplying these two values ​​gives us our projected total return. For example, let's say that we want to grow eggplant and our field is 8 hectares: we know that eggplant in our region has an average yield of 25 to 40 tons per hectare. This means: 8 hectares X 25 tons = 200 tons of eggplants. Finally, we need to find the market price of the eggplants in our region (not the retail price, but the price the farmer receives). Let's say the farmers report that this price is $100 per ton. Then our projected revenue is 200 tons x $100 per ton = $20,000.

Remember that we chose the lowest possible yield (25 tons instead of 40 tons) because beginners are unlikely to get the maximum or even the average yield. The average yields given online can often only be achieved by successful farmers with many years of experience.

In addition, there can also be significant deviations in all these numbers. For example, we cannot get the same price for all eggplant varieties. It can also happen that traders want to buy your products at a much lower price and claim that your fruit is not uniform (this is a common problem for newcomers). But even in this case, we have a rough idea of ​​our expected earnings for that crop.

Examining and documenting all of these costs and projected revenues is essential to determine if you will make a profit from the harvest. Many people are fed up with their city life. They just want to start a new life by engaging in farming. However, getting into farming without doing this research will undoubtedly lead to economic disaster.

Step 2: Check your financing options - secure your capital

Of course, a farmer doesn't get paid every month or every 15 days as an employee normally gets. In the best-case scenario, a farmer can then make money by selling the product. As a result, by default, farmers must pay all production costs upfront, well before receiving any revenue. So you need to raise capital to buy all the supplies you need (seeds, seedlings, fertilizers, agrochemicals, irrigation equipment, workers' wages, etc.) and of course to cover your family's living expenses for at least six months.

Fortunately, if you don't have the necessary capital, there are many farm loan options. In many countries, the state authorities want to encourage people to get into agriculture. Therefore, they provide the guarantee so that the farmers can get interest-free loans from commercial banks or state banks. International institutions also grant loans to new farmers in many countries. Contract farming may also be an option for you. In this case, a farmer and a buyer (such as a food processing company) agree on a specific product price before the crops are grown. Typically, the buyer pays all the costs of setting up the crop and deducts the amount from the farmer's final proceeds.

 

Contract farming may also be an option for you. In this case, a farmer and a buyer (such as a food processing company) agree on a specific product price before the crops are grown. Typically, the buyer pays all the costs of setting up the crop and deducts the amount from the farmer's final proceeds.

Contract farming may also be an option for you. In this case, a farmer and a buyer (such as a food processing company) agree on a specific product price before the crops are grown. Typically, the buyer pays all the costs of setting up the crop and deducts the amount from the farmer's final proceeds.

Step 3: Make sure you have the supplies and resources you need at the right time.

Another point to consider is whether you can have all the necessary supplies and resources when you need them and at reasonable prices. For example, farmers often hire workers to help them with specific jobs (e.g. harvesting). It would be a big challenge to start a farming business and find that you cannot find the labor in your area. Even if your business doesn't need permanent employees, you need to be sure that you can hire casual workers if you need them.

In viticulture, for example, most winegrowers require a significant number of workers during the harvest season. If they don't find workers at that time, the grapes will stay on the plant longer, and the quality and commercial value drop significantly in just one week. Even in developed countries like the US, experienced farmers report that they have abandoned apple orchards because they could not find workers to harvest. Cotton farmers also face similar problems. Eventually, the plant is mature and the farmer is forced to harvest immediately.

However, harvesting crops like cotton requires a specialized tractor that costs hundreds of thousands of dollars. Can you rent such a machine at this time? If an area has many cotton fields and only a limited number of harvesters, only a fraction of the cotton fields will be able to be harvested at the right time.

As in almost all professions and careers, a farmer's success not only depends on himself but also on his living environment and the network he has built up over the years.

Step 4: Organic or conventional farming? Do you go for quality or quantity?

Organic farming includes farming techniques and methods that aim to protect the environment, people and animals through sustainable agriculture. Producers in organic farming can only use biological substances for both fertilization and crop protection. As for fertilizers, they mainly use manure, compost, or special organic-synthetic fertilizers. They mainly use traps and predators as plant protection measures. This cultivation method involves a lot of effort and money and achieves significantly lower yields than conventional cultivation. In return, the organic producer can market the products at higher prices than the conventional ones. Good Agricultural Practices) Derwent.

Choosing between organic and conventional farming is not easy. Certainly, a new farmer cannot be cost-competitive. He does not have enough experience to control all costs and produce a satisfactory product at an attractive price. As a result, many new farmers are opting for organic farming, focusing on quality. You plan to produce a small number of high-quality products and sell them at very high prices. Some of them succeed well while others fail. In any case, organic farming requires special handling, guidance, and a certain amount of experience to be successful.

Step 5: Checking of storage facilities and logistics - transport

Not all products are transported directly from the field to the market. In many cases, the farmer must store the harvested goods for a period of time before transporting them to the buyer. 

However, many farmers do not sell their products directly to wholesalers. Therefore, having a suitable storage facility can be crucial. Different products require different conditions for proper storage. In most cases, the warehouses are buildings equipped with sensors that control and regulate temperature, humidity, CO 2, and light conditions.

In many cases, transport is not the responsibility of the farmer. However, many farmers still have to transship and deliver their products themselves, especially to local buyers. In this case, farmers should have a vehicle that meets the requirements for the safe transport of the product, for example, to avoid contamination of the product.

Step 6: What must a farmer do? – Research, research, and research again!

According to the Center for Rural Affairs, “In the pre-industrial economy, wealth was directly tied to land ownership. The more land you own, the more you can produce and the more money you earn. Those who had the capital to build factories and delivery systems prospered in the industrial economy. Today we are in a knowledge-based economy. The wealth now flows to those who know what others do not.”

This principle is very important for a farmer. Often we see a group of farmers in the same area growing a crop in the same way.

One of the producers may have done extensive research to find third-country markets or to design a different packaging for their products. For example, he could use his herbs to produce essential oils and sell them at a higher price instead of the plants. This grower has a better chance of long-term success. At the same time, all other farmers (who rely on the conventional wisdom) will always complain that they are making lower profits and that agriculture is not financially viable. The farmers of the future will have to engage intensively (preferably 365 days a year) with new growing techniques and new markets for their existing crops, new uses for their produce, new packaging, alternative outlets, new profitable crops that could thrive in their regions, etc. deal with

You don't need a college degree to become a farmer. However, it is advisable to constantly educate yourself online and offline about growing and marketing strategies and attend training courses that will help you cope with any situation. For example, it is important to know and “understand” your plants. Farmers who have extensive knowledge of the basic biology, life cycle, and growth stages of plants can detect possible physiological or pathological abnormalities at the earliest stages. This gives them a better chance of making fact-based decisions quickly and producing quality products for years to come. Finally, it is important to know the standards of good agricultural practice, which include the correct use of water and energy,

While online research is generally necessary, there are other valuable sources of information. The members of your local farmers' association or your local agricultural department should become your most important confidants. They can inform you about current (economic and scientific) developments in agriculture, e.g. Eg disease outbreaks, changes in the regulatory environment, new markets for your product, new potential buyers, loans for specific crops, etc. Of course, you have to question everything and ultimately you are responsible for every decision you make. Nevertheless, good information from local experts is always helpful and can often lead to better decisions.

Step 7: Research the local and world regulations for your area of ​​interest.

Good Agricultural Practices (GAP) is a set of practices that farmers must adapt to protect their own health and well-being, that of consumers, and ultimately the environment. Standards may differ from country to country due to regulations and legal frameworks, but the philosophy remains the same. The rules and principles of good agricultural practice create an overall mindset of prevention rather than a remedy.

The implementation of good agricultural practice begins even before the crops are grown. For example, if you select a heavily contaminated field, even if you do everything else correctly, your product will likely still be dangerous to the general public.

The implementation of the CAP will certainly lead to a long-term increase in income for farmers while helping us to consume safer, higher-quality food. Last but not least, compliance with good agricultural practices strengthens ecological sustainability. Ongoing training and education are essential for farmers and everyone involved in the supply chain of agricultural and non-agricultural products.

In our modern, dynamic agricultural world, every professional farmer, in addition to expanding his production, must also ensure compliance with the principles and guidelines of sustainable agriculture. Many government agencies, food processors, and retailers around the world apply GAP standards to their suppliers to ensure the quality of their agricultural products. Growers who don't adhere to these standards will gradually fall behind.

With globalization and international trade, retailers can easily find new GAP-certified suppliers.

Animal Husbandry

Raising livestock is much more complex than farming and requires greater financial and personal commitment. It is important to know that not all types of livestock facilities are always allowed in a region. Also, most countries have strict regulations about how far away a livestock facility must be from inhabited areas. You must find out about the regulations in your area before you start your work.

When it comes to animal husbandry, the terrain on which you want to set up your facility is very important. Again, if you own property in an area that allows pets, things are simple. On the other hand, if you have to lease land, your production costs can increase significantly and you could be forced to go out of business at some point. In any case, make sure you have a reasonable contract with the property owner.

In animal husbandry, the investment costs are higher. Commercial livestock farming requires large investments to build a proper facility and house the animals appropriately. Even modern milking systems are expensive. There are also additional costs for feeding and vaccinating the animals. Maintaining hygiene standards and having a proper waste management plan is also essential.

Again, it is important to decide what kind of animal husbandry you want to run. Not all animal species are suitable for everyone. The animals you will raise will be part of your life and family. You will spend most of your day with them. Therefore, it is important to make an informed decision. As a preparation, you can start by keeping 2-3 animals in your yard (if permitted) to see if you are suited for this profession.

As you adjust to this new lifestyle, you should ask yourself the questions above. Who will buy your products? How many potential buyers are there in your region for your milk, meat, or eggs?

Will they pay cash or by invoice? When do you buy the product? Do you need storage facilities so you have more time to negotiate a better price? Can you export your product and find buyers in another country? Is there a specific demand for the product you have chosen? Can you make a profit from all of these factors (profit = total revenue - total cost)?