Northeast Beginning Farmer Project

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I have so many ideas. Where do I begin to narrow them down?

Many new farmers are so enthusiastic that they begin with a half-dozen or more enterprises all in the first year, without having analyzed their ability to really do any of them well. While this approach works in rare cases, an approach that is more likely to preserve your sanity and your enthusiasm for the 2nd year of farming is to go through the planning activities outlined in the Choosing What to Produce tutorial. If you start small and grow with your success, you are more likely to experience success! Ultimately, what you choose to grow will reflect your soil and land qualities, your passion, your skills, and your markets – and of course, whether you can meet your financial goals by growing it.

What do I need to do to become a real farm?

In most instances, getting “official” recognition for your farm is as easy as filing a DBA (“Doing Business As”) form with your County Clerk’s office. The transaction usually costs around $25, and it serves to protect your farm name within your county. Then you can take this DBA to your bank and use it to open a business account for your farm. Use this account to keep all farm income and expenses separate from your home bank accounts. It’s the very beginning of good farm business practices and recordkeeping.Once you’ve done this, you can qualify to be exempt from paying sales tax on most farm purchases, for which you’ll need to get an ST-125 form (this is what it’s called in NY – regulations and forms will be different in other states) from the State Dept. of Taxation and file it with any store from which you make farm purchases. See the Fact Sheet #17 on Sales Tax Exemptions from the Guide to Farming in NY for more information.Once you’ve made $1000 in sales in a calendar year, the IRS will officially recognize you as a farm and you can count your farm supply purchases as business expenses on your taxes. At this point you will need to file a Schedule F. See the Farmers Tax Guide from the IRS for more info.If your business involves processing food in a kitchen, selling dairy products, processing meat, making wine, or selling nursery plants, you may need to apply for licenses or comply with special regulations. See Fact Sheet #27, Marketing Regulations, in the Guide to Farming in NY for more details.

How do I finance my farm startup?

If you’re a new farmer, your chances for success will be greater if you can avoid going into debt to finance your farm operation, since your initial profits can be reinvested in the farm rather than paying the bank. Credit cards, with their extraordinarily high interest rates, are a particularly dangerous way to finance your new enterprise. Think carefully and creatively about your options, and resist temptations to buy more and better equipment than you really need. Too many promising operations have been sunk by overcapitalization. Of course, some operations will benefit from a loan, especially if they have a solid business plan that exhibits a realistic strategy for paying it off. Find more info about specific strategies in  Fact Sheet #4 Financing a Farm Operation in the Guide to Farming in NY.

How do I get a grant to start my farm?

Grants are almost never available to start a farm and are not a reliable strategy for growing your business. However, grants may be a valuable resource once you’ve been in business for a while. They can enable you to expand a particular aspect of your business to make your operation more viable or provide funding to try a new practice on your farm. For a comprehensive list of grants available to farmers in NY (including Federal grants available to farmers in other states), read Fact Sheet #31, Grant Opportunities for Farmers in the Guide to Farming in NY.  ATTRA (Appropriate Technology Transfer to Rural Areas) also maintains a rolling list of current grant opportunities for farmers and farm support specialists.

How profitable is farming?

Like most things in farming, you could ask this question of a dozen farmers and get 13 different answers. With the perfect storm of great farmland, high-end markets, solid crop mix, and advanced skills, it is possible to net $70,000/year on less than 2 acres, maybe even better than that. Most farmers make significantly less, and the range of profitability among farms is vast. The pervasive assumption that farming is not profitable is false, but so is the assumption by many new farmers that it’s easy to make a lot of money in farming. The truth is that it will most likely take you quite a few years of sound business decisions, and development of good production systems and markets to be that profitable. But, it is entirely in the realm of possibility that you can make as much money farming as you can in another profession.

What can I raise profitably?

This is an important and complex question that can be answered through good research and business planning. Identify what you want to raise, investigate the costs and potential returns, and then decide if it meets your goals on paper, before you invest real money. If you work through the tutorials on this site (use the menu on the left to navigate through them), you will be well on your way to thinking through all the elements that make up this question. A note on enterprise budgets: one way to examine profit potential is to develop an enterprise budget for whatever you’d like to grow. There are literally hundreds of enterprise budgets available online, but they are often either outdated, developed for an entirely different market, a very different production scheme, or a very different region of the country – sometimes all of the above. For this reason, it’s important to develop your own enterprise budgets by researching likely revenues in your region and markets, and learning about variable costs from farmers with businesses similar to yours. If you’d like personalized help answering this question, check out the next offering of our Markets and Profits online course or check the Events Calendar and Who Can Help? directory to see if there is a face-to-face training near you, or someone who can help you with this piece of a business plan.

How long does it take to become profitable?

We typically hear from farmers that it takes 5-7 years to be profitable. There are certainly exceptions; farmers who start with minimal investments on leased land may be able to achieve profitability in the first or second year. This question is also dependent on your definition of profitability. If you expect to have off-farm income indefinitely, your definition of profit might be that the farm covers all its variable costs, some fixed costs, and generates enough profit for re-investment in the farm, but you do not expect it to pay you or contribute to your retirement or other savings. In this case, you might be able to lower the number of years to profitability to 3-5. Years to profitability will be greatly impacted by your purchasing decisions as you build your farm. If you suffer from “Shiny Equipment Disorder,” and buy brand new tractors and implements for your small start-up operation, it is possible you will never achieve profitability.

What’s the step by step process to start a farm?

There is no formula for starting a farm. Some people have a vision for their product and market first; others start with land and and try to determine what crops would grow well on it. If you’re just getting started, here are a few of the first steps to take:

1. The best advice we’ve heard from successful farmers is to start small, plan thoroughly, and grow as you experience success. Work your way through the tutorials here at Plan Your Farm. While there is no one-size-fits-all process for starting a farm, the questions and resources listed here will give you the basic foundation of information and connections you’ll need.

2. Get connected with other farmers, and with the support network for new farmers. Workshops, conferences, and farm events are one of the best ways to get ideas and learn from inspiring successful farmers. Find out about field days, pasture walks, workshops and conferences by joining the mailing list for your local Cooperative Extension and regional and statewide farm organizations – check out our Events Calendar and search our Who Can Help page to find organizations in your region that host farm events.

3. Get informed. Read everything you can find about whatever type of farming you’re considering. The Publications section of this website is a start. Watch videos by and about farmers who are doing what you want to do. Start getting your ideas in writing – one way is to use the online worksheets for a Farm Start-up Plan on this site.

4. Get personalized help. There are so many variables in farming that this website can’t realistically do more than help you scratch the surface of the important topics you’ll need to know about, and point you in the right direction for more assistance. Depending on the nature of your questions, you can find people to help you at your local Cooperative Extension office, Farm Service Agency, Soil and Water Conservation District, and local or regional grassroots organizations that help new farmers. Find contacts for all of these organizations at our Who Can Help page.Also, consider taking one or more of our online courses to help you think through the details of your farm. Work from the comfort of your home, meet new and experienced farmers, and get personalized guidance from knowledgeable instructors.

Why bother with a business plan?

The idea of spending time in nature, working with soil, plants, and animals to produce food for people has enormous appeal, especially since most of us are several generations removed from farms. But if you intend to sell any of your bounty, it is important to get past the romantic idyll of farming and do some research to see how feasible your ideas are. Many new and especially small-scale farmers don’t think of their farm as a business. But we often hear from more experienced farmers “If I had treated my farm as a business and made smarter business decisions from the beginning, I would be in better shape now.” If your farm start-up will require a loan, you will need to have a solid business plan in place. But even if you are self-financing your operation, it’s a really good idea to have at least an outline of a plan, to demonstrate the feasibility of your idea. Even if your farm will not be your primary income source, the sooner you learn to think of it as a business, the more successful you are likely to be.

I’m not ready to write a business plan yet. What do you recommend for me?

If you’re not ready to write a formal business plan, that’s fine. The worksheets sprinkled throughout the Plan Your Farm tutorials will help you think through most of the critical topics related to planning your new enterprise. If you are still trying to decide whether farming is definitely a good fit for you, check out Exploring the Small Farm Dream (scroll about halfway down the page). This resource, written in 2003 by Kathryn Hayes and published by the New England Small Farm Institute, is the best one we know of for aspiring farmers.

How do I know when I’m a farmer?

There is no single answer to this question. “Farming” as opposed to “gardening” implies business involvement, so if you are actively producing food, fuel, fiber, fish, or forestry products, keeping business records on your income and expenses, and filing a Schedule F with your federal taxes, you are farming.But tax benefits or other financial programs for agriculture each have their own criteria. The IRS defines you as a farmer if you make more than $1,000 in farm revenue in a year. But to receive agricultural property tax assessment on your property, you need to demonstrate significantly more income each year (in NY, $10,000/year on more than 7 acres. See Fact Sheet #21 in the Guide to Farming in NY for more info). If farming becomes the majority of your income, you can qualify for a farmers income tax credit (Fact Sheet #16 in the Guide to Farming in NY). The Natural Resources Conservation Service (NRCS) offers several cost-share programs that can help you build farm infrastructure if it’s related to a conservation priority on your land. Again, their requirements and definition of farmer are different than other programs, and you’ll need to contact your local NRCS office to find out details.