Is it your dream to run your own farm? If so, you’ll need to have the relevant experience and be prepared to put in the work to boost the chances of your farm being profitable. This guide takes you through the necessary steps to help you understand how to start a farm.
You might want to start a farm if you like the idea of working for yourself and enjoy spending a lot of time outside. Although farming can be challenging, if you plan well, it’s possible to earn a decent profit.
What’s more, there’s a wide range of different farming types to choose from. You could consider poultry farming, vegetable farming or dairy farming, for example. You could also think about growing cereals such as barley, oats and wheat, or fruits such as apples, strawberries and raspberries.
Farming can be profitable, but you need to plan carefully. The covid-19 pandemic hit farming incomes hard and they have struggled to recover. That said, figures show that Total Income from Farming (TIFF) in South Africa for 2022 was over R417 million, an increase of 15.2% from 2021.
As well as the pandemic, the farming industry has also been affected by extreme weather, such as heavy rain or prolonged dry spells in recent years. Farming can be unpredictable so you need to ensure your farm is resilient, that you’re producing maximum yield and that you’re selling your crops for the highest price possible.
Farms cover a wide range of types, each focusing on different agricultural activities:
The most profitable types of farming depends on factors such as location, climate, soil quality, market demand, and individual expertise.
Generally, high-value crops such as fruits, vegetables, herbs, and specialty crops like microgreens or mushrooms can generate high profits, especially when grown using sustainable or organic practices.
Livestock farming, including poultry, dairy, or fish farming, can also be profitable, particularly with efficient management and access to niche markets for premium products. Additionally, niche or specialty farming businesses such as organic, agro-tourism, or value-added products like cheeses or honey can command higher prices and attract customers.
If you want to be a farmer, there are a number of skills that can help set you up for success. These include:
Having a driving licence will also be useful and it pays to have some technical knowledge so that you know how to handle machinery. You could even consider completing a diploma or degree in an agricultural subject.
Farming can be hard work, so it’s best to start out small and then expand once things are going the way you hoped. If you’re growing vegetables, for example, start by only growing something simple like tomato plants or a variety of salad of leaves, before expanding and starting a farm as your primary source of income.
If you’re having animals on your farm, start with a few chickens or one goat and then increase the number of animals you have over time.
Starting small means that any mistakes you make will be on a smaller scale, and learning from these mistakes means you’re more likely to have success as your farm grows.
Before you start running your own farm, it’s worth gaining some real-life experience on a working farm so you know what you’re getting into and how the business work. Ask around to see whether you could volunteer on a local farm.
Reading books and taking courses will also help you to learn more about the industry and, if you can, look for a good mentor who can teach you more about the job and give you valuable feedback.
Decide on the type of farming you want to do and then spend time researching it in detail. If you’re only growing food for you and your family, you won’t need to spend quite as long researching. All you’ll need to think about is the fruit and vegetables you and your family eat that would be easy to grow in your climate.
However, if you want to sell the produce you grow to earn an income, you’ll need to do a lot more research. Think about how many different goods you want to produce and whether there is sufficient demand. Who are you planning to sell your produce to – restaurants, shops or consumers? Make sure you also consider which items sell for high prices and which might not be so profitable. You need to have a good idea of who your customers are and how much they will buy.
If you’re raising animals, again you’ll need to consider whether you want to rear cows and goats to produce milk for sale, or whether you’d prefer to raise pigs for pork products and so on. Consider which has the highest demand and which is likely to earn you the most profit. To help you, check out farmers’ markets, meet other local producers and speak to customers as you shop.
Once you’ve worked out what you’re going to farm, you need to decide whether you want to buy land or lease it. Buying land gives you complete control over how you use it, but it also comes with higher financial risk. It’s also likely to be more costly.
Some farmers (or other landowners) will have extra land that they are not using and might be willing to lease to you. This can be a low-cost way to get things up and running and it will be lower risk.
When looking for land, you’ll need to consider a range of factors, including whether you will have access to a steady supply of water and the quality of the soil. It’s sensible to carry out a soil test so that you can assess whether it’s chalky or sandy, or full of clay, for instance. This can help you work out whether you need to invest in certain fertilisers or other supplements.
Also look at whether there are already any structures on the land, such as processing facilities or barns or chicken coops. Different crops and animal products will need different processing and storage facilities.
Finally, you’ll need to consider how close you are to where you’ll be selling your goods. After all, you don’t want to be driving for hours just to reach the nearest town.
Most of us won’t have the cash readily available to help get a farm up and running, so you’ll usually need to turn to finance.
One option is to apply for a business loan with a high-street bank or online lender. This will enable you to borrow a lump sum of cash that you then repay in monthly instalments, with interest, over a set term.
It’s also worth finding out if you’re eligible for a business grant. This is a sum of money awarded to a business to help it grow and develop and, unlike a loan, it does not need to be repaid. Business grants are usually awarded by the government or other companies and there are hundreds of different grants you can apply for across South Africa. These will often be targeted to specific industries, community groups or types of business, so check carefully.
Asset finance can also be used to help you acquire farm equipment. The two main options are hire purchase and leasing. Hire purchase means you hire the equipment from the lender and then make the agreed monthly payments. At the end of the term, the equipment is yours.
Alternatively, leasing lets you rent the equipment from a finance provider and then pay a regular fixed fee over a set term, with interest added. At the end of the term you might be able to pay a lump sum to buy the equipment, continue to lease it, or cancel the agreement.
Once you’ve completed the above steps, you’re ready to start growing and selling your products. Provided you’ve carried out your research, you’ll know where you’re going to sell your goods and the amount you want to sell them for.
Farmers’ markets can be a good option, but you could also set up a farm shop or partner with local businesses. You could even partner with other producers to sell your products under one brand.
The cost of starting a farming business can vary a lot depending on factors such as the type of farming, scale of operations, location, equipment needs, land, and regulatory requirements. Small-scale or niche farming businesses may require minimal initial investment, focusing on essential tools, seeds, or livestock, while larger operations or specialised businesses may have high upfront costs.
Common expenses include land purchase or lease, infrastructure development such as fencing, watering systems, and storage facilities, equipment purchases or rentals, seed or livestock acquisition, and operating expenses like labor, utilities, and insurance. Additionally, regulatory compliance costs, such as permits, licenses, or certifications, should be considered.
Farmers may also need to invest in marketing and distribution channels to reach customers effectively. It’s important for new farmers to conduct thorough market research, develop a detailed business plan, and budget accurately to estimate startup costs and ensure financial sustainability.
If you’ve got your business off the ground, now is not the time to take a backseat. Instead, you need to start thinking about how your business will grow and what you need to do to achieve this.
Social media can be a great way to get the word out about your business and attract new customers. Instagram and Pinterest can work well as they are visual and let people see what’s happening on your farm. But you could also consider using Twitter and LinkedIn to share articles about the farming industry and encourage discussion. Facebook Messenger is also great for responding to customer queries.
Additionally, it’s worth creating a website for your farm so that people can easily find out more about it. Using website builders can make your life a lot easier initially, but you might want to hire a web developer as your farm grows.
Also think about attending industry events to network with other farming industry professionals, as well as advertising through radio, brochures and newspapers. You might even want to expand into new areas – you could set up a camping ground on your farm, for example, or you could start growing ‘pick your own’ flowers.
There can be a lot of reason why some farms fail. These include:
Finding the right type of finance for your new business won’t always be an easy decision. So if you need help, the team of experts at Swoop will be happy to talk through your options and work out the best solution. Get started today.
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Written by
Rachel has been writing about finance and consumer affairs for over a decade, helping people to get to grips with their finances and cut through the jargon. She's written for a range of websites and national newspapers including MoneySuperMarket, Money to the Masses, Forbes UK, and Mail on Sunday. Rachel has covered almost every financial topic, from car insurance and credit cards, to business bank accounts and mortgages.
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