Start Up

[OrleFane]

Hello everyone.

First a bit about myself. I am 37 and was born and raised on a dairy/beef farm and worked for several large (1500-4000 head) dairies over the years. I have done everything from milking to caring for calves to field work. I decided to join the Army and moved away from home and farming. Now my contract is up in Jan and I'd like to get back into farming. This time I'd like to stick to beef and stay away from the dairy. I currently live in Pennsylvania and am looking to move to Kentucky.

Once the farm is up and running I will be fine but I find myself a bit lost as how to begin. I know that I am going to have to get a place to live, land, cattle, and some machinery (for hay) but I'm not sure exactly how to go about doing it. I would like to farm full time, with a cow calf operation, and have a grass fed herd. So do I go big right out of the gate or get a job, start small, and work my way up? If I go big how big do I have to go to be profitable enough (to pay for the farm and support my family) to be a full time farmer? Also if I go big how do I get from start up to first check with no funds coming in? Do I do everything with a loan or are there other financial options? I had heard that there were grants to be had but thus far I have had zero luck finding any that I can use. Do I start with calves (which are cheaper to get) and wait the 2 years to start making money or do I get 3-in-1's (which cost more) that will get me started sooner? How do I figure out the head/acre ratio for the area I'm going to be living in? I understand that there are a lot of things that go into figuring that ratio but I haven't had much luck getting specifics for my area. When we had beef while I was growing up we ran Herefords and they were great animals but now I'm seeing a lot of info about cross breading, how big of a difference is there between cross and not cross?

I know that is a lot of questions and I'm sure I have more but it's 0300 and I really need some sleep. Any help would be great. Thank you.

 

[Son of Butch]

To farm on a scale large enough to support you and yours without also working "in town" takes a HUGE investment.
Few have the resources available to achieve it, if you don't then...
You will need to write a business plan and be able show prospective lenders projected income, expenses, profit per acre,
profit per head, how it will cash flow and most importantly to them, how you will be able to pay them back on a scheduled
timeline. A local Ag University should be able to assist you or at least have the resources to point you in the right direction.

 

[Rafter S]

... or get a job, start small, and work my way up?

Yes, that would be my advice. As Butch stated, jumping in whole hog would require an enormous investment. Even if you could get someone to loan you the money to do it, I wouldn't recommend it. You don't need that kind of risk hanging over your head with a family to support. I can't emphasize that too much. Get a job, find a small place, and get a few cows. Buy your hay instead of buying equipment. Expand slowly and pay as you go. It will take longer but you'll sleep better.

 

[msplmtneer]

:welcome: to the forum and thanks for your service. Good luck :tiphat:

 

[Bigfoot]

Again, welcome to the forum, and thanks for your service. You might as well say that ii is next to impossible to just up and start farming/ranching. i hate to be negative at all, especially to a new member. The capitol to get started is just too great.

 

[greybeard]

How do I figure out the head/acre ratio for the area I'm going to be living in? I understand that there are a lot of things that go into figuring that ratio but I haven't had much luck getting specifics for my area.

That can change not just region to region but even pasture to pasture within any given farm or ranch. You'll have to narrow down your geographical area of interest a lot more, ascertain how much forage the ground or acreage can support and sustain, how long your growing season will be, availability of hay and your pocket depth for supplemental feeding and go from there to figure stocking rate and aum.

Welcome home Soldier!!!

 

[ChrisB]

First off, thank you for your service.

You stated that your contract is up; how many years have you been in the Army? If you are close to getting your 20 years in, is re-enlisting an option? I ask this because that would get you closest to being able to farm full time the quickest. Unless I'm mistaken on how military retirement works.

I don't believe there are any grants (free money), but you can get low interest loans with up to 40 years to repay. Check with the local FSA office in the area you are moving to and work with them.

Going slow and paying cash for future expansion may be the best and safest advice but... If you do that you will never get to where you want to be. You first have to ask yourself how bad you want to do this. Is it something that simply sounds like a nice way to make a living? Or is it your passion in life? What I mean is, if it is your passion, are you willing to live anywhere and do whatever you can to make ends meet?

The quickest way into the cattle business in my opinion would be buying Holstein bottle calves and finishing them all the way out on shelled corn & pellets. You don't need a lot of equipment or land doing this. And you will be able to sell them in about 14 months. Then on the side buy a few beef cows and grow your pasture and cow herd as you can afford. But whatever you do, it is going to take a sizeable investment.

Working on a large dairy for a while may be an ideal situation. Maybe you could buy their bull calves, and possibly be able to buy their pushout feed unless they feed it to their heifers. If you get some land, maybe they would even let you use their equipment if you are a good employee.

 

[cow pollinater]

Welcome and thank you for your service.
I hate to be a downer but every ag loan I've ever taken out asks me how long I've been in business. You can point out your farm background but they really want to see how long you've been paying the bills.
As for how to get going once you do get something, old bred cows or pairs get my vote. They don't get old by doing it wrong year after year and you can buy them for just a tad over slaughter as long as nobody else at the sale is trying to do the same thing. Let them raise a calf and if you like them ok and they breed up on time with #2 then hold them a second year and if not they go back to the sale and you get close to what you bought them for plus a calf to sell.

 

[OrleFane]

I guess I am missing something or I am thinking about this wrong. I grew up in Western NY and have spent the last few years in Central PA. When I think about the cost of getting started I'm not seeing a massive investment. My wife and I were looking to buy a house here in PA, and I know the cost of land in NY, and I can buy a farm in KY with 100 acres for about the same price as a house with a couple acres here in PA. I have found several farms/land in KY between $150-200K with acreage ranging between 70-200. Some of those have houses and barns and some are just vacant land but for that price range in PA and NY I might be able to get an old house or trailer and 10 acres or a nicer house with an acre or two. One example in KY that I found is a farm, that has been being used, it has a house, 2 barns, and 80 acres (the house and barns are in nice shape) with an asking price of $165K. With the rainfall and lush grasses in KY I should be able to put 40-50 head on that farm at $80-100K for 3-in-1's. If I do all the work myself and shop right I should be able to pick up the machinery to do my own hay and do fence repair/upgrade for another $40k. So in total if I go high on the cattle I'm looking at $295k and I'm up and running. For that price where I live now and up in NY were I grew up I might be able to get a nice house with 10-15 acres or an old run down house or trailer with 20-25 acres. I know that $295k is a large chunk of money but I'd be spending that here and only really getting a house to live in. So am I missing something or am I looking at this wrong?

 

[Kell-inKY]

One example in KY that I found is a farm, that has been being used, it has a house, 2 barns, and 80 acres (the house and barns are in nice shape) with an asking price of $165K......So am I missing something or am I looking at this wrong?

like the realtors say, location location location

You don't state whether you are married and have kids, if you are wanting a bargain in a depressed area it may not go over well with the wife when it comes to the school system etc? I also have to wonder if this 80 acres is full of trees, or is it pasture?

In my area (which is pretty high I must admit), you would be looking at a half a mill minimum. In the worst most depressed area I can think of within 50 miles, it would still be twice what you are seeing UNLESS it is mostly trees. Even figuring at 2500 an acre for pasture (totally unheard of around here), it would still be 200k WITHOUT a house or barn. Productive farm land is not cheap. I really have no idea what land values are in Eastern and Central Kentucky though, so keep that in mind.

Not trying to discourage you, if you can actually get 80 acres of pasture, with a liveable house and a barn, then it sounds great, except I don't think 50 head is enough to replace a full time income. Plus you have cattle experience which is very valuable. However, I am not a fan of you going into debt in such a risky venture with cattle prices etc. Have you tried the Dave Ramsey thing?

 

[Son of Butch]

So am I missing something or am I looking at this wrong?

No, you are not looking at it wrong. But you have to keep going with your calculations.
How much income will the land and cattle generate and what will your payments be?
Here is an example:
300K at 5.75% interest for 30 yrs = 360 monthly payments of $1750
1750 x 360 = 630,000 - 300k principle = 330,000 interest
1750 x 12 = 21,000 yr

50 cows generating $280 head profit per year = 14,000
21,000 - 14,000 = 7,000 short fall.
(Sterling profit tracker projected average for cow/calf operations in 2016 is $240 hd)
50 x 240 = 12,000 for a short fall of $9000

Plug your own numbers in to see what you can make work.
But, I come up with you'll need additional off farm income to make the payments and for living expenses until your 68.
38 yrs old + 30 yrs = 68

 

[Bigfoot]

I admire your spunk, and hope you look back someday, and say. "Well, I did it when nobody said I could." Truth is, there will be expenses, and losses far beyond your wildest dreams. Also, I live in ky, and in my area $500,000 wouldn't buy you 100 usable acres.

 

[greybeard]

I just sold 17 acres--just pastureland and fenced, with 1 old barn and a small shed on it. $120,000. No house-- no well, no septic.
$7060/ac and that's about the going price here--or less. At that price, 100ac would cost $706,000.
So right off the bat, before you bought your first heifer, you would be down nearly $3/4 million.

 

[backhoeboogie]

I just sold 17 acres--just pastureland and fenced, with 1 old barn and a small shed on it. $120,000. No house-- no well, no septic.
$7060/ac and that's about the going price here--or less. At that price, 100ac would cost $706,000.
So right off the bat, before you bought your first heifer, you would be down nearly $3/4 million.

My daughter just purchased 160 plus acres. Barn. Barn is huge, wooden and in excellent condition. 4 water wells. 1917 Craftsman home that is in nice shape. Immaculate. A few sheds and outbuildings. All land is useable farm land. Fenced and cross fenced into 5 pieces. Ponds on 4 of the 5 pieces. Excellent pasture across the entire place. Sandy loam. Gorman, Texas. Less than $400,000. Cows can pay for it at that price. She already has cattle. Right around $2500 an acre with a house and great infrastructure. Working pens etc. I do believe she needs to improve the working arena and pens, chutes etc. Maybe another $5,000 investment but she can work with what's there. Her husband already has several thousand feet of pipe and rod on their other place.

An engineer I work with just bought 270 acres right outside of Fort Towson, Okalhoma. $1075 pr acre. I have not seen the property personally. Just pictures. I would say most of it is useable for grazing and probably 1/3 of it could be tilled and planted. Another 1/3 could be put into improved pasture.

In my opinion, with the current interest rates, a man can pay $4500 an acre for good farm land and the cows can pay for it. No income mind you. Just getting it paid for by cows and holding on for capital gain.

Cedar infested rock hilltop around here is going for over $10,000 an acre. It would take 40 acres per cow. People are paying those prices based on location. I sold mine. Huge capital gains.

 

[greybeard]

$10,000/ac for rockytop...that's unreal.

 

[Jabes0623]

I'm way down in SE Ohio & am starting out myself. We purchased 100 acres, when we bought it, there was roughly 30 acres of good pasture, 2 barns 1 useable the other we tore down & no fence. After over a year of hard work & expense I've got about 50 acres of really high quality pasture. I'm going to start building the fence & corral this week, with a little luck I hope to be done by spring. By the time all is said and done I'll probably have close to $100,000 in to just getting this 50 acres ready to use. The other 50 acres is divided between a nice creek bottom & some heavily wooded hillsides, a portion of which is in a CRP conservation that the .gov pays me to just leave alone. I'll decide what to do with it when the contract expires here in 7 years.

I share this story with you to say; if at all possible find a place that's already ready, or at least mostly ready to go. Buy a place with nice open pasture at the very least. You can find some pretty enticing deals on rough land but by the time you get it ready to farm you'll have just as much, if not more money in it than you would've just buying land that was ready to roll from the start. Plus you'll lose a considerable amount of time getting it useable. I do not mind the clean-up work on this property as we purchased it for sentimental reasons as much as practical ones, it's directly adjacent to what's left of my great-grandparents old home place, the vast majority of which is now under a lake that was built by FDR in the new deal way back when. If it weren't for that, I would seriously regret my choice to purchase such overgrown rough land.

 

[Son of Butch]

....if at all possible find a place that's....at least mostly ready to go. Buy a place with nice open pasture at the very least. You can find some pretty enticing deals on rough land, but by the time you get it ready to farm you'll have just as much, if not more money in it.... Plus you'll lose a considerable amount of time getting it usable....we purchased it for sentimental reasons as much as practical ones, If it weren't for that, I would seriously regret my choice to purchase such overgrown rough land.

Thanks for sharing Jabes. Interesting food for thought for any needing to look twice before they leap.

 

[greybeard]

....if at all possible find a place that's....at least mostly ready to go. Buy a place with nice open pasture at the very least. You can find some pretty enticing deals on rough land, but by the time you get it ready to farm you'll have just as much, if not more money in it.... Plus you'll lose a considerable amount of time getting it usable....we purchased it for sentimental reasons as much as practical ones, If it weren't for that, I would seriously regret my choice to purchase such overgrown rough land.

I took 60 acres from solid rough forest starting in 2008 and made it in to pasture the next few yrs and built a new house on it in 2009. I was 58 when I started. I saved a lot of $$ doing it myself and doing it slow, but I gotta tell ya, it took a lot of me---out of me.
If had it to do over again, I sure would do it different--would a bought one ready to stock and a house already in place. Would maybe think different if I had been younger and had a couple teenage sons still home, but I didn't.
(takin it from the forest was relatively easy, but keeping it--not so easy--that forest wants it back--always)

 

[lavacarancher]

Thank you for your service. As BHB noted you can find land a little cheaper than $4K to $7K per acre if you look. At one time Texas had a veterans land program. I don't know if it still going but something you might check into.

 

[Dragstang]

First of all thanks for your service. I an new hear and not an experienced farmer. What i have done is start and run a successful businesses. I watch other people and see how they succeed. I do not feel i have the experience to give advice, but i do not see anyone saying to rent land and start a heard that way. I would be careful about borrowing much money before you get some experience on how the business works.