Buying a farm

Base the decision to buy a farm on sound business principles, not on emotion and sentiment, cautions Susan Pletts.

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Farming is a business with no place for emotion and sentiment. Rather, reason and good judgement is called for. If you want to farm, start by asking yourself the following questions:

  • Do I want to be a landowner or a farmer? That is, do you want to own the land you farm on?
  • What are my reasons for wanting to own land? Do I really want to farm, or is it a last resort because I haven’t been able to find a job elsewhere?
  • Am I on my own, or part of a group? If there is a group, does it have an adequate, registered legal entity, such as a co-operative, company or trust with a good constitution (set of rules). Is there a reasonable exit strategy for members who don’t wish to continue in the business, or who aren’t doing their bit?
  • Have I researched the type of farming I’d like to practice and is it suitable for the area where I can obtain land?
  • How good is the local infrastructure? Are the roads reasonable and is power and water readily available?
  • Do I have the finance to purchase movables (tractors, implements and equipment), livestock and inputs such as fertiliser to get my farming operation going?
  • Will the finance cover my overhead expenses until production earnings are available?
  • Are the markets accessible? 
  • If I’m going to secure a bank loan, will profits be enough to cover repayments, overheads and running expenses?
  • If you can’t answer these questions fully, and in the affirmative, then don’t consider going into a farming venture. 

Consult experts. Your bank is a good place to start. Your own knowledge should be sufficient to understand the options it presents to you. Research has become easier with technology and there is information available on the internet.
The department of agriculture and the Agricultural Research Council (ARC) assist with business plan information and supply various infopaks. The objective of running a business is to make a profit and farming is a business.

Next finance column: Sale transactions and transfer duties.

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Contact Susan Pletts on 082 572 3724, or at [email protected].