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Crops farming

How to Buy a Farm

Find out how to buy a farm- from financing to location.

Farmers are often referred to as the backbone of the economy. There is certainly no overstating the importance of farmers to South Africa.

This lifestyle can be very different to the modern office working life and there are a lot of people that thrive working in a beautiful landscape surrounded by nature with the satisfaction that it is a job that is keeping the world going.

So, if you are looking for a business that has new challenges every day without anything close to a monotonous routine, farming could be for you. Keep in mind that this job will be a complete change in your lifestyle, though!

farm land

Find the right farm

The agricultural industry covers a broad range of specialisations that require different amounts of capital and different kinds of skills. Will you grow crops, raise animals, or a combination of these?

The location of your farm will be a large determining factor of what type of agricultural activity you can do successfully. If you are buying an already established farm, you have the advantage of looking at the previous owner’s books and seeing if it is a financially viable choice.

A pre-existing farm will also be less costly than building one from the ground up if you do your research and choose the right farm to buy.

Nguni cow

Financing

There are several options for financing if you are considering buying a small-holding as South African land policy is trying to favour re-distribution of land and, therefore, smaller land parcels.

Resource-poor farmers can approach The Land Bank for support. They will offer loans in order to help people who would otherwise not be able to participate in mainstream agriculture. You can apply for an unsecured loan of up to R25 000.

The Micro Agricultural Financial Institutions of South Africa (MAFISA) scheme is set up to provide financial services to smallholder farmers. These loans are specifically for input costs.

You can also approach a commercial bank for a loan. Make sure that you have a very detailed and well-researched business plan before you do this.

Wine farm

Business plan

Creating a business plan to buy a farm is different from creating a business plan for other industries. This is because your business plan will need to include a production plan that will have to be extremely well researched and detailed.

This section will look at the way that your farm will operate and what kinds of products it will produce for market. You will need to understand the type of soil, the buildings, the equipment that is on the farm and what kind of condition it is in and the processes that are used in that particular type of farming.

This part of the business plan will be the most detailed with information on the capabilities of the land and market research in order to understand whether this kind of farming will be profitable.

The agricultural industry is volatile and so you will need to outline how you have accounted for this through diversification or through farming something that does not have a lot of competition.

Nguni cattle

Market positioning 

Going into farming is going to be different to other businesses as you get ready for a complete lifestyle change. It is not different, however, in how you need to approach making a profit.

Consider the questions that any business would in order to understand whether you will be able to make money off your business venture.

What kind of need will your product fill? What competition will you face? Can you create demand for your product? What advantage do you have over your competitors? 

These kinds of questions need to be addressed before you leap into the business if you intend to make money farming. 

If you are passionate about it, though, you will get satisfaction out of it in some way every day. For some people, working outdoors, from home and seeing very real results from your hard work is exactly the reason that they get into farming and become good at it. 

Buying the right farm will be the first step that you take to being one of those people. 



Anthea Taylor

About the author

Anthea Taylor is Content Producer at Dynamis and writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

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