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howtobuyafarm

How to buy a farm

Brandon Fawaz, who started a farm as a freshman, shares 18 years' worth of knowledge

We spoke with Brendon Fawaz, owner of Fawaz Farm to get his top tips on some of the things to consider when buying a farm.

Brendon on analyzing your knowledge and expertise

"I think the first thing to look at is level of knowledge, skillset and expertise in relationship to the type of operation they're trying to buy. For example, I'm extremely knowledgeable about hay, and to define that even more, alfalfa hay and orchard grass hay."

"I would not have a clue how to run a sugar cane farm or a soybean farm or a farm that grows a different commodity or to get into animal agriculture. I wouldn't know how to run
a commercial pork operation."

"So I think the very first thing they need to look at is their knowledge and their expertise in relation to what they're trying to buy. That would be first and foremost."

On what to know about the land

"If someone is trying to buy a farm they need to be familiar with the area and have some 'on the ground experience'. They need to know if the farm typically runs out of water in August or September when water levels can be lower, or does it have water year-round?"

"Is it dependent on water from a government project or from an irrigation district that has the possibility to dry up? Is it ground water that can become metered?"

"Is it their own storage that they have onsite? Crops only grow when there's water and, in some areas, rainfall is all the water they need. 

"Second, something I think is vastly overlooked in the farming industry, is soil type. No matter what you do, try to be a good farmer by picking the right type of seed, use a good fertilizer, chemicals and crop amendment materials.

"If you have extremely poor soil, it's going to limit your yield or your return from the very beginning. That doesn't mean that it's a poor investment, but it means that it's not worth as much money as a farm on better soil."

"So, knowing the soil type is something that's very important that someone should look at in the beginning." 

On the costs of buying land

"The leasing or pricing of land is highly dependent on the geographical area. "

"In our area, land might be as low as $4,000 an acre. You might go south 100 miles and it gets up to $6-7,000 an acre. You go south another 100 miles and it's $10-12,000 an acre."

"Move west 100 miles and it could be $100,000 an acre. It is extremely variable."

"I've seen different auction and land reports from throughout the Midwest and other areas and there's a lot of farmland that's been breaking $10,000 an acre in the current market."

"There are definitely exceptions to the higher and lower end of that value. "

"Leasing would be extremely complicated. There are straight cash leases, which I think are becoming less and less common."

"There's more share cropping where the landowner and the person operating the farm have some risk and reward interest in the operation. Those just vary so much by area."

On challenges of buying a farm

"The number one obstacle or challenge I face in my business is regulation by the state, or how the state regulates what I can do on my property or property that I lease and control. California isn't unique; there are different degrees throughout different states about regulations."

"That's something that a person has to be aware of. What regulations will affect them in the area that they're trying to operate in and how do they work with them?"

"How do their neighbors work with them? That's something that someone should have their eyes wide open about. 

"Second, in agriculture sometimes a 10 percent failure is as good as 100% failure. For example, if you were in school and you missed 10% on a test, you still have an A-."

"You still feel pretty good and move on. In agriculture, if you plant a field and your crop is not prepared properly, the seed bed is not done properly, and you have 10% of the ground that's missing a healthy productive plant, that will haunt you the rest of the field's life.

"Whether it is with weed control, loss of production, you name it. I would say in agriculture you have to strive for perfection because you don't get a lot of second chances. Your second chance in our area is a year away."

"We have one year, make one crop, and then we have to invest in a crop for the next year to get a return for the next year." 

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Debbie Williams

About the author

Debbie is a freelance writer 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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