Buying farmland is very different than most real estate purchases, even dissimilar than buying a ranch. Farmland can be a profitable investment; however, there are many areas that must be researched prior to making a purchase. In this article several aspects are conferred that should be researched prior to purchasing farmland – soil quality, crop history, water availability and climate, and lease options to name a few. Often, much of this information will be researched during the due diligence period or can be provided by a good land broker. Swan Land Company is known for providing in-depth information that can help determine if a specific farm is the right fit for your goals and business decisions.
When it comes to farming, understanding the characteristics of the soil is imperative. The quality of the soil, including organic matter and nutrient availability, is one of the most important inventories to monitor and manage. It also is important, before a farm is purchased, to understand the best farming practices in the area and to recognize how well nutrients are reserved in the soil. Many areas require cover crops planted between seasons to help retain nutrients and manage weeds while other farms utilize a period of fallow. Fallow is a period of rest in which a field is left unsown for a season.
Water erosion within the fields and the presence of weeds will be an indication of past management practices and help determine if poor management practices are currently or have historically been employed.
Crop history is directly related to the quality of soil. Knowing the crop history, rotation of the crops and the rotation intervals will help determine the productivity of the soil, and in turn, the potential profitability of the farm. Crop rotation is a variable factor that is a fine line between the balance of profit verses soil management. Certain crops are in higher demand than others, however in order to meet those demands, lower demand crops must be incorporated into the fields to maximize production of crops on both a short-term and long-term basis. Crop rotation also helps alleviate harmful pests, decrease disease, and increase nutritional value of the soil.
Irrigation, water availability and climate are important factors to take into consideration. Both irrigated farmland and dryland crops require a certain amount of moisture. Knowing the water rights, irrigation systems that are in place and water availability of a farm, as well as the climate, average annual rainfall and moisture levels of the area will be a determining factor of crop selection, viability and profitability.
Another important factor to consider when purchasing farmland is knowing leasing options, whether leasing the farmland is the initial plan or in the foreseeable future. Is the farmland currently leased and what is the length of the lease? What are current and forecasted leasing prices, and what is the demand for leased farmland in the area?
Before buying farmland, reach out to area farmers, lessors and lessees to help answer questions regarding the current farming statistics in the area. Farming cooperatives and local extension agencies can also be a strong source of information.
If you are interested in buying or selling farmland in Montana, Wyoming, Nebraska, Idaho, Utah or New Mexico, the brokers at Swan Land Company are extremely knowledgeable in the purchasing and selling of farmland. Contact us or give us a call today at 866.999.7342. We look forward to working with you.