How to Start a Farm

Starting a farm in Canada can be exciting and nerve-wracking. There is a lot that goes into farming, and not all farms are the same. Farming isn’t like any other business out there, and it takes a particular sort of business owner (and person) to start a farm and make it thrive. It’s not an easy job, but the rewards can be well worth it. Before you get started, the first question you should ask yourself is: “Is farming right for me?” Farming isn’t for everyone. It takes a lot of grunt work combined with business savvy. Farming can mean long days, even long nights, and a lot of research. The amount of work you’ll need to put in will partly depend on whether you want a business to support yourself or a hobby farm. Hobby farms can be quite lucrative, but they can also be just that: hobbies. However, if you want to make a living as a farmer, a business structure farm might be the way to go. Here’s how to go about starting your own business running a farm. Pros to starting a farming business No matter what type of farming business you start, there will always be demand, particularly for food. Farms are one of the foundations of a consumer market. But like all market economies, there will be competition. If you price your products correctly, you’ll stand a chance in the farming market. If you price your products too high, you’ll be out of business pretty quickly. If you price too low, you likely won’t turn a profit. With farming, there is an opportunity for diversifying. In fact, many farmers do just that. If you grow crops, you can plant more than one type of crop. If you are opening a petting zoo, you can also grow and sell your own feed, or even open a bed and breakfast to guests. In Canada, there are a lot of financing options available for new and established farmers, many of which are non-repayable small business grants. Particularly in the energy farm sector, there are considerable investments being made. Cons to starting a farming business As with any type of new business, there are always going to be cons. With farming, however, these drawbacks can be deal-breakers. The amount of knowledge and work needed to get a farm up and running can be a barrier, particularly for entrepreneurs with no previous farming experience. One of the biggest concerns is the weather. In Canada, a dry winter season can mean dry spring soil. Hot summers can bring the risk of wildfires, particularly in the prairies. Strong winds and storms can damage crops, buildings, and fences. Also, don’t forget about pests and diseases. Depending on the type of farm you want to start, your equipment overheads can be very high. Building a proper business plan can help you get a sense of the must-haves versus the nice-to-haves, and how much money you have to work with. The amount of work involved in starting a farm may also mean hiring temporary workers right from the start. There is a lot of physical labour involved in farming, and even if you’re physically capable, there are some things that you just can’t do alone. Consider hiring costs when creating a financial plan. 7 steps to starting a farm Now that you have a basic understanding of the amount of work included in farming, as well as the pros and cons, here are seven steps to starting your own farm. 1. Choose what to produce What do you want to farm? Is it flowers? Dairy and livestock? Maybe you want to open a petting zoo. Here are a few types of farms that you might consider. Produce farm: A produce farm is a farm that grows food produce, like fruits, vegetables, and herbs, for sale at a market. The size of produce farms can vary considerably. Some farms are massive and distribute to major grocery retailers. Others are much smaller and sell mostly at farmers’ markets and local markets. Regardless of its size, there are regulations related to selling produce that must be adhered to. Dairy and livestock: Dairy and livestock farms raise cattle, goats, pigs, or chickens. These farms can be expensive and take a lot of work and capital to get started (and keep going). Animals need to be purchased at auction or bred on the farm. Depending on the type of farm and number of livestock, you’ll need a lot of acres of land and equipment. Don’t forget to factor in veterinary costs! If your livestock is getting sick, you’ll need help. Fish: This is a farm that breeds and cultivates fish. Usually, fish farms supply food, such as trout or salmon. But some farms breed exotic fish for aquariums and pet stores. Others can even breed fish for restocking lakes for angling. Flowers: A flower farm can be as big or small as you’d like. You might even have a micro-farm and grow just a patch of flowers on your property. You can then sell these at farmers’ markets or to local business owners. Some flower farmers grow flowers for seed production, which can be sold to seed retailers or at local markets. Energy: The Government of Canada is investing a lot in renewable energy farms, which is great for entrepreneurs. Energy farms include different types of energy that are all renewable sources. Wind farms and solar panel farms can provide electricity to local regions. They can also be community cooperatives, where locals all invest a share in the supplies, such as wind turbines and solar panels. Therefore, everyone owns a certain percentage of the farm. Entertainment: While a lot of work, entertainment farms can be, well… entertaining! These farms range anywhere from a hobby farm to a petting zoo to a flower farm, and even a goat yoga farm (it’s a real thing!). Entertainment farms are on the rise and can be quite lucrative. They still require a fair amount of work, and you’ll have to consider special liability insurance if customers are coming to your property. 2. Learn everything about your product Once you’ve landed on the type of farm you want to start, do your research. Learn everything you can about that product and what it takes to be a farmer. Talk to other farmers, business owners who sell those products, and watch the markets. Going in well-informed will help mitigate any unpleasant surprises. 3. Choose a business structure What type of business structure do you want your farming operation to be? Do you want it to be a sole proprietorship, a partnership, or a corporation? The primary difference between these business structures is how tax is structured and your liability if the business fails. Essentially, a sole proprietor is personally responsible for all financial obligations, including debts and losses. A corporation is a legal entity in and of itself. Therefore, the business owner—you—is protected. Corporations are taxed under a lower tax structure than sole proprietors. If you choose to be a sole proprietor, you’ll be subject to personal income tax structures. Each business structure has its own pros and cons, and it’s best to do your own research before deciding. 4. Register your farm Just like any other business, registering your farm is a wise decision. It helps with income tax, to secure funding, and it looks more professional to potential investors. In fact, some investors won’t consider investing in your farm until you register it. How you register your farm will depend on the business structure you’ve chosen. That’s where Ownr can help you manage your business. 5. Find land If you don’t already have access to land, the next step is to find land. For smaller farms, you could use land that you already have. However, check to see if you need any land zoning exceptions from your local municipality first. You can find land at places like Realtor.ca and Zillow. 6. Premises Identification Number A Premises Identification Number is unique to farms. It is a unique number that is assigned to a plot of agricultural land by the provincial government. A Premises Identification Number is not always applicable to energy farms, however those farms need to abide by their own set of rules and regulations, particularly with regard to noise. 7. Learn about the different tax rates and programs Owning a farm comes with a lot of financial responsibilities, including knowledge of the different tax rates and programs, many of which can be of benefit to you. Here are three tax programs geared towards farmers in Ontario: Farm Property Class Tax Rate Program The Farm Property Class Tax Rate Program is a provincial program that ensures Ontario farmers are taxed at no more than 25 per cent of their respective municipality’s residential property tax rate. This is because most farmers use their family residence and land as their primary business. Managed Forest Tax Incentive Program (MFTIP) The MFTIP is an Ontario program similar to the Farm Property Class Tax Rate Program, but applies to farmland that is classified as “Managed Forest.” These lands are taxed at no more than 25 per cent of the municipal residential property tax rate. Conservation Land Tax Incentive Program (CLTIP) The CLTIP applies to Ontario land that is considered a “provincially significant area of natural and scientific interest.” Lands that are eligible for this tax incentive program could qualify for a 100 per cent property tax exemption. If you’re ready to take the plunge and start a farm business of your own, Ownr can help you to take the next step.