Funding, how can young families raise the capital required to start or purchase a farm?

4 posts
Tue, 06/26/2012 - 18:04 #1

Member for

12 years 4 months
aussie freebs
Last seen: 03/08/2018 - 21:05
Joined: 06/26/2012 - 17:36

Funding, how can young families raise the capital required to start or purchase a farm?

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Farming Help
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Fri, 06/29/2012 - 09:09 #2
charlie
Last seen: 12/26/2018 - 09:21
Joined: 05/31/2011 - 09:44

Hi Aussiefreebs,

Welcome to Farmstyle and thanks for the question.

There is no easy way to raise the capital to buy a farm. Over the past decade the price of agricultural land similar to real estate has increased significantly. Farm land within a two hour drive of the large metropolitan cities and land close to large regional centres has increased by the largest percentage. As an example the average farm (1,250 hectares) purchase price in NSW is now $800,000.

Increases in the cost of farming land have put the dream of owning a large farm out of reach for many unless they have been born into a farming business or been able to generate significant savings from off farm sources.

If you want to get into farming my obvious suggestion would be to firstly save plenty of money for a significant equity stake. Equity (not supported by off farm income) required by a bank for a farm can range anywhere from 40-60% of the purchase price. Personally I would try and have at least 50% equity in the farm before you start. For the loan you will need to prove to the bank through a cash flow forecast that the debt can be repaid. 

I have seen people successfully enter farming by a measured approach of started small, building up equity over time, usually selling and upsizing the farm.

How have other members raised the capital to buy their farm, I'm sure there are some creative ideas out there?

Charlie

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Thu, 06/28/2012 - 23:33 #3
arbe
Last seen: 03/08/2018 - 21:05
Joined: 09/23/2011 - 16:27

What about buying as much land as you can afford and leasing the rest, expanding as you can?

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Tue, 08/07/2012 - 16:42 #4
katiepooch
Last seen: 03/08/2018 - 21:05
Joined: 10/01/2011 - 10:46

Hi all,

I'm not sure if you are aware but there are 'Young Farmer Finance Schemes' available in most states. These programs offer concessional interest rates, repayments and flexibility with regard to deposits.

I know that both Victoria and Queensland have a young farmers finance scheme and I'm sure that New South Wales is trying to get one established.

They have eligibility criteria (age, education, experience). If you fit into these criteria it might be a good way to get started in farming. A link to information on the NSW scheme is below.

http://www.nswfarmers.org.au/__data/assets/pdf_file/0004/69628/YOUNG_FARMER_FINANCE_SCHEME_short_doc.pdf

Hope this is helpful.

Mary 

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