Dear OGS –
I intend to start a small farm operation in 2011. I am looking for ideas on the cost of equipment and supplies that I will need to get started as well as suggestions on how to finance them. Thanks.
— Andi in Asheville
Dear Andi –
The approaches to start-up capital are probably as varied as the farms that use them. I will describe our approach and offer some ideas on how to proceed.
I estimate the cost of our infrastructure at about $50,000 but we assembled it gradually as our farm operation grew. That number may sound high but irrigation systems, fencing, greenhouses, coolers, dry storage, tractors, fruit trees, plastic buckets, pick-up trucks, tailgate tables, and such add up. I describe our approach with a term that I heard from former Celo farmer Ruth Ostrenga – “flying low.” – or in other words spending as little as possible on equipment for a small scale operation.
Farming is a second career for me so we were able to assemble a down payment on our farm with proceeds from selling a house elsewhere. It came with a barn, well, and several outbuildings that were “financed” through our home mortgage. Our first year we grew on about a quarter acre so not much infrastructure was needed.
In my view, the trick in flying low is to have a plan for how large your operation will eventually be and to install infrastructure that can be expanded as the operation grows. A less desirable approach is to buy cheap equipment that needs to be torn down relatively soon at a waste of time and money. For example, if you are laying irrigation line, it makes sense to put a large enough pipe in the ground to accommodate future expansion in that direction. A propagation house can be placed in a way to accept future bays or more hoops as the demand for transplants grows.
For cooling we used old refrigerators for a few years until we could afford a reach-in cooler. It was eventually replaced with a used walk-in. Some growers cool produce in a spare room using a window air conditioner and special controller.
A packing shed can be tarp and laundry tub. The family pick-up can be the tailgate vehicle too. The house well can pressurize a small irrigation system. A walk-behind tiller can prepare an acre or so in the beginning, even if a tractor is needed eventually.. Most equipment is available used at a much lower cost if you have the patience to look for it.
Be sure and remember the option of renting equipment or contracting with a neighbor who owns the equipment that you need. Some growers have a neighbor disc their production area each spring and manage it with a walk-behind tiller until it is cover cropped in the fall.
To summarize our approach, we worked up to the $50,000 in infrastructure very gradually as our farm grew. We financed our farm equipment from farm proceeds generally with some help from off-farm employment. We avoided debt and each year we continue to improve the equipment in our operation with farm earnings.
At the other end of the spectrum is “fly high” or obtain a loan to buy the equipment for full-scale operation immediately. Possible sources of financing are Mountain Bizworks, Self-Help Credit Union, or Carolina Farm Credit. Small business loans through more conventional lenders may also be an option. Most lenders will need to see a business plan and a good credit history. Without a track record, the sales pitch to the loan officer might be challenging but it’s worth asking. When you do have a track record, a good relationship with a lender may be helpful. Many growers obtain a loan each year for operating capital and pay it off when the crop comes in.
We took the frugal, fly low approach to infrastructure but other options exist. It might make sense to put off large purchases for a few years until you have enough experience to know exactly what equipment that you will need. It might also be best to rent highly specialized equipment until you are sure that you will be growing the crop needing that equipment for many years.
The CRAFT organization managed by OGS can be a great source of ideas on flying low. Every farm tour gives me ideas on how to do more with less on our farm.
Best of luck with your farm enterprise. We need new growers. Please let Organic Growers School know how we can help.
Ask Tom © 2013 Tom Elmore & Organic Growers School
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Author: Tom Elmore
Tom Elmore is co-owner and operator of Thatchmore Farm in Leicester NC. He has grown certified organic fruits and vegetables for 25 years and serves on the Boards of the NC Greenhouse Vegetable Growers Association and the Organic Growers School.