Beginning farmers are a diverse group—young to middle-aged, small to large operators, steeped in agriculture and new to the industry. What they share are high startup costs and limited capital, whether transitioning into a generational farm, returning after an off-farm career, or establishing a new farm.
These challenges can be managed with a strong business plan, the right partners and mentors, sound financial practices, and proven risk management strategies.
This guide helps you think through the foundational steps to starting a farm and developing the skills and mindset needed for financial success.
In this article:
Who is a beginning farmer?
Beginning farmers are defined by the Farm Credit Administration as those with 10 or fewer years of experience operating an agricultural enterprise. The size of the operation doesn’t matter, nor does age.
In fact, the typical beginning producer is between the ages of 35 and 64. Many have built off-farm careers and are returning to a generational farm or ranch. Others meet the definition of beginning and young set by the U.S. Department of Agriculture (USDA)—those producers who are 35 and younger.
While producers never escape the capital-intensive, high-risk nature of agriculture, beginning producers generally face high startup costs, limited availability of land and equipment, and inadequate capital to withstand setbacks.
USDA offers programs designed to help beginning producers start farming. This includes specialized loans and expanded benefits for insuring crops and livestock.
As an agricultural lender whose mission includes growing the next generation of producers, we are approved to originate and service Farm Service Agency (FSA) loans. We also have loans and a Starting Gate program tailored to the needs of our young or beginning customers.
Ask the right questions of the right people
Farming is more than a job. It’s a way of life—one that can offer autonomy and the opportunity to work with nature and alongside family.
Production agriculture also requires time commitments beyond a 9-to-5 job, physical labor, and strong business acumen—none of which guarantees you a profit at the end of production cycle.
Clarify your “why” before you commit
Now is the time to take stock, do your research, and get the information you need to answer one key question: Why do I want to farm? Knowing your “why” allows you to move forward with purpose and to define your vision and goals. This starts by setting realistic expectations about farming—and for your farm.
Learn from farmers inside—and outside—your circle
Talk to farmers—those who have years of experience and those who are newer to the industry. They can help you understand the cost of farming, options for starting and scaling an operation, and the must-haves versus the wants. Experienced producers can also guide you in finding markets and managing land, finances, and labor.
Family members with farming experience are invaluable. But producers outside the family operation can help broaden your perspective and open new ways of thinking about how to start a farm.
Van Mansheim, a South Dakota farmer and rancher, credits his uncles with teaching him sound business and farm management and outside mentors and farmer programs with opening his eyes to different production methods that support his goals.
Use education to close experience gaps
Take advantage of courses offered by your local extension office and community college. Several land-grant universities offer online courses that beginning producers find useful when establishing a farm. Many of these courses are free and self-paced.
Start early with financial conversations
Meet with your lender. It’s never too early to seek an assessment of your financial position and what it means to start a farm. Lenders who finance agriculture can offer insights specific to your operational goals. The right lender will know the local landscape—the competition, where opportunity exists, strategies that can help you establish a farm, and more.
The time you spend researching will help you align your lifestyle and financial needs to the type of farm you establish. It also will help you demonstrate to partners, including your lender, that you have done your homework and know what you want to accomplish.
Map your vision for your farm
No two farms—even neighboring operations producing the same commodities—are the same. And no two plans for establishing yourself in agriculture will be the same.
Transitioning into a generational farm is one of the most common routes for beginning producers. Wendy Johnson, an Iowa producer who left a fashion career to return to the family farm, is a good example of this. Johnson i established a small operation, Joia Food & Farms, where they test production practices before introducing them on the larger farm Johnson operates with her father.
Some beginning producers find opportunities as tenured operators retire. Still others seek niche markets or side hustles to get started.
These are just a few ways to gain a foothold in the industry, and your vision for your farm will be influenced by your business and personal goals. Several factors will contribute to how you achieve your vision.
Access to land shapes every decision
Beginning farmers often aspire to buy their own ground, the cost of which varies significantly depending on location, soil quality, water supply, cropland versus pastureland, improvements such as drain tiles, and more.
While land is a good long-term investment, it requires a strong capital position. For this reason, leasing farmland is common among beginning farmers. Leases take many forms, including fixed or flexible cash rent, crop-share, and custom farming.
The right lease or land purchase is the one that best supports cash flow so you can meet your financial obligations and grow your operation over time.
Managing startup and equipment costs
There is no way around it—farming requires significant money to get started. Just how much will be determined by the size and scope of your operation and the commodities you produce. Your lender will be important to understanding your startup costs.
In the past decade, equipment costs have risen significantly. How you manage this expense is critical to your bottom line. It pays to research and evaluate all your options, including buying new or used, leasing, sharing, hiring custom work to reduce your equipment needs, and providing custom work to gain efficiencies.
Labor realities for beginning producers
Beginning producers often are the laborers. This is a great way to gain experience, generate income for your own operation, and develop trust with a producer—who may offer you opportunities down the road, such as use of equipment in exchange for work.
As you establish your own farm or ranch, your labor needs will be shaped by many factors, including the size and scope of your operation, whether you have an off-farm job and need outside help with day-to-day farm chores, and the availability of dependable family members.
Create a business plan
A written business plan gives you a competitive advantage. Producers who have put pen to paper to develop a road map for their farm or ranch are as much as four times more likely to succeed and 21% more profitable, according to Dr. David Kohl, professor emeritus at Virginia Tech and frequent speaker and writer on agriculture finance.
Why a written plan matters more than you think
Because farm businesses often are intertwined with family, this is an opportunity to identify your organizational and personal goals. What do you want the future to look like for your farm, for your family?
A business plan is a communication tool
It takes time as a beginning producer to build trust. What proactive steps can you take to ensure your landlord and lender understand what you are trying to do? How will you separate business from family conversations? What strategies can you put in place to avoid or resolve miscommunications?
Defining roles to reduce conflict
No matter their size, farm management falls into three general categories: business and finances, production, and marketing. If it’s a family operation, you may also need to consider household management. The clearer the roles, the less likely conflict will arise.
Planning for both profit and quality of life
For the well-being of farm and family, ask yourself: How much time do you have to devote to each? How does farming fit in with off-farm jobs? Who fills in when your children have games or the family wants to go on vacation?
Core components every farm plan should include
While this is a tall order, a business plan doesn’t have to be complicated or long to be effective. It does need to be well thought out—for your benefit, and for those you will be working with you, including your lender, landlord, business partners, and family members.
Our Starting Gate workshops for young or beginning producers include a session on business planning. Here are key elements we cover:
Your mission and core values. Succinctly describe your farm (commodities, business model, and goals) and the principles that will guide it. Aim for two to three sentences that allow employees, partners, and others to easily understand where you are going and how you will get there.
A SWOT analysis. You will look at four aspects of your business—internal strengths and weaknesses, and external opportunities and threats. Updated regularly, your SWOT analysis will allow you to use your strengths to take advantage of opportunities while also mitigating risks.
Short-term goals (12 months) and long-term goals (two to five years). Avoid vague goals: Increase profits. Be specific: Return on assets will be 6 percent by year-end.
Financial plan. You will build a balance sheet, cash flow and income statements, and your breakeven. Scenario testing (What if commodity prices drop or increase? I can’t plant because of weather?) helps you identify where you might need to make changes.
Marketing and risk management plans. This is where you demonstrate the viability of your business—where and how you will sell your commodities to break even, and the strategies you will employ based on the risks your operation could face.
Make it legal: Licenses, certifications
Agriculture businesses operate under unique rules that govern everything from land use and pesticide application to labor and taxation. Federal, state, and local governments set their own rules and regulations.
Here are some common requirements:
Sales tax permits if you sell direct to consumers.
Food safety certification if you sell produce to retailers or restaurants.
Zoning approval from your county for agriculture use.
Livestock health certificates.
Permits to irrigate, farm in environmentally sensitive areas, and to transport animals across state lines.
Understanding various rules and regulations can feel overwhelming. Fortunately, there are resources to ensure you apply for all the necessary licenses and certificates. You may want to consult a lawyer to get started.
Your area FSA office can help you register your farm and obtain a farm number, as well as identify relevant licenses, certifications, and documentation—some of which will be important to USDA program eligibility. Your state agriculture department, local extension office, and land-grant universities also can help you navigate the regulatory environment.
Business structures
The right business structure can protect you from liability and support your business goals. It can also save you money at tax time.
There are several structures common to agriculture, including:
Sole proprietorship
Partnership
Corporations
Limited liability company (LLC)
Each has benefits and limitations. A certified public accountant (CPA) can help you understand your options from a tax perspective. Attorneys who specialize in agricultural law are crucial when drafting your legal documents.
Financing options to get started in farming
When you are starting a farm, you may need more than one approach to financing, such as an FSA loan for young and beginning producers combined with a private loan. While FSA offers an array of financing options for all producers, it has specialized loans to help young and beginning producers with farm purchases and operating costs. FSA loans require additional outside funding. For most, this means securing a private loan through a lender who participates in FSA loans.
Look beyond the interest rate
While interest rates matter, they aren’t the only factor to consider. Loan terms, including their length and payment structure, can help address cash flow needs. Your lending needs may include:
Operating lines of credit. Farm operating loans provide short-term capital to pay for agriculture-related expenses, such as livestock, labor, cash rent, seed, and inputs.
Real estate. These long-term mortgages finance or refinance farmland, pastureland, and other ground used for agricultural purposes. You may also be able to use land loans for land improvements, such as fencing, grain bins, and facilities.
Equipment. Your financing options will depend on whether the equipment is new or used and bought at the dealership, or through a private party. It also pays to compare purchasing versus leasing equipment.
Livestock. Finance the purchase, care, and feeding of livestock. Our customers also can refinance debt on livestock.
Intermediate loans. Depending on the lender and product, these loans can have repayment terms of up to 10 years—longer than operating lines but shorter than real estate loans. They can be used to finance capital purchases such as equipment, breeding stock, and facility improvements.
Matching loan structure to cash flow
Look for a lender who understands the unique needs of young or beginning producers, and has lending products that are flexible enough to fit your operation.
What lenders expect from beginning producers
Lenders are in the best position to support your success when you are transparent and your documentation is accurate. Be prepared to share your:
Business plan
Balance sheet
Income statement
Cash flow budget
Insurance is nonnegotiable in agriculture
Farming is a high-risk business, and beginning producers generally don’t have the capital to withstand a bad crop year. A storm that wipes out a barn or an employee who suffers an injury can also be economically devastating.
Different risks require different coverage
Insurance is essential to mitigating risk, and each product protects a different aspect of your farm. Your coverage needs may include:
General farm liability. Protects against lawsuits, bodily injury or property damage on the farm.
Property insurance. Protects farm machinery and equipment, farm buildings, and stored products against theft, fire, and weather.
Workers’ compensation. Most states require you to carry this coverage if you hire employees.
Commercial auto and farm vehicle insurance. Personal auto policies typically don’t cover vehicles used for farming.
Federal crop insurance. These multi-peril products protect against natural disasters and price declines. They also support your marketing plans. Beginning producers qualify for expanded subsidies for up to 10 years.
Whole-farm revenue protection. Covers revenue from all commodities under a single policy.
Livestock insurance. These products, including federally subsidized options, are important to protect revenue and margins.
The value of specialized ag insurance advisors
Choose agents who have specialized knowledge, particularly when it comes to crop insurance and livestock policies. There are thousands of possible options to choose from when insuring your crops. Our crop insurance resources include a trigger yield calculator, key deadlines, and other resources.
Grow your knowledge and network
Farming decisions are complex and risky—and you don’t want to make them in isolation. Mentors and peer networks shorten your learning curve by sharing real-world experience, lessons learned, and practical insight. Learning from others who face similar challenges builds confidence, reduces costly trial-and-error, and helps producers make more informed financial and management decisions.
Learning doesn’t stop once you start farming
Continuing education—informal or formal—also helps you remain competitive. Starting a farm can be all-consuming, but look for learning opportunities on finance, technology, production practices, and risk management.
Workshops, conferences, and courses will expose you to new ideas and proven strategies, helping you adapt to the ever-changing agriculture environment and make smarter decisions.
Side X Side Conference 2026
Our Side X Side conference puts next-generation farmers and ranchers on a path to success with strategies for navigating succession, managing finances, and mitigating risk—while also building a lasting community of future-focused ag producers.
Build a support system you trust
The more opportunities you take advantage of, the stronger your network of support. It should include:
Financial officers who understand your operation and help with planning, risk mitigation, and long-term strategy
Peers and producer groups who offer perspective, encouragement, and practical insight
Mentors who provide guidance on management, succession, and decision-making
This mix of professional and peer support strengthens resilience, improves decision-making, and helps producers navigate both challenges and opportunities.
Mentors and ongoing education will help you grow and scale your operation with confidence, reduce isolation, accelerate innovation, and create a foundation for long-term success.
