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Business options for a new grazing property

Meg Grzeskiewicz Published on 14 November 2013

A thorough evaluation of a potential grazing property does not stop with forage and fence. You must put equal weight on the business characteristics that come with the land.

These factors are not always obvious but greatly impact your daily activities. Make sure to investigate the following categories for each property you consider.

Location
How far is the property from your home and any farms you already operate? Closer is always better, in case of emergency and for lower travel costs.

Decide the maximum distance you are willing to travel. Is there a sale barn nearby? An interstate or main route for easy animal transport? Where will you buy feed, fencing and supplies?

Will a semi or truck and trailer be able to fit easily down the roads to the farm? Is there a veterinary clinic nearby that treats your animals? You will probably need one to sign health papers for animal transportation.

Laws and regulations
Make sure to research the agricultural laws in the town, county and state where your potential pasture is located. If the property is not zoned for agricultural use, the landowner may be able to apply for a zoning change.

There are usually regulations in place for what constitutes a legal fence as well. If the existing fence is in working order but doesn’t meet the requirements, you may be liable for damage done by escaped livestock.

You’ll need to spend money on an upgrade before you start grazing. If your potential pasture is near a state line, you’ll need to check into regulations for interstate animal transport.

You may want to buy or sell animals in the neighboring state. Some states require brands or other specific forms of identification (take this into account when evaluating handling facilities on the property or planning to install them).

If you plan to sell meat or milk, you will need to comply with USDA and local regulations. Your packing plant’s inspection status dictates where your meat can be sold.

There may also be rules governing sales at farmers’ markets. Compliance with all laws may be less expensive and labor-intensive on one tract than on another, depending on location.

Competition and land access
Take note of agricultural and development activity nearby. Will there be competition for your land from other livestock producers? Are there crop farmers, new subdivisions or stores nearby? Do not choose the last remaining pasture in a predominantly row-crop or rapidly developing area.

Remember that you have defenses against competition. Choose a property far enough from suburban sprawl. Sign a long lease (10+ years), and make sure your landowner understands the many benefits you can bring to the property through holistic management that other land uses cannot.

Find out from the landowner or real estate agent if anyone else has access to the land. Are there any hunters who hold seasonal leases?

Do utility companies need access to the property? Plan your fences and grazing rotation accordingly. Keep access paths open, and locate livestock away from hunting areas during active seasons.

If there are neighboring houses or farms nearby, ask about the current owner’s relations with them. Are there any neighbors who complain about noise or manure smell? Are there loose dogs that roam the area? Children who might need to be warned about electric fencing?

Landowner
It is important to evaluate your landowner as well as your potential pasture. “The foundation of your success or failure will be built upon the relationship you have with the landowner,” says Chris Stelzer, grazing manager and administrator of AgriculturalInsights.com.

“Take the time to ensure that it will be a healthy and mutually beneficial relationship before investing your time and money. Try to buy them lunch.

Spend a few hours with them asking them about their life and their goals for their property. If their goals don’t align with yours, it probably won’t work out. Ask them if they have ever leased the property before, to whom and why it did or didn’t work out. This will also give you an indication of how they do business,” says Stelzer.

The ideal landholder is interested in what you have to say and excited about beginning a grazing operation on his or her property. It is imperative that he or she respect your expertise and be willing to give you the reins when it comes to managing the land.

Nothing will create stress and hinder your progress more than conflicts with him or her. Remember that you’re going to be bound by this lease contract for multiple years.

Explain to your landowner that the installation of ponds, corrals or other investments may be necessary to build a profitable grazing operation.

Describe how these projects will increase the value of the property and directly benefit them. Then make sure they are willing to contribute financially to these projects. After all, when your lease ends, your landowner will, for instance, keep the ponds.

Insurance
Another major matter to be discussed with your landowner (in a leasing or management situation) is farm liability insurance. He or she may already have a policy if they are renting land to another farmer or farming themselves.

The most inexpensive way to obtain coverage is to get added to the existing policy as a renter. Many agencies offer a “tenant-owner policy” for you if your landowner is not covered.

You or your landowner should call the agent to clarify coverage details before you sign a lease. There are many affordable options available, so shop around before committing to any policy.

Do not confuse farm liability insurance with livestock insurance. A livestock policy only provides reimbursement for certain death losses (such as lightning and flooding). It will not protect you from animal-related liability.

Market
Finally, make a plan for how you will make money. The subject of marketing can easily fill books, but here are the basics.

First, what is your product? Will you sell live animals or meat, milk or other value-added items like cheese?

Decide on your selling points: Are your products all-natural and local, high-quality and affordable, or premier genetics? Pick a unique “identity” for your products.

Who are the customers interested in the selling points you chose? They may be urban or rural families, other farmers or commodity buyers. Identify where your target customers live and buy. Is there a sizeable customer base within an economical radius of the property?

If you are selling live animals, how many producers in your area will want your stock? Are there sale barns or active order buyers nearby?

Next, decide how you will get your products to your customers. Will you direct-market or sell through the commodity system? Selling your own products is usually more profitable than the commodity market, but it does require a serious time and work commitment.

Seek cooperation with others whenever possible because there is power in numbers. Can you join a local cooperative as a supplier? Join forces with neighbors to plan a seedstock sale?

How will you get the customer’s attention? In direct marketing, your sales are a reflection of your advertising efforts. Resources in advertising and sales outlets for farm businesses are endless.

How much product will you raise and sell? The size of your customer base will determine the scale of your operation.

Do not tie up your money in more livestock than your market will buy, even if your land can carry more animals. Choose the class of animals you raise and plan your production calendar with your marketing strategy in mind.

Only after you research these factors should you make a leasing or purchasing decision. Be thorough; don’t stop with the six categories above.

Something that appears to be a small inconvenience now may become a nightmare once you begin grazing. However, no property is perfect. Make your choice based on the totality of your observations, and decide which features are most important to you.  FG

Meg Grzeskiewicz is a freelance writer based in Colden, New York.

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