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Should I buy a farm or a ranch

Should I buy a farm or a ranch?

The lowdown on the key differences – in terms of commodities produced, land prices, challenges and uncertainties – between running a farm and running a ranch.

Those outside the agricultural industry could be forgiven for thinking that farms and ranches are essentially the same thing. Far from it, even if there are many similarities.

If you’re considering buying an agricultural business, but you’re a novice in the field, then – as well as acquiring the relevant skills, knowledge and experience – it’s worth understanding the key differences between a farm and the Great American ranch first.

What farms and ranches have in common

While there are plenty of differences, let’s start with the things they have in common – namely that they:

  • Represent a foundational source of the human food chain and economy
  • Involve the strategic use of land (and other natural resources) to produce food and other products
  • Rely on a combination of human and mechanical labor to produce a product
  • Are subject to fluctuating international commodity prices, and weather conditions, making either vocation highly unpredictable

As for the differences, a farm features a plot of land and/or other natural resources that produce crops or other commodities for human consumption or use. They can be strictly crop-based, livestock-focused or a combination of the two.

A ranch is actually a type of farm, focused exclusively on raising livestock for food and/or other products made from the animals. On ranches, land is more commonly used for grazing than for planting.

Considering these definitions, it’s apparent that many farms are mislabelled. For instance, it’s common to refer to an operation that primarily produces milk as a ‘dairy farm’, when in fact, it’s more accurately a specialized type of cattle ranch.

Let’s break down the differences between a farm and a ranch a little more.

Comparative size

This is certainly not a hard-and-fast rule, but generally speaking, ranches tend to be much larger because livestock herds require far more grazing land than a farm needs for producing an equivalent volume of produce.

While farmland is usually measured in acres (or plowable acres, if the land is multi-purpose), ranches are measured in square miles, often incorporating hundreds of square miles of owned and/or leased grazing land.

Tools and equipment

Because of the wide range of produce, farms will use any or all of the following:

  • Manual gardening tools
  • Trucks
  • Tractors
  • Combines
  • Threshers
  • Hay balers
  • Various storage and production buildings
  • ...And many other crop-specific tools and supplies

Ranches, on the other hand, generally require the use of trucks, ATVs or horses for use in herding and pasturing animals, along with fencing and the few tools required to maintain it. While some ranches expand to include full breeding and birthing operations – often requiring specialized equipment or staff – this isn’t overly common or necessary to run a successful ranch.

Setup or acquisition costs

The total purchase price or initial investment for a ranch depends largely on the price per square mile and amount of grazing land included.

If high quality grazing land is plentiful in the area, it may cost much less to buy or lease as part of a ranching operation than it would, for instance, to build a house on or use for other commercial purposes. But you’re going to need a lot of it, so the overall price tag can still be substantial.

There’s also a significant outlay in buying enough livestock to make your ranch profitable.

On the other hand, buying a small farm sufficient for homesteading (growing enough food to feed your family) and/or earning a small profit can require a relatively small investment, especially in some areas of the country.

But the total initial investment will depend to some extent on what – if any – equipment comes with the package and what shape it’s in. A modern farm without the necessary farming equipment is unlikely to produce enough, quickly enough, to turn a profit – and buying all that equipment up front won’t be cheap.

Running costs

Farming and ranching are both occupations beset by uncertainty, in terms of both the weather and national and global commodity prices. This means it’s difficult to predict with much certainty how much will be produced in a given season, and how much revenue it will generate.

All things considered, however, this volatility hits crop farmers far harder than ranchers.

Admittedly, the value of livestock also fluctuates with supply and demand along with several other factors, while ranchers do have to deal with a living, breathing commodity that can get sick and die unexpectedly.

Nevertheless, their success is less contingent on the weather, the prevalence of pests or plant diseases and other natural occurrences they have no control over.

Farmers, on the other hand, need a healthy dose of luck along with their skill and hard work if they’re to enjoy a bountiful, lucrative harvest year after year. Sometimes, no matter how hard they work, Mother Nature just doesn’t cooperate.

Farmers will also likely spend more to fuel and maintain their equipment, and will have a bigger headache in coordinating seasonal labor needs. However, ranchers will likely need to maintain a larger staff of laborers, foremen, and others to help with the animals year-round.

Farm or ranch: which one for me?

If you think you have what it takes to earn your living from the land, the choice between buying a farm or a ranch really comes down to which type of work excites you most. If there’s little between the two, then the differences above may help you reach a decision.

What is for sure is that both operations require a tremendous amount of work, but both can also be richly satisfying.

To find out more about the differences between the two sectors, the kind of businesses on the market and typical prices, check out the ranches for sale and farms for sale on BusinessesForSale.com.



Bruce Hakutizwi

About the author

USA and International BusinessesForSale.com Manager for BusinessesForSale.com, a global online marketplace for buying and selling small medium size businesses. The website has over 60,000 business listings and attracts over 1.5 million buyers to the site every month.

@BizForSaleUS

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