Whether to expand your farm operation is a decision we farmers can torture ourselves over, often causing sleepless nights and much deliberation among spouses, our farm stakeholders, and sometimes even with our pets or sleeping children!  My husband and I operate a grain farm near Souris, Manitoba, where competition for land is getting fiercer all the time.  Decisions need to be made quickly yet thoughtfully. 

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Here is a handy little list of five things to ask yourself before buying farmland:

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1. Can I afford it?  This is a biggie! We have found two people to be really helpful with this part - our accountant and our lender.  Having an ongoing relationship with our accountant and loans officer has been helpful to do some quick cash flow analysis and examination of what mortgage payments may look like. 

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2. Is it worth it?  So, there’s gas in the tank (i.e. access to capital) but is the land a lemon or a Ferrari? How productive will the land be and what is its yield potential?  Remember there are great resources online from Manitoba Agriculture and Manitoba Agricultural Service Corporation’s “Yield by Soil Type” Browser.

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3. Can I do it?  Does my farm operation have the physical resources to productively manage the expansion such as sufficient workforce and equipment (and a nudge from your lawyer: best practice is to have employment contracts)?

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4. If I’m doing this, are there any legal red flags?   A quick call to your lawyer can help with a title search to confirm the vendor owns the land and there aren’t any strange liens registered against the title. Research can also be undertaken to determine if there are any issues pertaining to water rights or drainage, work permits, mineral rights, unpaid property taxes etc.

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5. Let’s do it.  What’s next?  The first step is to have an Offer to Purchase prepared to present to the vendor.  Again, this is where you contact your lawyer to have the purchase agreement prepared.  The lawyer will help you clearly communicate the terms of the transaction, and whether your offer is subject to any conditions.

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When the opportunity to purchase comes up, be ready!  Luck favours the prepared as they say.  We have also found working with a farm management coach can be beneficial to help us understand our farm’s finances and capacity for growth.   

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Good luck with the process and try not to wake the kids! 

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