Okay, you are young and energetic, or maybe old and grouchy, and you have decided you are going to be a flower farmer. Good decision! Now, unless you already have land, your next thought is getting some land. This presents a good news/bad news dilemma.

Let’s start with the bad news. In almost all areas of the U.S. and most of Canada, farm or ranch land is priced way above its agricultural production value. Even considering the ups and downs of the real estate cycle, this has been true since the inflation decade of the 1970s. An extreme example is northern Virginia, where we have several ASCFG members. In some cases it would cost you $120,000 to buy the land to graze one cow, and the income from that cow would be $400-$700 per year. Good luck making those land payments.

Why are farm prices so inflated? The first reason, of course, is developers bidding high prices on land to develop into high-rent residential and commercial properties.

Farm Livin’ is the Life for Me

Allan Nation, author of Land, Livestock & Life, calls the second reason the urban economy. He explains that wealthy people in cities want an escape to the countryside. They want the lifestyle, great views, and beautiful scenery. They want to show off their property to their city friends. They want to get away from noise and pollution. Mr. Nation adds that “They need to feel the isolation of” open spaces and “Reawaken their spirituality.”. Ranch consultant Greg Simonds sums it up best “They’ve got money. They want happiness”.

Now it’s time for the good news. First, you need to realize that you do not have to own the land; you just need control of the land. You can do this with a well-structured lease agreement. An advantage that specialty cut flower growers have over livestock farmers such as myself and conventional crop farmers is you do not need large parcels of land. This gives flower farmers more flexibility when pursuing land. There are ASCFG members farming small vacant city lots in large and small urban areas. My wife Linda flower farms on less than one acre.

Now, how do you approach the landowners about leasing the property? Mr. Nation advises a strategy of learning the needs and problems of the landowners and providing them with solutions. Once city people take ownership, most of them quickly discover they do not like the hard work and expense that it takes to maintain the beauty of the property. Get creative and come up with the solutions to these problems.

Here are some examples of selling points you can use. Your cut flower business will help to preserve and even add to the beauty of the land, and at the same time reduce the owner’s cost of maintaining the land. You make the management decisions in the business, and the owner is free to wander in the beauty you are providing.

You as a flower farmer are also helping to lower the property tax on the land. In most situations, agricultural land that meets certain requirements is taxed at a reduced rate. In my county in Tennessee, farmland that produces at least $1500 of farm products is taxed at only 25% of appraised value. Another financial point for the owner is that the rental income the farmer is paying him/her is considered passive income, and subject only to income tax, and not Social Security and Medicare taxes. Again, be creative and find ways to help the landowner.

Land Spreading Out So Far and Wide

Let’s also discuss your financial situation as owner of a cut flower farming business. First, remember that it will be very difficult to pay for land with the profits of a farming business because land is so expensive. Second, your rental payments are tax deductible as a business expense, but agriculture land that you own cannot be depreciated to reduce taxes as most other assets can. Third and most important, in any company your money needs to be spent on things that produce income and enhance profit. This is true especially for start-up farm businesses. Most farm businesses are structured for failure because so much capital is tied up in non-income-producing assets, and there is not enough cash flow to cover the cost of these so-called assets, including land.

The two agriculture business authors that I respect the most (Allan Nation, and Dave Pratt, owner of Ranch Management Consultants) both agree on this one principle: first build your business, and later you can buy land with after-tax dollars.

In his book, Your Successful Farm Business, Joel Salatin writes about a woman from Edmonton who “Lived in a…condominium, had no money, no land, but had a burning passion to become a farmer.” She creatively persuaded a friend to let her put a garden in the friend’s backyard. Then the friend’s neighbor wanted a garden, and by the time Joel spoke with the woman “She was farming 18 backyards full time, with one part-time employee, and her entire farm infrastructure consisted of hand tools that she carried on a special rack on her bicycle.” A great example of creativity overcoming a lack of capital.

The question that many of you probably have now is “What if I already own land?” You’ll have to wait for the next article for the answer.

Roy Doan

Cherry Hill Pastures

Roy Doan is co-owner of Cherry Hill Pastures, a beef cattle farm, and Aunt Willie’s Wildflowers, a cut flower farm, in Blountville, Tennessee. Contact him at [email protected]