How To Own A Farm In South Africa

How To Own A Farm In South Africa

Farming can be profitable, but you need to plan carefully. The covid-19 pandemic hit farming incomes hard and they have struggled to recover. That said, figures show that Total Income from Farming (TIFF) in South Africa for 2022 was over R417 million, an increase of 15.2% from 2021.

How To Own A Farm In South Africa?

Step 1: Start small and expand

Farming can be hard work, so it’s best to start out small and then expand once things are going the way you hoped. If you’re growing vegetables, for example, start by only growing something simple like tomato plants or a variety of salad of leaves, before expanding and starting a farm as your primary source of income. 

If you’re having animals on your farm, start with a few chickens or one goat and then increase the number of animals you have over time. 

Starting small means that any mistakes you make will be on a smaller scale, and learning from these mistakes means you’re more likely to have success as your farm grows. 

Step 2: Learn by doing

Before you start running your own farm, it’s worth gaining some real-life experience on a working farm so you know what you’re getting into and how the business work. Ask around to see whether you could volunteer on a local farm. 

Reading books and taking courses will also help you to learn more about the industry and, if you can, look for a good mentor who can teach you more about the job and give you valuable feedback.

Step 3: Decide on and research your niche

Decide on the type of farming you want to do and then spend time researching it in detail. If you’re only growing food for you and your family, you won’t need to spend quite as long researching. All you’ll need to think about is the fruit and vegetables you and your family eat that would be easy to grow in your climate.

However, if you want to sell the produce you grow to earn an income, you’ll need to do a lot more research. Think about how many different goods you want to produce and whether there is sufficient demand. Who are you planning to sell your produce to – restaurants, shops or consumers? Make sure you also consider which items sell for high prices and which might not be so profitable. You need to have a good idea of who your customers are and how much they will buy.

If you’re raising animals, again you’ll need to consider whether you want to rear cows and goats to produce milk for sale, or whether you’d prefer to raise pigs for pork products and so on. Consider which has the highest demand and which is likely to earn you the most profit. To help you, check out farmers’ markets, meet other local producers and speak to customers as you shop. 

Step 4: Secure your land

Once you’ve worked out what you’re going to farm, you need to decide whether you want to buy land or lease it. Buying land gives you complete control over how you use it, but it also comes with higher financial risk. It’s also likely to be more costly.

Some farmers (or other landowners) will have extra land that they are not using and might be willing to lease to you. This can be a low-cost way to get things up and running and it will be lower risk.

When looking for land, you’ll need to consider a range of factors, including whether you will have access to a steady supply of water and the quality of the soil. It’s sensible to carry out a soil test so that you can assess whether it’s chalky or sandy, or full of clay, for instance. This can help you work out whether you need to invest in certain fertilisers or other supplements. 

Also look at whether there are already any structures on the land, such as processing facilities or barns or chicken coops. Different crops and animal products will need different processing and storage facilities.

Finally, you’ll need to consider how close you are to where you’ll be selling your goods. After all, you don’t want to be driving for hours just to reach the nearest town.

Step 5: Get finance for equipment and product

Most of us won’t have the cash readily available to help get a farm up and running, so you’ll usually need to turn to finance. 

One option is to apply for a business loan with a high-street bank or online lender. This will enable you to borrow a lump sum of cash that you then repay in monthly instalments, with interest, over a set term. 

It’s also worth finding out if you’re eligible for a business grant. This is a sum of money awarded to a business to help it grow and develop and, unlike a loan, it does not need to be repaid. Business grants are usually awarded by the government or other companies and there are hundreds of different grants you can apply for across South Africa. These will often be targeted to specific industries, community groups or types of business, so check carefully. 

Asset finance can also be used to help you acquire farm equipment. The two main options are hire purchase and leasing. Hire purchase means you hire the equipment from the lender and then make the agreed monthly payments. At the end of the term, the equipment is yours.  

Alternatively, leasing lets you rent the equipment from a finance provider and then pay a regular fixed fee over a set term, with interest added. At the end of the term you might be able to pay a lump sum to buy the equipment, continue to lease it, or cancel the agreement. 

Step 6: Sell and distribute your product

Once you’ve completed the above steps, you’re ready to start growing and selling your products. Provided you’ve carried out your research, you’ll know where you’re going to sell your goods and the amount you want to sell them for.

Farmers’ markets can be a good option, but you could also set up a farm shop or partner with local businesses. You could even partner with other producers to sell your products under one brand.

What skills are required to be a farmer?

If you want to be a farmer, there are several skills that can help set you up for success. These include:

  • People skills: During your time as a farmer, you’ll need to network and build good relationships with a wide range of people.
  • Organisation skills: As part of your role, you’ll need to carry out a range of tasks including working on the land, completing paperwork and manging staff. That means you need to be organised and know how to prioritise tasks. 
  • Management skills: Even if you’re starting a small farm, you’ll likely need to employ one or two members of staff. You might need to hire more staff as your business grows. You’ll need to be able to manage your team members and be able to motivate them. 
  • Fitness: Farming is a physically demanding job so you’ll need to be fit and healthy. 

Having a driving licence will also be useful and it pays to have some technical knowledge so that you know how to handle machinery. You could even consider completing a diploma or degree in an agricultural subject.