How much money do you need to start a small farm?

In this guide, we’ll cover some of the major costs involved with starting a small farm so you can figure out exactly how much money you’ll need.

You’ll find out:

• What’s classed as a small farm?
• What are the different kinds of farms?
• How much money do you need to start a small farm? 

This article focuses solely on startup costs. If you’d like some broader advice on getting into the farming business, try our other article, “How to become a self-employed farmer.”

Before we figure out how much you need to start a small farm, it’s worth working out what is meant by “small”.

Although it can differ depending on the type of livestock or crops, farm size classification in the UK is normally determined by Standard Labour Requirements (SLR). In other words, how many full-time equivalent (FTE) employees are needed to run the farm, assuming one full-time employee works 39 hours per week. 

Using FTE, we can categorise farms into different size categories. Under this categorisation, very small farms are those that need less than 0.5 full-time workers, while small farms are those that need between 0.5 and 1 full-time worker. 

The amount of money you need will vary greatly depending on what kind of farm you choose to run. For example, will you grow crops, rear livestock, or do a mixture of both?

Here are some common types of UK farms:

• Poultry
• Vegetable
• Dairy
• Cereals
• Pig 
• Cattle
• Fruit

The type you choose will affect your startup costs and your profit margins later on. For example, livestock might sell for more money than most crops, but the initial purchase and ongoing costs are significantly higher. 

As a small farm, you might want to consider high-profit crops that can make a lot of money out of less space, such as:

• Mushrooms
• Microgreens
• Ginseng
• Lavender
• Saffron
• Goji berries
• Wasabi
• Flowers

When starting a farm of any size, your main expenses will be:

• Land
• Farming equipment
• Insurance
• Livestock 

We’ll briefly run through each and look at how much you can expect to pay for them. 

The land will probably be the most considerable expense, even when starting a small farm. Farmland is split into two categories; arable land and pastoral land. 

Arable land, used for growing crops, is valued at around £8,400 per acre. Pastoral land, used for raising animals, is valued at around £6,700 per acre. These figures are based on 2021 sales records. 

For context, the average UK farm is around 213 acres. So 213 acres of arable land would cost £1,789,200, whereas 213 acres of pastoral land would cost £1,427,100.

The equipment you need will vary depending on what your farm is doing. And, on top of that, the prices of each piece of equipment will depend on its model, size, and age. 

• Soil cultivation machines: From £1,000 to £30,000.
• Planting machines: From £1,000 to £5,000.
• Irrigation systems: About £100 per hectare.
• Harvesters: Anywhere from £2,000 to £200,000.
• Hay baler: From £1,000 to £10,000. 

Some of the more expensive pieces (like harvesters) are only needed seasonally, so it might be a good idea to rent one as you need it rather than buy your own. 

Farming is already a risky business, so you’ll need a number of insurance policies to protect your investments. You’ll be able to find dedicated farm insurance policies that cover the essentials, including:

• Property cover 
• Environmental pollution 
• Livestock 
• Employers liability 
• Public liability cover 
• Products in transit
• Product liabilities 
• Accident insurance
• Farm produce 
• Diversification

The cost of your cover will depend on the size of your farm, the value of your produce, and the value of your equipment, so call around to find the best quote. 

For your vehicles, you’ll have to take out a separate policy. Agricultural vehicle insurance will cover most agricultural vehicles, like quad bikes, combine harvesters, balers, and tractors, and can protect you for as much as £500,000. 

Livestock is sold at auctions around the UK, and prices will be different depending on what you’re looking for. The type, breed, and age of the animals will all affect the price they’re sold for. 

HMRC keeps a detailed record of the average cost of livestock sales every year. You can see those figures here. 

With all the startup and running costs involved with owning a small farm, careful financial management will be essential for your success. Thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more and start your three-month free trial here.