Having an orchard is a unique kind of farming. Rather than tilling land for traditional crops, you're growing trees. Instead of feeding, tagging, and herding animals, you're pruning, fertilizing, and harvesting fruit.
From apples to oranges to pears, there are a lot of types of orchards you can buy. Like any farm purchase, however, you need to make sure you do your homework. If you're looking to buy an orchard, here's what you need to know.
Set Your Goals
Before you can commit to this kind of purchase, you need to know what your goals are. Are you planning to run this as a full-time business, or as an additional income? Is your vision to have families come pick their own fruit, or to sell to wholesalers? How much time do you have before you need to turn a profit?
Knowing what you want out of your orchard will help you know exactly how much land to look for, whether to find a farm with existing trees or to start from scratch, and more.
Remember, this is a business! You'll need to create a business plan so you know your startup costs, target market, marketing strategy, and expected sales and profit.
Buy Your Land & Equipment
Whether you're starting from scratch or buying an existing orchard, you need to make sure you find a large enough plot of land that has the proper soil for the trees you want to grow. An orchard that you plan to use as a side hobby can be five to ten acres, but to make a decent profit you'll want to look for 50 to 100 acres.
Start up costs for an orchard are significant. Unlike most farmland, you'll be looking for rolling or elevated land so that cold air can drain during spring frosts. As an example of a price, you can expect to pay $3,250 per acre for orchard farmland in California.
You'll also need to test the soil before you purchase to make sure it's suitable for the trees you want to grow. Internal soil drainage, pH, and fertility are the most important factors.
Replanting an existing orchard requires that you rotate into biofumigant cover crops for two years to restore the soil before starting again. If you're starting from scratch, you'll need to determine your tree spacing and how many trees per acre you can support.
Once you have the land, think about how much equipment may be. Saplings or grafts range from $10 - $80 each, and you'll need everything from shovels to augers and tractors as well. Don't forget about pruning shears, boxes to harvest fruit, sprayers and tree guards either.
Should You Buy an Existing Orchard?
What if you want to buy an existing orchard without replanting it? It may be challenging to find an owner willing to sell, but sometimes it is possible.
Buying an existing orchard that is currently in operation is like buying any other business. You want to carefully review the financials and pay attention to any unusual expenses that might point to problems. Take a look at the land, test the soil condition, and see what condition the trees are in before you commit to buying. Decide if you feel like any trees will need to be replaced and what impact that will have on the ongoing profits.
It's best to work with a buyer's agent who is a great negotiator so that you can get the best possible deal. Someone who understands business and orchards in the area would be a great ally. Remember, the less you pay up front, the faster you recoup your investment and start making pure profit.
Consider Financing Options
The financing for buying an orchard is different than buying a home. You'll need to have a business plan showing your expected yields and profits. Many banks that offer agriculture loans offer specific options for orchards and groves.
Lenders look for “Five C's” before they agree to loan you money. They want to be sure of your capacity to repay the loan. They'll want to see how much capital you already have invested in the business. They'll decide on your character (in part by using your credit report and current financials). Banks will review what collateral you have available to back up the loan, along with the conditions surrounding your farm venture (including market conditions and risk).
Have a Buyer's Agent on Your Side
It's never a good idea to go into a large purchase without help on your side. An experienced real estate agent can help you understand the orchard market in your area and find good opportunities. They can help you negotiate for the best deal and avoid missing any important details in your investment.
When you work with a Clever Partner Agent, it gets even better. Not only do you get the experienced professional help you need, in most states you can get $1,000 back toward your closing costs when you purchase property for $150,000 or more.
Ready to purchase your orchard? Reach out to Clever today.