Welcome to our Frequently Asked Questions Page! Chances are you have a question that we are often asked by other agricultural business owners and professionals. Scroll through our carefully developed list of FAQ’s and supporting resources, or use the topical quick links below to jump to your question for fast answers.
I am thinking of or in the planning stages of starting a small agricultural business, including orchard crops, livestock, or crops/vegetables. What resources would you recommend to help get my business started?
Starting your own business can be frightening, but also exciting! The Colorado State University Extension Agricultural and Business Management (ABM) Team has a multitude of resources for both beginning and established producers to effectively manage risk in your agricultural operation and successfully jumpstart your business venture.
A business plan is a great place to begin when starting your agricultural business. It is an essential tool for the success of your farm or ranch and serves as a road map to guide your business, and it impacts your daily decisions, provides direction for expansion, diversification, and direction for future evaluation.
View our Agriculture Business Planning Workbook for a step-by-step guide that will surely put you on your way to preparing a business plan for a successful business. This workbook is designed to provide an outline for developing a business plan for your agricultural business. Each section contains an explanation, examples, and space for you to begin developing a business plan of your own. The Business Planning Workbook is also available on our Full Resource Index, located under the General Risk section.
A good next step is to look at creating enterprise budgets for your farm or ranch. Enterprise budgets are a listing of all incomes and expenses associated with growing and harvesting a specific crop. The CSU ABM Team prepares enterprise budgets for all the major crops and livestock grown and raised in Colorado. These budgets indicate the incomes and expenses for an average producer in Colorado. You can use enterprise budgets to make decisions to determine your enterprise mix, help determine if you are a low-cost producer, and make sound production decisions. View a full listing of our Enterprise Budgets to see what crops or livestock may fit into your operation.
A great publication and resource for you to add to your toolbox is the Custom Rates Survey. Colorado State University Extension annually conducts a survey of custom rates charged for various crop and livestock operations and lease arrangements in Colorado. Data is collected from agricultural producers, landowners and managers, lenders, agricultural consultants, machine operators, and Extension agents. The report is generated for the previous year beginning in February of each year. The latest published report is for the year 2020, as the 2021 report is currently in production. View our Custom Rates Survey to determine costs for custom-hired labor and lease rates for agricultural ground to help you make production decisions and estimate labor costs.
I would like to lease out my agricultural land (or I am looking to lease land to expand my current operation): what would be the best lease structure to use, what is the going rate for leasing agricultural land, and what templates do you have available to use for drafting this lease?
Leasing your agricultural land is a great option to retain ownership of your property, while still generating profit from your land if you do not currently farm or ranch. A lease is an agreement giving use of an asset to another person for a specific period of time at a specified rate. A lease does not transfer ownership nor an equity interest in the asset.
The ABM Team has fact sheets available regarding each type of leasing structure to help you determine which leasing structure will work best for your current scenario. The fact sheets include crop share lease agreements, flexible cash lease agreements, fixed cash lease arrangements, pasture lease agreements, and cattle lease agreements. Each fact sheet details the pros and cons of each leasing agreement to help you make the best decision for your lease structure. Our leasing fact sheets are available on our Full Resource Index, located under the Financial Risk section.
Colorado State University Extension annually conducts a survey of custom rates charged for various crop and livestock operations and lease arrangements in Colorado. Data is collected from agricultural producers, landowners and managers, lenders, agricultural consultants, machine operators, and Extension agents. The report is generated for the previous year beginning in February of each year. The latest published report is for the year 2020, as the 2021 report is currently in production. View our Custom Rates Survey to determine costs for custom-hired labor and lease rates for agricultural ground to help you make production decisions and estimate labor costs.
Every year the USDA National Ag Statistics Service releases county-level data for cash rental rates for irrigated cropland, non-irrigated cropland, and pastureland. The rates are based on survey data collected from Colorado agricultural producers from March through June. These rates represent an average of all rates reported for a county, including both recently negotiated rents. The ABM Team compiles this data from the USDA and converts it into map format for ease of viewing. The USDA Colorado Agricultural Land Cash Rental Rates publications are available on our Full Resource Index, located under the Financial Risk section.
At the request of the State Land Board, Colorado State University surveyed people leasing and/or owning privately owned, non-irrigated grazing land in Colorado. The purpose of the survey was to discover and report lease rates paid by livestock owners and received by landowners in 2018 and 2019. A similar survey was conducted for the 2010, 2013, 2015, and 2016 grazing years. The full publication, Lease Rates for Privately Owned, Non-Irrigated Pasture in 2018 and 2019, and survey results are available for viewing on our Full Resource Index, located under the Financial Risk section. Previous year’s reports are also in the same location.
The USDA’s National Agricultural Statistics Service in cooperation with the Colorado Department of Agriculture collect data and information from ag producers to publish the Colorado Agricultural Statistics Bulletin. The estimates available in this bulletin and what is published throughout the year are valuable tools for producers and agricultural industry professionals to make sound decisions. The report is issued annually each fall and contains county-level data for the state of Colorado
Ag Lease 101 helps both landowners and land operators learn about alternative lease arrangements and includes sample written lease agreements for several alternatives. Ag Lease 101 was created by and is maintained by a team of economists and attorneys with the North Central Farm Management Extension Committee. View the Ag Lease 101 Document Library for access to leasing publications and leasing forms and templates. As always, it is a good idea to have a legal professional review any contracts you develop to check for accuracy.
How do I write a business plan for my farm or ranch?
A business plan is an essential tool for the success of your farm or ranch. It serves as a road map to guide your business, and it impacts your daily decisions, provides direction for expansion, diversification, and direction for future evaluation.
View our Agriculture Business Planning Workbook for a step-by-step guide that will surely put you on your way to prepare a business plan for a successful business. This workbook is designed to provide an outline for developing a business plan for your agricultural business. Each section contains an explanation, examples, and space for you to begin developing a business plan of your own.
What is estate planning?
An estate is a person’s net worth in the eyes of the law at the time of the person’s death. An estate plan is an organized manner to distribute one’s assets and liabilities after the person dies. An estate plan also provides instructions for end-of-life decision making.
Please visit the Human Risk section of our Full Resource Index to access fact sheets, free online courses, and other resources pertaining to estate planning.
What is a will?
A Last Will and Testament is the most important document in an estate plan. It is a set of instructions for the personal representative to follow when settling the estate of a person who has died (decedent). A will should identify when, how, and to whom one’s assets should be disposed of and how one’s business affairs should be addressed, if applicable. In addition, a might also name a guardian for minor or adult dependents.
Please visit the Human Risk section of our Full Resource Index to access fact sheets, free online courses, and other resources pertaining to estate planning.
What is succession planning?
Succession planning – sometimes called transition planning – is the systematic process of transitioning management and ownership of a farm, ranch, or other business from one generation to the next generation. Logic would indicate that developing a succession plan should be an obvious requirement of management and business ownership. However complex forces are at work and despite recognizing the importance of a plan, most farm businesses decide to do nothing about succession.
Please visit the Human Risk section of our Full Resource Index to access fact sheets, free online courses, and other resources pertaining to succession planning. Also, the AgTranstions web site is designed to help farmers and ranchers develop a plan for transitioning a business to the next generation.
How do income and self-employment taxes impact my farm/ranch business?
Tax issues are important for agricultural operations because income and self-employment taxes are a major “cost” and because many USDA programs and farm and ranch loans use a producer’s federal income tax return. The National Farm Income Tax Extension Committee is a group of specialists from across the U.S. providing information and resources for farmers and ranchers about tax-related issues.
How can I determine the financial feasibility of an alternative strategy or enterprise?
Agricultural producers are always looking at alternative production schemes (e.g. conventional tillage versus chem-fallow) or enterprise (e.g. selling calves at weaning or backgrounding). Partial budgeting is a process of estimating (1) additional returns, (2) reduced costs, (3) additional costs, and (4) reduced returns associated with the proposed change.
Please visit the Financial Risk section of our Full Resource Index to access fact sheets, free online courses, and other resources pertaining to partial budgeting and financial management.
My banker keeps using the term financial ratios. What is she talking about?
Financial ratios are created with the use of numbers taken from the various financial statements (balance sheet, income statement, cash flow statement, and statement of owner’s equity). The ratios are designed to help better understand the financial position of a business. Typically used financial ratios assess a business’s profitability, liquidity, solvency, and financial efficiency, although there are many other ratios used by financial analysts.
Please visit the Financial Risk section of our Full Resource Index to access fact sheets, free online courses, and other resources pertaining to financial management.
