For those who live and work outside the agricultural industry, the words “farm” and “ranch” may seem like synonyms. They’re not, though. And, if you’re speaking to one of the many passionate business owners who work their own farms and ranches, you’ll learn that lesson quickly.
If you’ve ever dreamed of buying, selling, or running a farm or ranch, understanding the difference between ranch vs farm can be an important first step in deciding where your agricultural business destiny lies.
What do farms and ranches have in common?
Before we get into the areas where they differ, let’s take a look at some basic facts about farms and ranches that they do share in common.
Farms and ranches both:
- Facilitate the very bottom of the human food chain and the world economy
- Require strategic use of land, water, and other natural resources to produce food and other valuable products
- Produce by means of human and mechanical labor in many different forms
- Rely on fluctuating market prices for their products, meaning income and profit are inherently difficult to predict
What’s different between farms and ranches?
With these common aspects in mind, it’s easier to understand ranches vs farms difference:
Any operation set up to use a plot of land and/or other natural resources to produce some sort of crop or other product that humans are going to use is a farm. They can be based around crops, livestock, or a combination of the two.
A ranch is a specific type of farm that focuses on raising livestock for food and/or other animal products (like leather, eggs, or milk.) At ranches, the land is set aside for grazing more often than planting and harvesting.
With those definitions in mind, it’s obvious some operations are mislabeled quite often. For example, we might commonly refer to a business that raises cows to produce milk as a “dairy farm,” when it’s more accurate to call it a specialized cattle ranch.
Let’s dive deeper into how these two operations differ from each other:
Claim up to $26,000 per W2 Employee
- Billions of dollars in funding available
- Funds are available to U.S. Businesses NOW
- This is not a loan. These tax credits do not need to be repaid
The size of the operation
While there are no size requirements in place to specifically define one operation as a farm and another as a ranch, ranches tend to be much larger than other types of farms in terms of how much land is required. That’s because large herds of cattle or other livestock need a lot more land to graze on than a farmer would need to tend to fetch the same return.
While farmland is usually measured in acres (or plowable acres, if the land is multi-purpose,) ranches are often measured in square miles. It’s not uncommon for large cattle ranches to incorporate hundreds of square miles of owned and/or leased grazing land.
The tools and equipment used
Farms have a need for many different tools and equipment to work the ground and collect produce efficiently. A farmer will routinely use any or all of the following:
- Manual gardening tools
- Trucks
- Tractors
- Combines
- Threshers
- Hay balers
- Various storage and production buildings
- … and many other crop-specific tools and supplies
Ranches, on the other hand, rely primarily on trucks, ATVs, or horses for use in herding and pasturing the animals, and a lot of fencing to keep the livestock contained. While some ranches include full breeding and birthing operations — which would require specialized equipment or staff — this isn’t very common or necessary to run a successful ranch. The largest notable exception is the automated milking machinery routinely used at large dairy ranches, which has become essential to competitive production for dairy farmers.
The initial investment
In the case of a ranch, the total purchase price or initial investment depends primarily on how much land is needed and how much land costs in the area. If land is plentiful, it may cost much less to buy or lease as part of ranching operation than it would, to build a house on or to use investment real estate. But, you’re going to need a lot of it, so the overall cost can still be very high. There’s also a significant upfront investment required to buy enough livestock to make your ranch profitable.
Buying a small farm that’s functional for growing and raising enough to feed your own family (also known as homesteading) can require relatively little money, especially in some areas of the country. Of course, the total cost of buying a working farm will depend on what equipment comes with the purchase and what sort of shape it’s in.
Expanding the farm to turn a reasonable profit can often be accomplished through efficiencies and strategic use of hired labor rather than buying more land. But, a modern farm without the necessary farming equipment is going to struggle to turn a profit. Purchasing all the necessary equipment upfront can be a huge initial investment.
Operating costs
As mentioned before, farming and ranching both include an inherent level of uncertainty. No one can consistently, accurately predict what it’s going to cost to successfully run the business year-over-year, or how much the operation can realistically produce.
This volatility tends to affect crop farmers harder than ranchers. That’s because, while the value of livestock fluctuates with supply and demand, and ranchers do have to deal with a commodity that can get sick and die unexpectedly, their success doesn’t hinge so dramatically on the weather. They don’t usually have to face the impact of microscopic plant diseases or pests, and other natural occurrences over which they have no control.
Farmers do need to face the unpredictable impact of Mother Nature, on the other hand, and they need to rely on a healthy dose of luck to supplement their skill and hard work if they’re going to succeed. Sometimes, no matter how hard they work, the rain doesn’t fall or the hail beats down the crop, and money is lost.
While farmers tend to spend more on fuel and equipment maintenance, and deal with seasonal labor needs, ranchers usually need to maintain a larger staff of laborers, foremen, and others to help with the animals year-round.
Should you choose to buy a farm or a ranch?
If you’re excited to try earning your living from the land, the choice between buying a farm or a ranch comes down to preference and which type of agricultural work you’re more passionate about.
Both operations will require a lot of hard work, and both can be quite satisfying. Initial and ongoing investments differ quite a bit, but that’s based on the differences between individual operations, not the overall differences between ranch vs farm.
As you continue to explore the available options, take some time to review the ranches and farms for sale on BusinessesForSale.com. These lists can add important context and detail to your decision making process.
