What you need to know about buying a farm

According to the 2025 Valuation Insights Report by the Australian Property Institute, agricultural land was the nation’s highest-performing asset between 2004 and 2023. Over that period, the average increase in returns was a remarkable 256 per cent.

However, buying and operating a farm is no straightforward feat. 

“The biggest mistake is buying the idea of a farm rather than the economics of a farm,” says Leah Freney, agribusiness transactions and investment specialist at Elders QLD Rural Real Estate.

These assets can be inherently complex undertakings, no matter their size, location or enterprise type.

The importance of experienced management

Often, farms succeed or fail based on how they’re run, not just on what they are. Effective management underpins everything from financial and operational performance to labour efficiency, regulatory compliance, risk management and even succession planning.

“Understanding how to use inputs to optimise what the resource base can deliver – and balancing risk and return over the long term – is critical,” says Dan Armstrong, senior consultant at agricultural consultancy firm RMCG.

Many farms aren’t owner-operated, but instead rely on professional management, which could be an on-site farm manager or an external operator. They often have significant experience running a farm, bringing hands-on operational expertise and deep knowledge of local conditions and production systems.

Armstrong says the hiring of professional management isn’t limited to large-scale ventures; even small farms can benefit from management support. This is especially the case for absentee owners or newer investors.

“At all scales, it can be beneficial to have some outside input – just to bring a fresh set of eyes,” he says.

Optimising and aligning with the land

Certain properties have fundamental limitations that make some types of production difficult, like poor soil quality or limited water access. 

Assessing the unique characteristics of a particular site, such as soil, rainfall, water availability and topography, can ensure that the enterprise is the right fit and the business is commercially viable.

“It’s about understanding the underlying capability of the land and water, and sometimes revising what you produce to better match that,” Armstrong says.

Freney says it’s not just about how much rain a property gets, but how reliable it is and when it falls.

“Rainfall matters, but not just average annual rainfall,” she says. “Distribution, reliability and how it lines up with the enterprise matter more.”

Jez McNamara, principal at Ray White Rural Queensland, adds that certain types of farms inherently require more due diligence.

“A large grazing property might not have much as far as due diligence goes, whereas for something like a citrus or avocado orchard, there’s a lot of due diligence to do,” he says, mentioning water as a key consideration, particularly on irrigation properties. In many cases, water entitlements are held separately from land titles, adding another layer of complexity for buyers.

The impact of climate and seasonal fluctuations

The very nature of a farm – a business exposed to weather conditions and biological systems – means changes of season and the inherent variability of climate are among the biggest drivers of risk.

“You’re dealing with biological and climate factors alongside the usual business considerations, and understanding those trade-offs is often where people struggle,” Armstrong says.

Climate variability and extreme weather are also becoming increasingly frequent and unpredictable, with longer and tougher droughts and a greater likelihood of bushfires affecting everything from crop yields to insurance premiums. In light of this, Armstrong says farms may be even more susceptible to financial volatility.

The differences in financing and costs

Lending works very differently for farming businesses, as lenders have to account for the variability and risk profile of a farm’s income and output. This is especially the case for farms operating at a larger scale. 

“Once you get over 100 acres, it becomes a very different type of lending,” McNamara says. “You’re looking at commercial rates and timeframes.”

Farms also have a complex set of operational costs that can catch buyers off guard. 

“Working capital is the silent killer,” Freney says.

Aside from standard business expenses like labour, fuel and maintenance, the properties require significant capital spent on inputs and infrastructure.

“Fertiliser, labour, irrigation water and supplementary feed are some of the major ongoing costs, and many of them can fluctuate significantly,” Armstrong says.

These costs are at the mercy of several external factors, including commodity prices, weather conditions and global supply chains. McNamara says current fuel shortages are significantly affecting farmers, with some delaying their winter crops due to the uncertainty.

Labour constraints

Staff are the backbone of any farming business. 

“Having efficient, reliable staff makes a significant difference to overall performance and profitability,” Armstrong says.

But finding the right workers is a common challenge. Labour shortages have long affected farming ventures across the country, thanks to a heavy reliance on seasonal migrant labour and ongoing difficulty attracting and retaining workers in regional areas. 

A 2025 survey by industry body Ausveg found that 92 per cent of vegetable growers struggled to fill full-time roles and 87 per cent had shortages of part-time workers.

Misunderstanding the complexities of farming

Both Armstrong and McNamara say that every farm has its own set of variables. The land, the types of production, the scale and structure, the climate and even the workforce are all highly specific factors, meaning no two farms will have the same operational requirements.

So while knowing ahead of time what to generally expect can be helpful, it ultimately comes down to experience, planning and ample due diligence.