You need capital to start making money. You need money to get the capital. How do you get one without the other?
In the past few years we have been investigating different options on how we can generate more cash flow (and hopefully profit) on our little farm in northern Huron Cty. Currently it is cropped, with the use of borrowed family member's equipment. I personally have a preference to do livestock due to the current building set-up on farm.
One avenue we have looked at is the dairy sector (we like cows for various reasons). When talking with bankers - "so how much quota do your parents have?" Oh, so we need "sponsorship" program in order to start. :-)
Lately, with the drop in the value of quota, we have talked about it again. One former banker suggested borrowing no more than $20,000 per kg quota. Yeah - that works great when quota is $25,000. So we start with 6 cows. Whatever.
This is where young folk have an issue with beginning farming. We have ideas that could improve efficiencies, labour management, productivity gains, reducing environmental "footprints"... etc. But to get the "elder" generation to agree is about as easy as moving Mt Everest.
One example I recall from Prof. Kohl was a 60 year old man walked up at a family succession planning meeting. He was interested in talking more about succession planning. Kohl was thinking "Oh he wants to retire and get his son more involved." No. His father and his son were walking up behind him. He wanted to get the farm from his 80+ yr old father, who was using a cane. So when would his 40 yr old son be able to farm? After he is eligible for retirement?
A few years ago every banker was willing to lend hundreds of thousands for a pig barn fully stocked. We always said no since I felt there was no future in pigs in Ontario for me. They also were willing to lend the same amount for a modern dairy - if my father would "give" his quota over.
In a super-big-box store in London one day a conversation with another customer came around to "taking over the family farm". She thought ALL farmers literally gave the farm to their children. because that is what happened in her family, her in-laws, and her neighbours - in the old country.
Well with that kind of capital, why do we need to worry about the question at the start?