New Research Reveals Where Starting a Farm or Ranch Costs the Most

Article courtesy of Mad Barn

The cost of launching a farm or ranch varies dramatically across the U.S., with new research revealing which states create the biggest financial barriers for aspiring agricultural business owners.

Researchers at Mad Barn analyzed 48 states across six key cost factors, including farmland prices, production expenses, energy costs, land rental rates, property taxes, and farmland value growth, to identify where starting an agricultural venture is most expensive.

California ranks as the most expensive state to start a farm or ranch. The state has the highest farm production expenses and the highest industrial energy costs in the study, making it especially costly for operators who need land, equipment, power, irrigation, labor, and supply chain access. California also has one of the highest farmland values per acre, further increasing the cost of entry.

Rhode Island ranks second, despite having relatively low farm production expenses compared with major agricultural states. Its biggest challenge is land. Rhode Island has the highest farmland value per acre in the country, as well as some of the highest energy costs, making it a difficult state for new operators who need to buy or lease land before starting a farm business.

Iowa takes third place, largely because of the scale and cost of its agricultural sector. The state has the second-highest farm production expenses, the sixth-highest farmland value per acre, and one of the highest farmland rental rates in the study. While Iowa’s energy costs are lower than many coastal states, the cost of land and production still makes it one of the most expensive states to launch an agribusiness.

New Jersey and Illinois round out the top five. New Jersey has the second-highest farmland value per acre and the joint-highest effective property tax rate, alongside Illinois. Illinois also ranks high for farm production expenses and farmland rental rates, showing how even established farming states in the Midwest can come with steep costs for new entrants.

The rest of the top 10 includes Massachusetts, Connecticut, Ohio, Nebraska, and Minnesota. Massachusetts and Connecticut stand out for high energy costs and expensive farmland, while Ohio is pushed upward by strong farmland value growth and high land values. Nebraska and Minnesota both rank high because of major farm production expenses, with Minnesota also recording strong land value growth and high rental costs.

On the more affordable end of the ranking, Wyoming comes out as the least expensive state to start a farm or ranch. It has one of the lowest farmland values per acre, low energy costs, and a low effective property tax rate, making it a less financially demanding option for new agricultural operators. New Mexico ranks as the second least expensive state, helped by the lowest farmland value per acre in the study and relatively low industrial energy costs. Montana, Nevada, and West Virginia also land among the bottom five, largely due to lower land costs, lower property taxes, and smaller production expense burdens compared with the most expensive states.

The full list:

Rank	State	Average Farm Production Expenses ($)	Average Energy Costs (Cents/kWh)	Average Farmland Value per Acre ($)	Farmland Value Growth (%)	Average Farmland Rental Rate per Acre ($)	Effective Property Tax Rate (%)	Total Score
1	California	47,732,738,000	28.18	13,700	2.2	13,700	0.7	72.08
2	Rhode Island	83,510,000	23.44	22,500	2.3	22,500	1.12	55.26
3	Iowa	34,273,252,000	10.35	9,790	3.9	9,790	1.33	51.31
4	New Jersey	1,464,248,000	17.21	16,600	2.5	16,600	1.88	47.73
5	Illinois	19,512,926,000	13.07	8,930	2.6	8,930	1.88	45.60
6	Massachusetts	676,120,000	25.09	14,900	4.2	14,900	1	43.85
7	Connecticut	671,684,000	23.78	14,440	0.7	14,440	1.54	41.39
8	Ohio	11,893,256,000	14.03	9,350	6.7	9,350	1.36	39.99
9	Nebraska	28,692,122,000	8.89	4,250	4.2	4,250	1.44	37.02
10	Minnesota	21,914,129,000	11.18	6,790	5.3	6,790	1	36.41
11	Indiana	13,100,203,000	14.32	8,850	4	8,850	0.76	35.33
12	Michigan	10,304,923,000	15.66	6,800	7.8	6,800	1.19	34.17
13	Wisconsin	13,288,709,000	13.42	6,420	4.9	6,420	1.32	33.06
14	Pennsylvania	8,364,711,000	14.19	8,490	4	8,490	1.26	32.20
15	Florida	9,591,703,000	11.74	8,700	4.8	8,700	0.78	30.56
16	Maryland	2,857,340,000	16.54	9,750	3	9,750	0.92	30.32
17	Texas	24,564,898,000	8.69	2,970	6.1	2,970	1.4	29.09
18	New Hampshire	285,219,000	22.02	6,500	4	6,500	1.5	28.39
19	Kansas	22,044,985,000	11.66	3,100	4.4	3,100	1.21	27.66
20	New York	6,682,815,000	22.21	4,300	3.6	4,300	1.3	26.83
21	Missouri	12,313,768,000	10.37	5,000	4.2	5,000	0.89	25.20
22	Washington	14,193,999,000	12.18	3,710	2.5	3,710	0.75	24.98
23	Tennessee	5,054,043,000	14.53	6,150	7.7	6,150	0.52	24.55
24	North Carolina	13,038,275,000	10.63	5,470	5.4	5,470	0.66	24.47
25	Delaware	1,400,438,000	14.11	9,550	N/A	9,550	0.54	23.98
26	South Dakota	11,717,112,000	11.70	2,970	6.8	2,970	1	23.87
27	Georgia	10,472,793,000	11.57	4,720	4.9	4,720	0.79	23.51
28	Kentucky	6,918,292,000	13.20	5,480	3.4	5,480	0.74	23.28
29	Vermont	866,838,000	20.86	4,400	1.1	4,400	1.51	22.30
30	Arizona	4,776,528,000	11.97	4,180	4.5	4,180	0.48	21.97
31	Idaho	10,146,117,000	9.84	4,580	4.3	4,580	0.5	21.39
32	Virginia	4,786,681,000	10.16	6,100	4.3	6,100	0.78	20.31
33	Arkansas	10,633,857,000	11.50	4,250	3.4	4,250	0.56	19.96
34	Maine	740,668,000	25.06	3,350	2.8	3,350	0.98	19.18
35	Oregon	7,030,237,000	10.63	3,780	1.6	3,780	0.81	18.59
36	Mississippi	6,435,860,000	14.73	3,580	2.6	3,580	0.58	17.94
37	Alabama	6,900,857,000	15.07	4,150	3.8	4,150	0.37	17.21
38	North Dakota	10,860,343,000	7.46	2,360	4.4	2,360	0.92	16.52
39	South Carolina	3,470,920,000	11.70	4,740	5.3	4,740	0.49	16.27
40	Louisiana	4,116,971,000	12.93	3,850	3.5	3,850	0.55	16.05
41	Colorado	9,425,474,000	13.01	2,290	4.1	2,290	0.5	15.61
42	Oklahoma	7,875,930,000	8.33	2,540	5.8	2,540	0.79	14.96
43	Utah	2,075,789,000	10.11	3,500	6.1	3,500	0.48	13.79
44	West Virginia	976,003,000	12.00	3,520	2.9	3,520	0.51	11.01
45	Nevada	1,049,739,000	9.06	1,200	4.3	1,200	0.5	9.81
46	Montana	4,970,737,000	12.42	1,230	2.5	1,230	0.61	9.42
47	New Mexico	3,465,440,000	9.76	725	3.6	725	0.63	8.78
48	Wyoming	1,907,320,000	9.50	1,000	2.6	1,000	0.53	6.33

Methodology

To determine the most expensive states to start a farm or ranch, this study evaluated and scored 48 U.S. states based on six key financial indicators: Average Farmland Value per Acre (40%), Average Farm Production Expenses (25%), Average Industrial Energy Costs (Cents/kWh) (10%), Average Farmland Rental Rate per Acre (10%), Effective Property Tax Rate (10%), and Farmland Value Growth (5%).

Data from these metrics was normalized and aggregated into a final index, ranking each state from the highest overall financial barrier to entry to the lowest.