Ranch vs. Farm vs. Homestead: 11 Differences (2023) You Must Know

If you’re looking to live on land that you’re purchasing, why not create a ranch, farm, or homestead?

These three types of properties are perfect for those who don’t mind pouring a bit of blood, sweat, and tears into something that they’re ultimately proud to call their own.

That said, if you’ve never thought about the differences between the three, we’ve got you covered.

It is true that many people use the terms ranch, farm and homestead interchangeably.

However, while all three do produce food, there are some key differences.

Understanding these differences can allow you to recognize which property is right for you and your goals.

Keep reading to learn more about the differences you must know!

1. A farm is land cultivated for agricultural production

A farm is an area of land used for growing crops and rearing animals for profit.

Thus, most of the food products you eat come from a farm.

Per the United States Department of Agriculture, a farm is any operation that is able to produce at least $1,000 in agricultural products a year.

As you may deduce, a variety of enterprises can be considered farms based on this definition – from small-scale family operations to massive factory farms.

So, if you’re considering using a piece of land as a farm, you have a lot of options, including:

Crop farm: This is a farm that grows fruits, vegetables, and grain.

Some farms are dedicated to one specific crop that they sell in mass quantities while others opt for a variety of fruits and vegetables.

Most large-scale industrial farms in the United States are monoculture farms.

This means that they grow only one crop at a time.

There are also small-scale specialty farms that produce a single crop, such as lavender, ornamental plants, landscaping shrubs, heirloom products, etc.

Fish farm: This is becoming an increasingly popular type of farm.

You may also hear fish farms referred to as “aquaculture.”

Fish farms have garnered negative reputations in the past few decades, but there are ways to create sustainable and clean fish farms.

Dairy farm: These types of farms raise animals for the milk or other dairy products (i.e. cheese or yogurt) that they produce.

While you may think of these types of farms as exclusively for cows, other types of dairy farms include sheep or goats.

In fact, sheep or goat farms are more common for small-scale operations.

Poultry farm: Poultry farms will raise chickens and turkey for slaughter.

Additionally, some farms will raise chickens to lay eggs to sell.

Meat farm: These types of farms exist to raise animals for slaughter and consumption.

Examples of meat farms include pig and cattle farms (see below).

2. A ranch is a place where livestock are raised in order to produce meat

You probably think of cattle or cattle ranching when you think of a ranch.

But you may also encounter sheep, goats, pigs, or other animals on ranches.

While there is no official definition of a ranch, it is generally considered a place where livestock are grown and grazed to produce meat and other products.

Thus, ranches are farms (per the USDA definition) where livestock are raised under range conditions.

These livestock will eventually be slaughtered for their meat and other products (think wool or leather).

Like farms, some ranches focus solely on one animal while others have a variety.

3. Farms and ranches may sound similar but have a few key differences in practice

Because some farmers raise animals to produce meat and ranchers do the same, you may not see the immediate difference between the two.

Here are some key distinctions that can help you differentiate.

Farmers call their land “fields” while ranchers call their land “pastures.”

Farmers keep equipment in their barn while ranchers keep cattle.

Farmers are focused on water, growth, and the prices of commodities and produce.

Ranchers are concerned with animal health, feed prices, and the selling prices of cattle.

A farmer’s objective is to create straight rows and healthy crops while a rancher’s objective is to raise fat, healthy cattle, and plentiful grass.

4. A homestead is a house and surrounding land owned by a family designed to create self-sufficiency

If you’re looking to buy land and produce food to feed your family, a homestead may just be your dream.

A homestead is an ideal way to incorporate crops and livestock into a single property where you live.

This makes it an appealing option if you’re trying to live off grid.

A homesteader often strives to live off the land and raise what he or she eats.

They’re often “back-to-the-land” people who appreciate the Earthy feeling of growing and eating something organic.

Since many homesteads do produce crops or livestock, they can often meet the official definition of a farm.

Thus, there is an overlap between small or family farms and homesteads.

However, the purpose of homesteading, as the term is commonly used today, is to live off the land and create a self-sufficient and sustainable life.

Homesteads are about being able to support yourself and your family based on what you make on the land and are generally not focused on producing agricultural goods for sale.

Surviving and thriving on your own land is a real and raw experience.

5. A farm generates money by producing from the land

While most farms make less than $10,000 in sales a year, the primary purpose of many farms is to generate at least some income from the crops or animal products that are produced on the land.

No matter the size, farmers are typically relying on hard work and the yields of their crops to make ends meet.

Unlike a homesteader, who has created a life on the land, the farmer’s life does not necessarily need to be on the farm.

They could be farming on a plot of land and living in another area.

Having said this, there are many farmers who both live on their land and use it to produce income.

6. Homesteads and hobby farms often get confused

A hobby farm is considered a piece of land that is less than 50 acres where the aim is not profit.

It is primarily used for pleasure or recreation.

People occasionally confuse hobby farming and homesteading because they are often of similar scale and neither places an emphasis on using the farm to produce income.

That said, hobby farming differs from homesteading because hobby farmers are generally not using the land to support themselves.

While homesteaders are not necessarily motivated by profit, there is a component to their work that allows them to survive, unlike hobby farming.

7. A farm requires healthy soil

A farmer will spend a great deal of their time ensuring that their soil is healthy enough to sustain crops.

This may not be as much of a concern for a rancher whose primary focus is on livestock (although they will still need land with sufficient natural resources to support their animals).

Homesteaders will need healthy soil if they intend to grow crops on their land, but many homesteads are also built on land with lower-quality soil and fewer resources.

Homesteaders have more flexibility and may choose to grow crops that work in the type of soil that they have or to raise livestock instead.

Ultimately, farmers will place the most emphasis on healthy soil.

If you’re shopping for land and think you want to use it for farming or growing crops, keep this in mind.

Purchasing land that has clay or another type of unfarmable soil will ultimately cause issues.

8. Farmland tends to be more expensive 

Because farms are dependent on high-quality soil, farmland tends to be more expensive.

Generally (and we are speaking generally), ranchland only needs soil of sufficient quality to support grazing grasses.

This is why ranches can be located in rocky or mountainous areas.

While not an exact comparison between farm and ranchland values, the USDA’s chart below shows that in almost every region cropland is valued higher than pastures (i.e. grazing land).

Since homesteads have been built on just about every type of land – from prime farmland to Arizona desert to Alaskan bush – the value of homesteading land will vary wildly.

However, similar principles will apply.

A homestead with high-quality soil and lots of water will be more expensive than one on drier, rockier terrain.

9. A homestead is typically smaller than a ranch or farm

According to the USDA, the average size of a farm is 444 acres.

A homestead tends to be quite a bit smaller since it usually only needs to produce enough to support a family.

During the Homestead Acts in which the U.S. government granted land to anyone willing to move west of the Mississippi River, the land was typically about 160 acres, although folks make homesteads on only a few acres.

While the U.S. government doesn’t give away free land anymore, some states do, but it isn’t anywhere near the size it used to be.

Still, you may be able to acquire a few free acres to live and work on.

And after all, who doesn’t love free land?!

10. Homesteading is about self-sufficiency

While many farmers and ranchers embrace the concept of self-sufficiency, the entire purpose of homesteading is complete or near-complete off-grid living  (rather than running a business or producing food for the larger community or society).

Homesteaders try to create an entire support system for themselves so they don’t have to rely on anyone else.

In some extremes, this may even mean making their own clothes and household products so they never need to use money.

Thus, homesteaders typically take a piece of vacant land and turn it into a very specific life-style focused on complete self-reliance.

11. Homesteaders are more likely to use non-traditional farming methods

This is often why homesteading is set apart from ranching and farming.

Homesteaders are often fixated on living off of the land in a sustainable way.

While many farmers and ranchers do strive to use the land sustainably, they often have tight margins and large operations, which means they have to manage complicated trade-offs between profit, sustainability, proper animal care, availability of resources, market conditions, natural conditions, etc.

Farmers and ranchers have years of experience managing large herds of animals or acres of crops and have specific, time-tested methods for keeping their operation running smoothly.

Since homesteads are smaller with less overhead and lower profit requirements, they have more flexibility to make mistakes or choose production methods that meet philosophical or lifestyle goals (such as permaculture farming) at the expense of yield.

Homesteaders also tend to prioritize keeping the land organic and maintaining a specific lifestyle.

However, when the goal is to make money on the land, individuals must use tried and true methods of farming the land to ensure they maintain the yields they need to be profitable.

Ranch vs. farm vs. homestead: How to choose

If you’re looking to delve into this niche with your vacant land, the primary consideration when selecting between a ranch, farm, or homestead should be its purpose.

Farms and ranches often fall on the “business” end of the spectrum while a homestead is a more self-sustainable life for the owners.

While you can certainly live on a homestead and not produce anything additional, many decide that it’s worth it to produce a little bit extra to sell for some cash.

At the end of the day, there is a lot of overlap between the three, especially when you look at small-scale operations.

So, unless you are looking to purchase a few hundred acres or more, you probably don’t need to worry too much about how your enterprise is defined.

Just go about figuring out the kinds of crops or animals you want to raise and then search for land that will support your endeavors.

Plus a bonus – what is a ranchette?

Another term that many veteran land buyers may have heard is ranchette.

There isn’t an official definition of ranchette since it is really just a real estate marketing term.

However, it is basically the hobby farm equivalent of a ranch.

A ranchette is a small-scale property, typically on the outskirts of a major metropolitan area, where the owner may have a residence and also raise some animals as a hobby or for additional income.

Some ranchettes are simply rural residential parcels while others may be large enough to support small herds of livestock.

Either way, a ranchette is not a profit-driven enterprise and most owners or operators will only work part-time, if that, at raising their animals.

Final thoughts

And there you have it!

These key differences between farms, ranches, and homesteads will help you determine what’s best for you and your vacant land.

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Disclaimer: we are not lawyers, accountants or financial advisors and the information in this article is for informational purposes only. This article is based on our own research and experience and we do our best to keep it accurate and up-to-date, but it may contain errors. Please be sure to consult a legal or financial professional before making any investment decisions.

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Erika

Erika is a former Affordable Housing Director for the City of New York turned full-time Land Investor. She used to help New Yorkers find affordable housing, now she helps people find affordable land around the US.

Prior to starting Gokce Capital, Erika received a Bachelor of Architecture from the University of Southern California and a graduate degree in Urban Policy from Columbia University. She worked as both an architectural designer and engineer in New York before joining the New York City Department of Housing Preservation and Development.

Erika currently lives in the New York Metropolitan area with her spouse, daughter and cat. She is originally from Chicago and still considers herself a midwesterner at heart.

Erika also loves to read, write and travel (fun fact, she has visited all 50 states and more than 30 countries!). Her new book, Land Investing Mistakes: 11 True Stories You Need To Know Before Buying Land, is now available on Amazon.

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