If you’re looking to live on or make a living on vacant 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 12 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 from such a broad definition, a variety of enterprises can be considered farms – from small-scale family farms to massive factory farms.
So if you’re considering using a piece of land as a farm, you have a variety of options for what type of farm you’d like to create.
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.
If you’re looking to grow a diverse selection of crops, then small farms are typically better for that.
Fish farm: This is becoming an increasingly more 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.
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 farms and cattle farms.
2. A ranch is a place where livestock is 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 large livestock are raised and grazed to produce meat and other products.
Thus, you should remember that 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.
Ranchers will herd their livestock and help them graze or feed so they can grow larger.
Ranchers may purchase the feed or produce their own.
Ranchers also often use dogs or horses to help them raise these livestock.
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, prices of commodities and produce.
Ranchers are concerned with animal health, feed prices, selling prices of cattle.
A farmer’s objective is to create straight rows, and healthy crops while a farmer’s objective is to raise fat, healthy cattle, and plentiful grass.
4. A homestead is a house and surrounding land owned by a family
If you’re looking for the best of both worlds, a homestead may just be your dream.
A homestead if the ideal way to incorporate crops and livestock into a single property where you live.
Since many homesteads do produce crops or livestock, they can often meet the official definition of a farm.
In fact, the majority of farms in the US have annual sales of under $10,000, which means they probably function a bit like a homestead in that they are producing supplemental earnings or food for the family, but are not generating the farmer’s full income.
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.
5. A farm generates money by producing from the land
While we have seen that most farms produce less than $10,000 in sales a year, the primary purpose of a farm is to generate money based on the crops or animal products that are produced on the land.
It’s how the farmer makes his income.
Unlike a homestead who has created a life on the land, the farmer’s life may or may not be on the farm.
They could simply be farming on the land and living in another area.
Thus, they’re relying on the hard work and yields of their crops to make ends meet.
6. A homestead may combine all the elements
While a homestead doesn’t have to combine all of the elements (home, livestock, crops), it can if you want it to.
This makes it an appealing option if you’re trying to use vacant land in a fulfilling way.
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.
Surviving and thriving on your own land is a real and raw experience.
If this sounds like your calling, you can start by watching our video on our to buy land and build a house.
7. 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.
Thus, people occasionally confuse hobby farming and homesteading because there is not a strict emphasis on making money.
That said, hobby farming differs from homesteading because hobby farmers must have another way to make an income outside of their farm entirely.
Homesteaders, on the other hand, use their land to be entirely self-reliant.
Farmers and ranchers work hard to make an income from their land each and every day.
While homesteaders are not exclusively motivated by profit, there is a component to their work that allows them to survive, unlike hobby farming.
8. 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, but 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 would ultimately cause issues.
9. 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 very 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).
|Region||Farm real estate value||Cropland value||Cropland rent||Pasture value||Pasture rent|
|U.S. total (48 States)||$3,160||$4,100||$140||$1,400||$13|
|Source: Land Values, 2019 Summary, USDA, National Agricultural Statistics Service, August 2019.|
Annual data by region and State are available from QuickStats.
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.
10. A homestead is typically smaller than a ranch or farm
According to the USDA, the average size of a farm is 444 acres.
Since ranch data isn’t tracked specifically by the US government, it is harder to get accurate data.
However, according to this article, the average size of a ranch in the United States is 442 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.
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?!
11. 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.
12. Not all farming or ranching is sustainable
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.
Many farmers and ranchers do strive to use the land sustainably, but 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 generally 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, homesteaders have more flexibility to make mistakes or choose production methods that meet philosophical or lifestyle goals (such as not using pesticides) 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 and maintaining the land to ensure the best yields.
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 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 extra cash.
Farming and ranching can be an attractive option for those who already have a “home base.”
You may purchase fertile vacant land as a way to produce additional income.
Especially if you’re able to hire help or someone to manage your farm/ranch for you, these two may be less time-intensive than homesteading would be.
Either way, you should select the one that you’re most interested in so that you can comfortably maintain it.
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.
But it is basically the hobby farm equivalent of a ranch.
A ranchette is generally 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 really just 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, on their property and animals.
For more tips on selecting a parcel of vacant land, see our video below.
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.
For more information on buying, selling, or investing in vacant land, check out our other resources below.
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If reading this article got you interested in land investing, you can check out our article on How to Get Started in Land Investing.
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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.