Farm Feasibility Studies

• feasibility
• planning
• new enterprise

What is a farm feasibility study?

A feasibility study is a short, focused investigation of one idea, such as a new enterprise, a processing facility or a land purchase. It asks whether there is a market, whether you can produce the product, whether the numbers work and whether you can handle the risks.

It is different from a business plan. A feasibility study decides whether to go ahead, while a business plan describes how you will carry it out. Many farmers do the study first and write the plan only if the answer is yes.

Penn State Extension and other land-grant programs offer planning questionnaires that walk through these questions in order. Treat the results as a decision tool, not a sales pitch for your own idea.

How do you test the market?

Begin with customers. Who will buy, how much, at what price and how often? Talk to real buyers, visit competing farms and markets, and look at published price reports. Hopeful guesses do not count as evidence.

Estimate the share of the market you can realistically reach and ask what makes your product different. If the answer is only price, be careful, since a larger competitor can usually match you.

Try selling a small amount before building anything. A few test sales at a market or to one buyer show real prices and real reactions, which are worth more than a survey.

• Who the buyers are and how many
• What they pay now
• Who else sells to them
• What would make them switch
• How you would reach them

Can you produce it?

Check that your land, water, climate, buildings, equipment and skills fit the enterprise. Ask other producers what the first two years were like and what they would do differently. Extension specialists can often give regional yield and cost ranges.

Check regulations too, including zoning, licensing, food safety and environmental rules. A great idea that your county will not permit is not feasible.

Be honest about labor. Who does the work during the busiest weeks, and what happens if they are unavailable?

Do the numbers work?

Build an enterprise budget with start-up costs, annual costs and expected revenue. Use a low, medium and high case, and calculate the breakeven: the sales or yield you need to cover costs.

Include your own labor at a fair wage and the cost of money you borrow or tie up. Then ask how long it will take to earn back what you invest, and how you would cover losses in the first years.

Ask someone outside the project to check your assumptions. A neighbor, an extension educator or an accountant often spots a number that is too hopeful.

What are the risks and how big are they?

List what could go wrong: a crop failure, a slow market, a loss of a key buyer, a regulation change, an illness. Estimate how likely and how costly each is, and note what you could do about each one.

If one risk could end the farm, find a way to reduce it or make the project smaller before starting.

Write each risk with a response, such as insurance, a second buyer, a smaller scale or a reserve fund. A risk with no response is a gap in the plan.

How do you make the decision?

Set criteria in advance, such as a minimum return per hour, a maximum amount you are willing to lose and a time limit for proving demand. Then compare the study's results with those criteria.

Possible answers are go, no-go, or go in a smaller test. A pilot with limited spending often teaches more than more research.

Share the study with your lender, spouse or partner and an advisor before deciding, since they may spot things you missed.

Where can you get help?

Extension offices, small business development centers, farm business management programs and SBA resources can help with market research and budgeting. Many offer free or low-cost counseling.

Be careful with consultants who guarantee results or charge large fees for a generic report. A good study uses your numbers and your local facts.

Keep the study short and dated. If conditions change, you can update the numbers instead of starting from the beginning.

Last reviewed: November 12, 2026. Written by the Farm Money & Grants Editorial Team. Educational only, not tax, legal or financial advice. See our editorial policy.