Farm & Ranch Acquisition Model | Lender Underwriting, TDCR & the Land Paradox Bridge

Agriculture, Dairy Farming, Financial Model

Break-Even, Business Plans, Business Valuation, Cash Flow Projections, Debt Service Coverage, Excel, Financial Model, Loans, Mergers and Acquisitions Model, Pro-Forma, Real Estate Valuation

Every farm template on the market is a ten-year forecast for someone who is STARTING a farm. This one underwrites the purchase of a farm that already exists, the way the lender will.

It is built around two published numbers. United States cropland rented for $161 an acre in 2025 against a cropland value of $5,830 an acre, a gross rent yield of 2.76% (USDA NASS). The average interest rate on farm real estate loans in 2026:Q2 was 6.79% (Federal Reserve Bank of Chicago, AgLetter No. 2013, 79 responding banks). The current income of the asset sits roughly four hundred basis points below the cost of the debt that finances it. Two numbers, two agencies, no opinion in between.

That is not a claim that farmland is a bad asset. It is a statement about which test a LEVERAGED purchase has to pass. Appreciation does not make a loan payment.

The signature output: two ceilings on the same purchase. What the COLLATERAL supports, capped at the 85% loan-to-value limit of 12 CFR 614.4200. And what the CASH FLOW services, built from the Farm Financial Standards Council capital debt repayment capacity at your target coverage. In the default case those read $5,168,000 and $2,135,677, a gap of $3,032,323, which is the exact amount of debt the land would secure and the farm cannot service. Per acre: the operation supports lending of $3,337 against a price of $9,500. Neither side contains a risk premium or a discount rate.

Three things it does that a farm budget does not.

It uses the TERM DEBT COVERAGE RATIO, whose numerator adds off-farm income and subtracts family living withdrawals and income taxes, and prints the corporate DSCR beside it: 1.06x against 1.18x on identical numbers. Set family living equal to off-farm income, tax to zero and the line rate to zero and the two become identical to the last decimal, which proves the difference is exactly those three things and nothing else.
It sizes the operating line on the intra-year trough. A farm spends cash for months before it is paid; the annual total never goes negative, August does. 7 CFR 762.125 requires the lender to model the operating cycle, not the calendar year.
It separates the acres the seller does not own. 39.3% of US farmland is rented, over half the cropland, and 57% of rented acres renew every single year. The model prices what a failed renewal does to coverage.

Government payments have their own line, and coverage is reported without them. They were 28.9% of US net farm income in the 2026 forecast against 7.9% in 2024. In the default case coverage falls from 1.06x to 0.80x without them, straight through the FSA regulatory floor of 1.00x.

Three subtypes on one switch: row crop, dairy and cow-calf ranch, each with its own revenue engine and its own inputs that survive the switch.

Validated against something it did not write. The dairy feed-cost engine reproduces two months of Dairy Margin Coverage values published independently by USDA Farm Service Agency, to the cent, on a sheet you can check rather than trust.

Fourteen sheets. Excel and Google Sheets, no macros, no external links, no iterative calculation. A 9-page user guide is included. Every benchmark carries its source and its date, and where none exists the sheet says so instead of inventing one: no farmland cap rate, no acres per animal unit, no MACRS recovery period per asset, no operating line sizing rule.

Educational underwriting tool. Not financial, investment, tax, legal or agronomic advice. It does not predict prices, yields or land values and does not tell you what a farm is worth.

You must log in to submit a review.