There are several steps involved in starting a farm.
First, place mud next to water.
Then dig it with a shovel, this will turn it into farm dirt.
Next, place fertilizer on top of the farm dirt.
Over time the fertilizer will become - at random - any of
grape seeds, or
The seeds will then grow into plants…
Digging the plants will then give you some materials or food, and more seeds to extend your farm with.