Is Now The Time To Grow Your Operation?

April 12, 2018 01:31 PM
 
 

Corn and soybean prices have seen little bumps in prices as of late. The September 2018 corn contract is slightly above the $4 mark while the August 2018 soybean contract is inching near the $11 mark at $10.68 per bushel.

Farmland values in Illinois showed stability in Illinois for much of 2017, and other land values are seeing improvement. These could be signs the ag recession could be behind us, and many farmers are wondering if now is the time to expand.

According to Michael Langemeier, ag economist with Purdue University, it depends on your farm’s current situation.

“If they need to garner economies of scale, lower their per unit costs on things like machinery and labor—one of the only ways to do that is to expand the operation so their per unit cost for machinery and labor are lower,” he said. “That’s a good reason to grow.”

Some farmers may be considering investing retained earnings. Langemeier says many farmers plan on putting that back into their farm.

“As the margins improve, there’s going to be more retained earnings that they could potentially use to expand the operation,” he said. “The biggest reason to grow is you’re bringing a family member back to the farm.”

Hear what Langemeier thinks the biggest financial mistake farmers make on AgDay above.

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