Maximize Your Profits in Lean Years

 
Maximize Your Profits in Lean Years

One way producers can maximize profits in lean years is to divvy up their farms into three categories, explains Chris Barron, an Iowa producer and Top Producer columnist. 

“How valuable is it to keep the farm you know isn’t producing?” Barron asks.

Rather than becoming stuck, a producer with 10 farms might align each location into one of these columns:

  • Upper Third: High productivity, consistent, correct scale
  • Middle Third: Breakeven, medium productivity, some consistency/location/scale
  • Lower Third: Lower productivity, inconsistent, poor location or scale

In some cases, a producer must hold onto farmland. In other cases, though, sorting out higher-performing farms from lower ones can enable farmers to make adjustments or remove certain locations from the operation.

“It’s about return on investment for each individual farm,” Barron notes.

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Comments

 
Spell Check

Farmlady
Mount Carmel, IL
3/18/2015 07:43 AM
 

  There is truth in the need to know whether your ground has been profitable or not. This article does not point out important things to take into account. Some of my less productive ground costs the least to produce merely because my land costs are very significantly less. This doesn't mean I want to get rid of my highly productive ground because it is still producing income. I like to have a variation in ground location and type. My "eggs"aren't all in one "basket". The challenge is to make all ground as profitable as possible. Ground you own yourself usually can be made to pay for itself. With that in mind, I would definitely scrutinize rented acres. If you can't make a profit and can't negotiate with the landowner, you need to drop those acres. You gain nothing by losing money on that ground.

 
 

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