Editor's note: We’ve gathered several experts to offer suggestions on trimming expenses in light of tighter margins in 2014. This is one of 10 money-saving tips.
Think twice about capital expenditures. Many farmers have upgraded equipment during recent years of strong profits, Mike Boehlje, ag economist at Purdue University says, so they might be in a position to go through a period of lower prices without making additional changes. It’s important to "right size" equipment to acreage, he says. The same applies to land and other fixed assets.
One way to maximize a machinery investment is to run equipment for longer periods of time, says Moe Russell, president, Russell Consulting Group of Iowa. He told the audience at the 2014 Top Producer Seminar that he foresees more farms running machinery 24 hours a day in the future, with limited downtime for routine maintenance.
Another option to consider is a true lease, says Paul Neiffer, The Farm CPA. While the Section 179 deduction for farm equipment likely will rise this year, there is plenty of uncertainty surrounding the final amount. That makes other cost-saving strategies for equipment valuable.
Keep Your Production Costs in Check for 2014
With grain prices dropping, it’s time to get creative. There is no one-size-fits-all-farmers answer, but there are numerous ways to more closely align costs with returns. Here are the money-saving tips we've gathered.