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Other ways to expand

Gil Gullickson 12/05/2012 @ 3:35pm Crops Technology Editor for Successful Farming magazine/Agriculture.com

Adding more acres is often how you think about growing your farm. Just remember, there are other ways to grow. In some cases, adding acres without thinking first can be undesirable.

“Growing by purchasing more land is only one of the many different ways to grow,” says Mike Boehlje, Purdue University agricultural economist. “When you mention growth in a business environment, businesses don't say, ‘Oh, we need to build a new plant.’”

Yet, that's exactly what you do when you go out and rent or buy more acres.

“In the business world, growth is growing the top line (growth in sales),” says Boehlje. Controlling costs is important, too. But bottom-line growth is the result of growing the top line, says Boehlje.

Ask yourself questions

For starters, ask yourself why you want to grow your farm. “Is it because you are trying to bring another generation into the business and you need income for them?” asks Boehlje. “Or is it ego? I'm not saying that is bad, but do you really want to be the biggest dog on the block?”

Suppose you buy a quarter of land next to your farm. It may well be worth it, as it might be the only chance you get to buy it in your lifetime. Still, it may have quirks that shift your attention from managing other parts of your farm.

“It takes awhile to get on top of a new unit of farmland,” says Boehlje. “It may not get up to the productivity you want during that first year. It takes time to know the soils. What often happens is you get a lot less sleep and you end up not doing as good a job on other parts of the operation – like marketing. It can be positive long term, but there could be a period of time where it's negative for the operation.”

3 other options

At last summer's Top Crop Farmer Workshop at Purdue University, Boehlje and Brent Gloy, Purdue agricultural economist, gave three alternatives to adding acres.

1. Diversify.

“You might get into a different type of business,” says Boehlje. “It might be that you're getting into a broader set of businesses through acquisitions or other types of arrangements.”

2. Tap unused assets.

Having a 16-row planter as opposed to an eight-row planter helps ensure timely planting in a spring interspersed by rain showers. These days, many planters are 16-row and larger. In a normal year, though, large planters can represent excess machinery, particularly if you farm on a smaller scale. If that's the case, custom farming may be one way to use excess capacity. Custom farming can also be an option if you have other implements with larger capacity than you need in most years, such as a sprayer or combine.

3. Use existing land more intensively.

Boehlje says his family's best strategy on their Iowa farm has been to buy land with inherent productive ability and then to upgrade it. “The best investment we ever made has been to tile,” he says.

Growth is more than buying another farm, adds Gloy. “Think proactively about growing without adding more acres,” he advises.

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