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Evaluating Farm Assets
Farming takes money. Lots of it. Take a hard look at your assets for the sake of your bottom line and viability for the future.
Jim Knuth is a senior vice president with Farm Credit Services of America. He says the single factor they see time-after-time between those who are succeeding and those who are struggling is how they manage their operation from a business, financial and marketing perspective. This includes evaluating the cost of assets such as machinery and equipment and re-thinking how they’re using it.
"Do I have too much? Do I need to sell a piece or two? What about custom farming something or maybe custom spraying, hiring somebody else? What about leasing, what about machinery sharing? At the end of the day they understand, I don’t make money in agriculture by owning machinery and equipment, I make money by utilizing machinery and equipment," says Knuth.
He says many customers who were proactive and sold an asset found it was the best decision they made for the long-term viability of their operation. It depends on the situation, but typically, they sell excess machinery first and land second.
"Selling an asset is hard. That’s a tough decision for a farmer. But what we saw is those who pulled the trigger, those who were proactive the fact is, they’ve put their operation in a much better, viable sustainable position," he says. "In fact, they’re probably better-positioned to buy their next farm versus trying to hold onto a farm that I simply can’t afford."