Maximize Your Current Land Revenue!
In a meeting with one of my clients in Northern Illinois yesterday, we discussed one of their options for increasing their current land holdings without adding more land. They are in an area where farmland is costing $12,000 or more and none is available. Additionally, land rents are approaching or exceeding $400 per acre.
One option is to put an irrigation pivot on a 240 acre plus parcel. Although this land is already yielding at least 200 bushels on average, putting in the irrigation system would cost about $200,000. The return would be increasing their yield to around 300 bushels per acre. If their normal variable costs are around $400 per acre, the additional $200 k investment would yield about $60-80 thousand per year or a less than three year pay back.
This probably beats paying $200 thousand for 16 acres of land.
In your operation, are you doing everything to maximize your current land production before going after other, possibly, more costly options.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
Comments are closed.