Farm Progress

Does farm growth always mean adding acres?

Keep an open mind about farm’s opportunities.

Darren Frye, CEO

June 25, 2018

2 Min Read
SimonSkafar/iStock/GettyImages

What are your biggest future goals for your operation? Your long-term goals might include bringing in family members, or expanding the operation in some way.

When the farm needs to grow because of our goals, we typically think of adding acres. It seems natural. If our operation is a certain size right now, there may be a particular milestone we want to reach over the next few years.

Too narrowly focused?

Sometimes, thinking of our farm’s growth only in terms of additional acres can actually limit or keep us from achieving our growth goals. There are many situations where getting additional ground is difficult – there isn’t much land for sale or for rent in the area, or it’s currently at a price level that won’t pencil out.

Even if you happen to farm in an area where there’s quite a bit of land for sale or rent, focusing solely on additional acres as how we can grow tends to limit our thinking. For example, if we think we can’t bring our son into the operation until we reach a certain number of acres, we might miss out on the opportunity to do so.

This can happen when we’re so focused only on a particular type of opportunity that we ignore or don’t notice other prospects for our farm’s growth. A narrow focus on getting additional acres can mean we don’t consider other potential ways to grow. Plus, sometimes adding more acres doesn’t necessarily mean more revenue for the overall operation.

New possibilities

Think more broadly: consider growth in terms of increasing your farm’s revenue. This may or may not mean growth in acres right now. Consider different types of opportunities – like side businesses (that may or may not be within agriculture) or ideas like ways to become more efficient.

The key is running the numbers and knowing the financial impact ahead of time, before you commit. Keeping an open mind about opportunities can give you more options to choose from. Then you can run feasibility studies and projections to see how a potential opportunity would fit with your core business of farming.

Another important thing to keep in mind is that just because an opportunity exists, or happens to be in your back yard, doesn’t necessarily mean it’s best for you or your operation. It needs to be the right thing, at the right time, for yourfarm. That’s why crunching and understanding the numbers around how everything would fit together financially is so critical.

Is there an opportunity – acres or otherwise – that you’re considering right now for your operation? Do you know whether it would increase your operation’s revenue? Do you have the numbers in front of you to answer that question? Talk with an ag finance advisor for data and guidance to use in your decision-making process. 

The opinions of the author are not necessarily those of Farm Futures orFarm Progress.

About the Author

Darren Frye

CEO, Water Street Solutions

Darren Frye grew up on an innovative, integrated Illinois farm. He began trading commodities in 1982 and started his first business in 1987, specializing in fertilizer distribution and crop consulting. In 1994 he started a consulting business, Water Street Solutions to help Midwest farmers become more successful through financial analysis, crop insurance, marketing consulting and legacy planning. The mission of Finance First is to get you to look at spreadsheets and see opportunity, to see your business for what it can be, and to help you build your agricultural legacy.

Visit Water Street Solutions

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