We have cash to invest in our operation. My son wants to pattern-tile as many acres as possible. Meanwhile, an older neighbor who owns 160 acres is hinting at retirement. Should we wait or invest in land we have?

The Profit Planners panelists include David Erickson, farmer, Altona, Ill.; Mark Evans, Purdue Extension educator, Putnam County, Ind.; Jim Luzar, retired Purdue Extension educator and landowner, Greencastle, Ind.; and Steve Myers, farm manager with Busey Ag Resources, LeRoy, Ill.

Erickson: I would be in favor of tiling your current owned acres. You do not know for a fact that the neighboring farm will sell and, if it does, whether you will be the successful new owners. Seems like too much “what if” to me. Invest in the improvement of your farmland, which should make it more profitable. In return, improve your ability to pay for new additions.

Evans: How valuable is the ground to you and will you truly be positioned to buy it based on its actual value? Talk to your lender and determine whether the land purchase is a good decision.

How are yields on ground you have and how much of a yield increase do you expect from tile? More ground may not be the secret to an increase in the bottom line. Doing better with what you have may be the answer. If this ground is essential in your operation in respect to its location, and especially if it has speculative value due to location, that can sway you more so to the land purchase. If the retirement is postponed a bit, perhaps both can happen with better returns from tile, if commodity prices stay strong.

Luzar: All farm investments are evaluated by calculating projected returns over time, with an expectation of probability of returns being central to determining the direction of investment. Both the tiling project and the farm purchase require examination of projected costs and returns to determine which project is most viable. Tiling returns will vary with respect to soil type, so it may be reasonable to prioritize higher-returning tracts for immediate installation and table fields whose projected returns are not as high.

My biggest concern is timing. The tiling installation can happen this year or later. The farm purchase may only happen this year. It might be useful to only tile the land that creates a very high return this year to see what happens with the farm purchase. I am not a card player, but if you play your hand of cash completely on tile and can’t buy the land, your options have been limited. The wet soil will still be there after the farm sale!

Myers: I would always advocate on improving what you have, meaning tiling existing land. However, as we all know, there is only so much money to go around. So, why not do both? I would suggest that there is no “promise” the neighboring land will actually come up for sale. Retirement does not equal sale; so, consider what capital may be needed for a purchase. Pare down immediate tiling to keep you flexible if that event were to come about.