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Return on equity as a farming operation matures
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dabeegmon
Posted 11/27/2015 16:53 (#4922657 - in reply to #4922642)
Subject: RE: Return on equity as a farming operation matures


SE Manitoba
mennoboy - 11/27/2015 16:44

I can see your point about inflation and value of the dollar. I feel if you don't account for the value of the land though, comparing 2 5000 ac farms, one with 80% owned and one with 20% owned and growing the exact same crops, the ROI will be different purely based on farm model. Even though they are generating the same $'s.


Well - - - if you treat the land ownership as a separate enterprise from the cropping you will have to change yourself a fair rent. That fee will also tell you how much land you want to own and/or rent (or not!).

If you treat EVERY operation as a cost center using fair achievable costs (regular custom operator rates) then you will also see where you costs can be trimmed.

Now if you want to get real kinky you will set up formulas for all of the aspects to your operation and run it through a monte carlo analysis system and then you will know (with a high certainty) what you will have in your jeans in December as you do your planning in January.
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