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Return on equity as a farming operation matures
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Clay SEIA
Posted 11/27/2015 21:39 (#4923443 - in reply to #4923426)
Subject: RE: ricefarmer14, you need to expand.........



emtbd1979 - 11/27/2015 21:29
Clay SEIA - 11/27/2015 20:19

ricefarmer14 - 11/27/2015 15:36 I'm asking the question as I'm not sure but what I'm seeing is that as long as expansion occurs and large investments are made into machinery fewer taxes are paid...as land and machinery are paid for and as the size of the business stays the same size your tax bill goes up and the need for additional investment decreases. Also as Tiler mentioned above try farming 5000 acres with leverage and equity of say 2,000,000.00 and a 25% ROE is 500,000.00 or 100 per acre profit. The mature business that owns 1500 acres and owes nothing on equipment with equity of 15,000,000.00 needs 750 per acre profit to reach a 25% ROE.


If I owned 1500 acres outright, and the machinery to operate it, the only thing I would be worried about is keeping momma so happy that she wouldn't run off with the pool boy and try to take half of it with her... 

if I owned 1500 clear I'd rent it out and just work my truck and lowboys for something to do. God that would be awesome! But that's a dream lol.


Actually, Five Lock Ball hit it right in a thread last winter when he said if he had enough money to farm in an unlimited fashion, he would smell like jet fuel, expensive Scotch, and whatever perfume it is that Brazilian bikini models wear..... 

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