USA | Reality speaks - 12/27/2025 19:40
you have it figured out. Short term debt is the most dangerous debt any operator can take on. It feels good it makes it possible to grow fast but it will be the one that financially will kill you if not managed properly.
Every failed farming operation and small business had too much short term debts. every single one never ever forget that.
Land debt as long as the payments are less than what a conservative rent would be is a good debt to carry while allowing you to grow the operation.
Machinery debt is sometimes a necessary thing, Its just like short term debts if properly managed it can help the operation succeed but its easy to mis manage machinery debt chasing the sec 179 expense tax write off.
Land purchases that require $1300-$1400 interest and principal payment plus Re tax, and income tax , is a long ways from conservative rent. When you have to come up with an extra $200-$400 acre from total acres farmed to subsidize the required interest and principal payment, more than likely = liquidity crisis @ some point. |
How many debt free farmers?
