Today, I want to look into growth opportunities for your farm through purchasing more country versus increasing the productivity of your current farm. As you know, the price of land has gone up significantly in recent times. Dollar per cow area or dollar per average yield of grain has become more expensive in terms of value, yet many of the farmers we’ve been talking to have been thinking about growth and expansion.
We recently had a meeting with our clients who were looking for growth opportunities for their operation. One of their options was to purchase a property further afield.
While purchasing country one to three hours down the road may seem feasible, there are pros and cons to consider before making your decision. Things like:
While buying the property next door can be a better option for growth, you want to esnure you buy it at reasonable value. This might seem like a no-brainer but again, we looked into this with a couple of our clients and in one instance, the property was going for a considerable sum. With the good seasons we’ve had coming out of the drought, it can be tempting to take on four or five times the debt in the name of expansion, however, you need to ensure you can service your loan during the tough time too, otherwise it could prove to be a real challenge, particularly if we return to more dry seasons.
The consideration here should be things like your ability to service the loan. Perhaps this decision to purchase more land is able to be done from a security perspective, but it should be researched thoroughly before deciding. Serviceability is paramount, with year-in-year-out cash flows prepared that stress-test projected cashflows. If it’s growth you’re looking for, you might want to consider your time-frames too. If you go heavily into debt, it might be a while before you see a return on your investment, so it’s important that you consider this as well.
The one solution to expansion that’s often overlooked is increasing the productivity of the farm you’ve got, rather than going into debt to buy the place next door or looking further afield.
Looking at your current property and identifying what can be done to make it more productive is a worthwhile exercise and should be done before purchasing more land anyhow. Asking yourself and your team questions like the below can all help to increase your property’s productivity and help you both in the long and short-term.
Finding your quick wins and picking the low hanging fruit is the quickest way to gain momentum for further growth. While it’s easy to get caught up in the idea of expansion, you could be missing out on the golden opportunities awaiting you in your own backyard.
Looking at your current property with fresh eyes can be an invaluable exercise. One of the key aspects of our Farm Business Success Program is finding the opportunities most available to you and taking advantage of them at the right time.
To find out where you might be missing key opportunities for growth on your farm, try our Farm Business Success Scorecard.
Passing the Torch: Transitioning the family farm Farm transition planning is about two things: preserving your family’s legacy and preparing the next generation to take
As a farmer, you already know that the unexpected is part of the job. You’ve weathered tough seasons, market shifts, and countless challenges to keep your farm going. But when you think about the future, especially as we head into 2025, are you confident you’re on the right track with your finances?
It’s no secret that farming can be tough. Rising interest rates, skyrocketing property prices, and mounting farm debt are just a few of the challenges that make farm management feel overwhelming. Add in cash flow struggles, succession complexities, and tax planning, and it’s easy to see why many farmers feel like they’re performing a juggling act.
Christmas is a time for family – coming together, sharing meals, and telling stories. Unfortunately, it can also be a time of tension, especially when difficult topics like the future of the family farm arise
When it comes to creating a secure financial future, the right adviser can make all the difference – that’s where Matt Meehan comes in. Committed to guiding you toward a secure financial future, Matt offers extensive knowledge and expertise, providing personalised financial strategies designed to meet the unique needs of farming families, individuals and business owners.
We are pleased to advise that Lifesolver has merged with Advisory Partner and Practical Systems. Through this new group, we are able to strengthen our focus on rural people and businesses, with excellent local service (and offices).
