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Maximize Your Current Land Revenue!

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April 27th, 2012

In a meeting with one of my clients in Northern Illinois yesterday, we discussed one of their options for increasing their current land holdings without adding more land.  They are in an area where farmland is costing $12,000 or more and none is available.  Additionally, land rents are approaching or exceeding $400 per acre.

One option is to put an irrigation pivot on a 240 acre plus parcel.  Although this land is already yielding at least 200 bushels on average, putting in the irrigation system would cost about $200,000.  The return would be increasing their yield to around 300 bushels per acre.  If their normal variable costs are around $400 per acre, the additional $200 k investment would yield about $60-80 thousand per year or a less than three year pay back.

This probably beats paying $200 thousand for 16 acres of land.

In your operation, are you doing everything to maximize your current land production before going after other, possibly, more costly options.

Paul Neiffer

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

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    Photo of 140 bpa wheat near Walla Walla pic.twitter.com/YsA2wPt1iH

    8 hours ago

    Corn does well in Washington state. 55 at night 95 during the day plus irrigation 2 days ago

    If average cash rents drop $50 this fall and cash return is 2% equals drop in average land values of $2,500. We shall see. 2 days ago

    2 years ago corn + beans + wheat was almost $40. Now it is under $20. 2 days ago

    Great time with @MRRChip today on Market Rally talking about the new farm bill. 3 days ago

    Drove over 2,000 miles in last 12 days. Saw a lot of good looking corn. Beans not so much 5 days ago

    When you drive through Minnesota, South Dakota and Iowa this time of year you see a lot of corn and beans and not much else 2 weeks ago

    Possible another reason for high US corn yield estimates is acres switched to beans were lower yield corn acres 2 weeks ago

    Don't understand why nobody claims the USDA manipulates the data when the report is bullish 2 weeks ago

    USDA pegged lower corn production but if yields trends continue this will quickly change to production increase. 2 weeks ago