b'CUT COSTS Continued from page 10 leave the producer with too much equipment would mean average interest payments overUse of Manitoba Agriculturesinvestment for the size of the farm.the life of the loan of nearly $550,000, orFertilizer Efficiency CalculatorMANAGING EQUIPMENT COSTS$137 per acre. Equipment costs for purchases and repairs In addition, principal payments of roughlyand working with a trustedhaveexplodedinrecentyears.Likeland, $180 per acre over the life of the loan wouldagronomic advisor equipment purchases commit the farm to a also need to be paid. Together, principal andcan assist with meeting thepayment schedule or consume working capi-interest payments would total $317 per acretal. The key question is the grain price and for the next 25 years on the purchased land.crops agronomic needs corresponding profit level that justifies the In a situation where farms are barely profit- while maintaining size, age and expense of a potential equip-able, a farm would need to take profit fromment purchase.land that is bought and paid for to subsidizeprofitability. Purchases that have a good cost-benefit the purchased land.analysisbyprovidinggreaterefficiency, While small land purchases wouldnt haveloweroperatingcostsorincreasedcrop a large effect on farm profitability and cashyields are often easy to support. On the other flow, larger land purchases will have signifi- hand, purchases that dont provide a clear cant impact. And in the example above, thisagreementsareconsiderablyshorterthanbenefit to the farm can act as an anchor on will be the case for the next 25 years. mortgages for land purchases.finances for years. Land rentals allow for lower capital andHowever, the benefit of lower cash flowProducerswhomakewiseequipment cashflowrequirements,makingrentalarequirements is offset by the uncertainty ofinvestmentdecisionsinmarginallyprofit-lower risk than purchase. Also, the risk ofshort-term rentals where a producer couldable years will be much stronger and more overpaying on land rents is limited to thelose that rented land. That could upend thecompetitive for equipment and land in the lengthoftherentalagreement,andsuchbalanceofequipmenttofarmedlandandfuture.Growing soybean?We are 100% focused on soybean, and we have been for over 40 years!PrograinThe Soy Expert.Discover the benets atmysoyexpert.ca'