Hidden Equipment Costs May Be Sucking Your Farm Capital

Hidden Equipment Costs May Be Sucking Your Farm Capital

With low interest rates and good crop prices, many farmers have invested in new equipment over the past few years. But hidden costs associated with that equipment may now be hurting your bottom line. Vince Bailey, with Farm Credit Mid-America, says, “You may have some equipment you are not getting full utilization out of, perhaps using it only part time. That is some capital sitting out there in the machine shed that  is not available to be used in a working capital situation.”  He added there may be better assets you can invest in that will give you a better return.

While selling that equipment may be a hard choice to make, Bailey urges producers to look at their operations as a whole and determine what assets are really necessary, “You really need to step back and keep an eye on the big picture. What are your investment choices doing to your bottom line and your cash flow?”

Bailey says the end of the season is a good time to evaluate your operation and begin to plan for what you will need in the future, “Things are fresh and top of mind. You know how long it took to harvest and what are you going to do next year.”

For more financial tips and insights, visit e-farmcredit.com.