Managing cost on the farm is a challenge at times. Typically things like input and fixed costs are the first that come to mind, but a big cost management opportunity that can affect the farm for years to come is your machinery cost. It's important to take a close look at your financials when evaluating your machinery cost, including a metric we've found to be very helpful - machinery investment per acre, which is the value of your machinery spread across the total acres you farm.
A big question many farm leaders face is whether to buy or lease new equipment. A good way to deal with this issue is to first determine the need, and that could be related to a gap in your production due to a shortcoming in your current equipment, or just because you have the opportunity to get a really great deal on something better that can serve you well into the future. If you find the necessity is there, that's when you can turn to the numbers to take some of the emotion out of the decision at hand.
Water Street Solutions Account Manager Jason Ladman recently spoke with ag broadcaster Dewey Nelson about this topic, including the story of a farmer client of ours who dealt with the same issue on his operation. Hear about how he talked these issues over with his ag finance advisor and what kind of metrics the two looked at to come to a decision in this week's radio interview, located below.