If you farm for a living, you may be interested to know that the future of agriculture and other types of farming are set to change. These changes might allow farmers of all types to expand their small farms and branch out into new and fruitful growing processes. However, expanding any type of farm requires the right financing, and it is important to invest in items that will help your farm increase its output. From livestock to land, buying farm supplies on credit can foster farming success when you make the right choices.
1.     Land
If there is available land adjacent to your existing farm, you may want to consider expanding into it. Additional land can afford you growing or grazing room and, depending on local zoning laws, you may be able to build additional farming buildings there as well. However, before you apply for a loan, it is important that you consider several factors about the available property and land you already own.
One important point you might consider when buying acreage on credit is the current worth of your own land. Before you apply for a loan from a company that specializes in farm and agricultural lending, you may want to have your existing land appraised first. If your land is worth less than the one you are considering, it might be wise to buy only a portion of the available acreage or postpone your purchase until the value of your land rises.
2.     Livestock
If you own a dairy or horse farm, expanding your output or raising profits by buying more animals may be a wise venture. There are several reasons for investing in additional livestock, especially if your animals produce something you can sell, but before you buy animals on credit, it may be wise to sit down and inspect your current profits and compare cost vs. potential capital.
For example, if you raise dairy cows and currently own fifty animals but want to double that number, look over your recent profits from the sale of their milk or calves born. Compare this amount to what you plan on borrowing for the purchase of additional cows, then add projected interest payments as well. If these numbers are far apart, the expansion might not cover the cost of your loan and you may default, which can have a negative impact on your credit. Consider a slower growth of your herd until you can be confident of meeting your lender’s requirements.
3.     Machinery
In 2017, several agricultural experts noted that technology is changing the way farmers plant, manage, and harvest their crops. Investing in farm machinery can benefit you and the planned expansion of your business, especially when it comes to automating simple tasks so you can focus your attention on more important matters. Automated machinery, such as combines and planters, may help you complete tasks faster and optimize the time you spend out in the fields. Because large farming machinery is so costly, taking out loans for their purchase is a decision you might want to plan carefully.
There are several questions you can ask yourself before you take out a loan to buy farm machinery; for example, how much will it increase your current debt and how can it contribute to profit? What are the projected interest payments on the machinery you wish to buy? The more questions you can answer confidently, the better prepared you can be to search for a lender who can accommodate you.
4.     Vehicles
Farm vehicles, such as full-sized trucks that can haul trailers, all-terrain quad runners, and tractors, can help you travel over your land quickly when necessary and move large objects and harvest from one area to another. Some can ease the work of farm labor. They can be a boon if you are planning for expansion, and buying them on credit can have several advantages.
One benefit of buying farm vehicles on credit is that you may be able to secure financing with a lender that specializes in agricultural loans, such as Western AgCredit. These specialty lenders understand the needs of the farming community and may be able to offer you financing on one or more vehicles, depending on your current credit situation. It may help if you have a financial plan to offer such a lender so a loan officer has a better idea of how you plan to move ahead with your expansion if you qualify.
5.     Sheds and Barns
Whether you have them built or buy prefabricated models, outbuildings like sheds and barns can contribute to your planned farm expansion in a variety of ways. Not only can they offer shelter for your animals and valuable equipment, they can also increase the overall worth of your land. The plausibility of having these buildings built on credit can depend on several factors that you may want to consider before you apply.
The necessity of sheds and barns as a part of your expansion plan can be gauged by looking at a few number sets. If you want to build a barn to shelter animals, it is important to consider what will be required to keep them comfortable and safe, such as watering and feed systems, heat, and fire or theft detection. If you want to add buildings to your property for storage, you may want to be prepared to let your lender know what you plan to store, as well as its value.
6.     A Home
If you currently live some distance from the land you work and real estate becomes available on some adjacent acreage, it may help you manage your expansion plans if you invest in buying a new home. Taking on a mortgage may sound daunting, but since lenders that specialize in agricultural loans may furnish mortgages for farmers, you may be able to secure a loan unlike one you might be offered at a bank that services everyday consumers, or you may be able to refinance some of your current loans to manage your expansion.
Expanding your farm on credit can help you grow your business in a way that does not overburden you financially. However, careful planning and spending can increase your chances of future success.
