How to Increase Value in Farm Real Estate

by Guest Author on June 13, 2013

With production costs on the rise, farmers find themselves in difficult times to turn a profit or get a decent rate on return, which is why some want to sell their farms or purchase additional farms for sale with the chance of increasing their returns.

What can farmers do to increase value on their own farms? Better yet, will it make a difference when it comes to selling their farms or purchasing new ones?

These are difficult questions to answer, but with the right combination of short and long term strategies and investments, farmers will have a better and more favorable idea of increasing the value of their farms. They may not be guaranteed a significant increase in profits due to high production costs, but they’ll increase the security for food and their farms, while improving the value of their farms in the long run.

Make Green Investments

Green investing attempts to increase personal wealth, while avoiding damage to the environment and harm to people. This is great for farmers, since farming, including animal farming, accounts for 20% of annual carbon emissions. Along with issues with irrigation inefficiencies and resource depletion, green investments are smart ways to attempt to establish long term solutions for farming.

Like any investment comes a different type of risk and return, but some more than others. Green investments consist of green stocks, bonds, mutual funds, etc. Green investing is a long term solution to environmental issues, while increasing a farmer’s wealth.

What kinds of green companies can farmers invest in?

They can invest in green companies that produce their farming equipment and machinery, other farming operations with green qualifications and green energy.

How does this relate to increasing a farm’s value, rather than just the farmer’s personal wealth?

Farmers can improve the green companies they invest in by supporting them on their farms, as well. A green operating farm leads to a healthier environment around that farm. Since farmers have a vast amount of land, they can purchase and install green energy sources on their farm to live off of and to sell the additional energy they won’t use.

Improve Crop Production

It’s clear that farmers rely on their crop production for revenue, so in order to increase not only revenue, but profits and the overall value of the farm; farmers need to improve their crop production operations. This doesn’t necessarily mean producing more crops, but in a more efficient, effective and smarter way that is also regarded as good farming practices.

  • Perform Good Farming Practices: Bad farming practices are one of the reasons food security is an issue, more so in the future, and why certain resources are wasted. Good farming practices are various farming methods that produce food that is safe for consumers and better on the environment. For instance, recycling water when possible, scheduled irrigation and maintaining healthy soil and structure from tilling.
  • Increase or Decrease Crop Production? Farmers are looking at ways to increase profits without necessarily selling more produce, but to decrease oversupplied crop production to match demand. This also frees up more space to grow other crops.
  • Grow What’s in Demand: Farmers can increase the farm’s value if they produce a crop that is undersupplied. Plus, it’ll diversify crops.
  • Create Resourceful Farming Operations: One way to increase profit margins is to cut back on operating costs. One way to do that is through more efficient operations and resourceful methods of farming, such as good farming practices. As resources become scarcer, I imagine there will be more of a governmental inference and regulation on these resources. Farmers who practice good farming methods will benefit more than those who don’t.
  • Diversify Crops: One way to reduce risk and increase value in the long run is through crop diversification. Farmers who plant one crop are playing a dangerous game. What if the market shifts or that type of crop is damaged or destroyed? Of course there’s crop insurance, but a diversified crop production in addition to insurance would be even better. Don’t put all of your eggs in one basket, put them in several.

Farmers and investors looking for certain farms for sale are more likely to choose farms with greater value and ones that are more likely to appreciate in the long run. Farms with green investments, green operations, good farming practices, smart crop productions and resourceful methods have a foundation built for a successful future in terms of food security, environmental safety, societal health and an overall market value.

About the author: Sam Ott writes for Absolute Auction and Real Estate Co., who offer farms for sale in Northern Missouri. Check out their listing’s page for available farms in Northern Missouri.

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