Road Warrior

Enthusiastic About the Future of Agriculture: Top-Ten List, No. 7



In recent columns, I have discussed why I am enthusiastic about the future of agriculture. This request came from an agricultural broadcaster in the Northwest, placing a positive slant on the future of agriculture. In previous columns I have discussed the five dimensions, the convergence of technology and one size does not fit all. Now let's move to number seven, profitability.


No. 7: Profitability

If one examines the farm record systems over the past two decades, it can be quickly observed that the top 20% of agricultural producers had a return on assets of above 10% for over 90% of the time. The return on assets was calculated on a cost basis rather than using market value of assets. Granted, producers on these record systems are not average because many producers do not keep good records or use their financial records in decision making. If one aspires to have average performance in profitability, their business life is usually five years or less, unless they have the equity base or the non-farm income to support operations.

If you think about it, the top 20% of producers with those returns, sometimes reaching 15%, have outperformed most investments, including the red-hot gold market in recent years.

Yes, agriculture can be a profitable industry if the operation is well-managed utilizing best management practices. Many of the most profitable producers have been found not to be the biggest, but those who operate in a very focused way, utilizing capital and human assets efficiently and effectively in a sustainable manner.


Special Note

Return on assets, utilizing cost basis assets, should exceed the rate of inflation, which has historically averaged 4%. Signs that your business is not exceeding this metric are refinancing requests on operating money, using equity or cash from other operations, not replacing capital assets, and running up high accounts payable to supplement your business.

Discuss this Blog Entry 7

on Mar 15, 2014

I also benefit from learning the assessments, but learn that alot of people ought to stay on essay to try and add worth in the direction of the authentic weblog release. animal feed

on Mar 15, 2014

I’ve just decided to create a blog, which I have been wanting to do for a while. Thanks for this post, it’s really useful! Kitchen equipments

on Mar 15, 2014

Thanks for a very interesting blog. What else may I get that kind of info written in such a perfect approach? I’ve a undertaking that I am simply now operating on, and I have been at the look out for such info. chicken incubator

on Mar 15, 2014

Thank you for posting such a great article! I found your website perfect for my needs. It contains wonderful and helpful posts. Keep up the good work! Lube Oil Filters supplier

on Jun 10, 2014

This is exactly what I was looking for. Thanks for sharing this great article!

on Nov 3, 2014

Lahore property Homes for sale in Lahore property including houses, flats, apartments and villas. Buy & Sell properties from Real Estate Agents in Lahore

on Nov 6, 2014

Find Admiralty maritime Lawyers for all your legal issues, our lawyers are best rated professionals in law and legal issues. Explore more lawyers, attornies, consultants and barristers to solve your legal problems.

Post new comment
or register to use your Corn and Soybean Digest ID
What's Road Warrior?

Dave Kohl is an ag economist specializing in business management and ag finance. He can be reached at

Blog Archive

Sponsored Introduction Continue on to (or wait seconds) ×