What is in this article?:
- The Flip Side of Rent Rants
- How does farming compare to other industries in terms of profit?
How does farming compare to other industries in terms of profit?
Is the 8% return to assets landowners look for realistic and how does that compare to returns in other industries?
First, if some leverage is used in purchasing land, returns can be 10-15%, especially with the low interest rates we have. Using someone else’s money can return more on your own money if returns are greater than the cost of debt.
Our clients’ return on equity averaged 14% in 2009, down from 18% in 2008. However, many have livestock and dairy, which brought those returns down. In comparing these to the Fortune 500 companies, their median return on equity was 10.5% for 2009. As I’ve indicated before, there is more opportunity to make money farming than most other industries.