Despite the struggling farm economy, many producers are looking to invest in their businesses. The question is, what kind of investment is a smart one in today’s environment? According to Chris Narayanan of C. R. Narayanan & Co., there’s no one size fits all plan.
“I don't know there's any best way. I think everybody's gonna be a little bit different,” he told U.S. Farm Report host Tyne Morgan. “Some cases it might be buying more land or renting more land to put in production, it might be diversifying their operations or investing in some of the new technology.”
No matter what, to be a smart investment you need to see what they payback will be. How will it increase your revenue or decrease your cost, or ultimately both?
“Seeing where your operation is today, as you add whatever it is that you're going to add, where is it going to take you?” Narayanan asked. “Make sure that [investment] actually adds value to it, rather than taking away.”
Despite sky-high farmland prices, Narayanan says it’s not necessary a bad idea to invest in land. However, land investments are just one of the areas a farmer can pour into their business.
“Land isn't the only thing. Like I said, the technology, diversifying your operations, maybe even doing joint ventures, you know, there's no one size fits all,” he explained. “I think that's the problem that most people get into, like, ‘well, we can't do here.’”
Going forward, Narayanan thinks farms will continue to diversify and consolidate.