Bigger is better. Go big or go home.
The push for excess in all things, it seems, knows no bounds. But how big is too big? Or is that the wrong question to ask?
From combines, seeding units and land bases, to suburban houses, fast food meals and the cars we drive, there’s been a push to bigger in recent years. This expanding of just about everything (including debt) stems from a number of drivers — incredible wealth and easy credit on the consumer side, but also access to low interest rates and a push for ‘economies of scale’ on the farm.
Many have tackled the question of what the most profitable farm size is, from ag economists to business advisors and analysts, and the conclusion is often the same — it depends.
Last month, Broadacre Agriculture, a mega-farm based in southwestern Saskatchewan, filed for creditor protection with $46 million in outstanding credit. It’s estimated the company put somewhere between 55,000 and 65,000 acres of crop in the ground in 2014. By harvest, they didn’t have enough cash flow to fuel their combines. What the heck happened?
There are those that would like to simply say they were “too big,” that mega-farms just aren’t viable. But is the land base tally really the sticking point? Can a mega-farm be viable? In the interview below, Real Agriculture’s Shaun Haney and Lyndsey Smith, run through some of what was in the CEO’s affidavit and what clues it offers to the demise of Broadacre. They also discuss the examples of other, very large farms that are hard at it, making a living from their ‘mega-farm.” So what’s the difference? Listen to that discussion, below.
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