Verified FBN Member (MO)

(edited) Business

I'm new to farming and getting ready for first season. Trying to create budget.

How do you figure land costs as a line item. We bought 160 acres 78 of which is tillable. Paid $400K and owe $388K after 3 years of rec. CRP payments. Do I seperate tillable from non? Do I figure debt amount across acres? Do I figure just interest or principle plus interest? Same on machinery. Bought a tractor last year and CPA depreciated 100% last year. Have a 1% interest only loan on it. Do I count interest only, interest plus principle and what about depreciation? Thanks in advance.

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Verified FBN Member (IL)

There's more then one way to do it but we typical do a "cash" budget. Not sure who original said it but "cash is the blood of a business" so...

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Verified FBN Member (MO)

Thank you for the information. I read this a few weeks ago and didn't realize I could respond.

Verified FBN Member (IL)

Similar answer, though there are different philosophies depending on your enterprises. The bank will care most about overall cash flow. Mone...

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