Deciding where to invest your hard-earned dollars in your farming operation is not easy. In times of tight margins, purchases must have purpose.
Four contract hog growers share insight into how they determine where to put their resources, what holds them back from making big investments and what they want to invest in next on the farm. The growers include Andy Evers of Union Mills, Ind., Tony Howard of Logansport, Ind., Tiffany Nagai of Knox, Ind., and Dustin Ripberger of Lewisville, Ind.
What is the biggest determining factor when you make an investment for the farm?
Evers: If I’m going to purchase something big, I need to see a return on investment — whether equipment (shorter return) or property (may not see the return but next generation will). To me, I’m thinking about the purchases I make working for me, but also with what the next generation wants to do later on.
Howard: Deciding if we need the purchase now or if it can wait until interest rates are lower and commodity prices are higher.
Nagai: Since it’s just my husband and I with the grain operation and contract pigs, we are both busy and want to make investments that speed things up. Time is very valuable. For example, how can we save time handling manure? We had two 5,000-gallon tankers and hauled out manure in those tanks. We recently decided to invest in a drag line system. It was more money than two tanks, but in the long run, it has saved us a lot of time and fuel. What used to take us 30 days now gets done in three days. Time commitment is a huge factor for us.
Ripberger: The biggest determining factor is return on investment. When it comes to equipment, I usually look for something that we pay for custom services. If it’s a job we can handle, and the cost of investment makes sense with what we pay for the custom services, then we trust that analysis. When it comes to infrastructure, that’s a little more difficult. I usually try to take a broader approach and get a feel for the future and what will serve me the best.
What holds you back from making big investments?
Evers: It’s the fear of what commodity prices are doing and what the markets are going to be moving forward. Right now, the hog market is fairly stable, the cattle market is fantastic and grain is not. It’s nice to be diversified; if I was just in grain, it wouldn’t be as easy. This approach gives me more flexibility when I consider making big investments.
Howard: Interest rates and commodity prices are the largest factors in making those decisions.
Nagai: The cost of everything. It doesn’t matter if it’s pig-related or grocery store-related, everything is very expensive, and interest rates are high. If you walk into the tractor dealership for a $50 part, be prepared to come out $300 later. Investments are a lot now.
Ripberger: Cash and future uncertainty. Obviously managing liquidity is No. 1. After that, I will look at what the future looks like for our operation using current trends around the industry to help make decisions.
What is the next big investment you want to make in your operation?
Evers: A bigger shop. Ours was built in the early 1990s by my grandfather, and we’ve outgrown it tenfold. With the barns, we almost need a separate spot for welding and repairs for barns themselves.
Howard: We are considering expanding our swine operation to help bring the next generation back to the farm. We may need to add another entity to help make that possible.
Nagai: We have 6,000 pigs now. Depending on if my daughter comes back, the next thing we would do is expand on another site and put up another barn. Hopefully this would allow my daughter to have enough hogs to do something with.
Ripberger: I am considering another wean-to-finish hog building or possibly on-farm fertilizer storage.
