Profitability, Risk and Business Plan for Hauger Farm
Michael Hauger, Gardner, defended his thesis, “Profitability, Risk and Business Plan for Hauger Farm,” on April 15, 2014. Hauger is a Senior Marketing Representative with John Deere Company in Olathe. He is a spring graduate from Kansas State University with a Master of Agribusiness (MAB) degree.
After inheriting 40 acres of farm land in a corn, soybean and wheat rotation, Hauger faced decisions about the best use of the land. He compared the net income and risk associated with custom farming, cash renting, and crop-sharing to determine the best option.
“Since I live 500 miles away from the land, it is necessary to develop a business plan for the day-to-day management and decision making,” Hauger said. “At the same time, I wanted to choose an option that would maximize net returns after considering the risk of each option. After reviewing the net returns for all three options, custom farming provides the highest return in the long run.”
Hauger encourages other young land owners who inherit land to examine the pros and cons of alternative options before making a decision on how to manage the land. For those not concerned about risk and wanting to make the most income from the land, custom farming may be the best strategy. If the land owner would like to build a relationship with the tenant and make profits when yields and prices are good, the land should be crop-shared. Finally, for those who prefer a steady income and low risk, the land should be cash rented.
Dr. Bob Burton, Professor of Agricultural Economics and Hauger’s thesis advisor, said, “The outcomes of Michael’s thesis are applicable to other people who inherit farm land and are determining whether to custom farm, cash rent or crop share the land.”
The full thesis publication can be found online on Kansas State University’s Research Exchange at http://hdl.handle.net/2097/17401.