. Agri-news. Agriculture. FOR IMMEDIATE RELEASE THE BEST LAND MAY BE THE BEST BUY A farmer who is buying land is often faced with a choice of two or more parcels with dif- ferent productivity potentials. If you had an opportunity to buy fair quality land capable of averaging 40 bushels of barley per acre for a price of $250 per cultivated acre or to buy a piece of land that has the potential of yielding 60 bushels an acre for a price of $400 a cultivated acre, which would you buy? Here is how Sandy Lauder, Alberta Agriculture's regional farm economist at Red Deer, suggests that you arrive at y
. Agri-news. Agriculture. FOR IMMEDIATE RELEASE THE BEST LAND MAY BE THE BEST BUY A farmer who is buying land is often faced with a choice of two or more parcels with dif- ferent productivity potentials. If you had an opportunity to buy fair quality land capable of averaging 40 bushels of barley per acre for a price of $250 per cultivated acre or to buy a piece of land that has the potential of yielding 60 bushels an acre for a price of $400 a cultivated acre, which would you buy? Here is how Sandy Lauder, Alberta Agriculture's regional farm economist at Red Deer, suggests that you arrive at your choice. At a barley price of $2 a bushel, the better land would gross an additional $40 an acre over the poorer land. Assuming that the extra costs to cover taxes, growing, harvesting and marketing the additional yield amount to 35f a bushel or $7 an acre (probably quite high), the net additional income would be $33 an acre. This $33 an acre represents a 22 per cent return on your extra $150 an acre outlay. interest payments at per cent would amount to $ "The partial budget," says Mr. Lauder, "is an excellent method of determining the relative profitability of the two parcels of ; If you are considering buying the $400 an acre land, then compare it with the poorer land by the partial budget technique. If, however, extra credit has to be obtained to buy the land, the extra cost per acre to cover Increased Revenue/acre (20 bushels x $2/bushel) Reduced Costs/acre $40 00 SUBTOTAL Additional (a) prow, harvest, market, etc (i>) interest payments Reduced Revenue/acre $ $ SUBTOTAL $ Therefore the mcreasp >n net returns by purchasing better land $ - (cont'd) -. AGRICULTURE. Please note that these images are extracted from scanned page images that may have been digitally enhanced for readability - coloration and appearance of these illustrations may not perfectly resemble the original work
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