A farm is purchased with capital, but cash flow keeps it running. From maintenance to insurance, the cost of ownership is often higher than new buyers expect. Andreas Greeff, managing director of Vleissentraal Eiendomme, shares advice for sustainable farm management.
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What is the most underestimated cost from a new owner’s perspective?
Maintenance. It is the unseen cost that consumes profits. A farm that is actively worked requires ongoing maintenance.
What about equipment?
Two factors come into play, especially with large tractors and implements. Depreciation over the equipment’s working life and replacement costs must be kept in mind to ensure the farm’s cash flow remains healthy.
Is renting or contracting better?
For smaller farms, contractors often offer a more practical solution. Equipment prices continue to rise, and it isn’t always possible for a smaller farm to make the capital investment. Larger farms can justify owning their own equipment.
How does financial structure affect the decision?
When debt levels are high, it may be advisable to bring in a contractor or rent equipment instead. This keeps cash available for production.
How do you extend the life of equipment to avoid high replacement costs?
The three golden rules apply to all your equipment, including bakkies and other vehicles: regular maintenance, trained operators who use the equipment correctly, and protection from the elements.
What other costs can surprise farm owners?
Unplanned expenses such as insurance premiums, rising electricity tariffs, and water licence fees can appear unexpectedly.
Your advice for long-term sustainability?
Treat your farm like a business: every hectare must deliver returns, and financial management must never be neglected.
For more information phone Vleissentraal Eiendomme on 072 118 7509, or visit vleissentraaleiendomme.co.za.
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