Traditionally, land assets and farming operations have been run together as one farming business. The benefits from separating the real estate (farm land) from the operating business relate to alternative options for farm scale expansion, succession and retirement.
A crop growing business is a combination of two key components:
- the operating business, and
- the real estate (farm land) business.
Typically, these components are treated as one. However, it is useful to understand the relative performance of each area and how they contribute to the overall financial position of the farming business. Treating the operating and real estate businesses separately provides effective and flexible options for succession and retirement, investment and expansion pathways.