Rising farm incomes influence leasing decisions
Higher commodity prices are influencing how farmers use various leasing programs.
Compeer Financial senior leasing specialist Anjie Erbsen tells Brownfield when producers are in a low-income situation, a lease fits well because it allows them to update equipment without a large cash outlay.
“But as we move into commodity prices in a higher range, farmers start to make different types of decisions. Maybe we’re not replacing things just due to need, but we’re doing some normal upgrades, expansions in our buildings, facilities, and our grain systems.”
She says those decisions are typically based off cash-flow and tax management.
“The lease many times gives them an additional tax tool that allows them to offset that income they have in those higher commodity markets.”
She says the tax attributes of deducting a lease payment as a rental as opposed to longer depreciation is a guiding factor when considering leasing products.
Erbsen made these comments during an upcoming What’s Happening podcast series, a content partnership between Compeer Financial and Brownfield.