Acceptable returns on eperating capital usually means leasing land is not viable

摘要

If the ownership of land is to be separated from operating a farming business, then it is important to know what the likely return on capital will be from that part of the business. Simply, what is the return on operating capital required to run the business. This information is important so that an appropriate lease cost for the land can be determined, and a prudent limit on the use of debt can be set. It can also help with setting prudent levels of debt for a business where the land is owned. The surprise is that for the average business, the return on operating capital is poor and does not allow much scope to use debt for expansion either through leasing or acquisition.