It is now 2023. Your client is a grain supplier from Manitoba who owns 200 (100% Class A voting common shares, 100 Class B non-voting common shares, 500,000 Redeemable preferred shares) of an incorporated private farm (Muddy Boots Farm Ltd.) that currently grows sunflowers, wheat, barley and flax on 2,650 acres of farmland. Adjacent to the farmers farmland is a production facility that sits on 50 acres of land. All land and buildings are fully-owned by your client through inheritance of the farm through generations of the family. The production facility is running at 78% capacity. The production facility is able to convert harvested grain to a sellable product within two days.

During the 2021-2022 growing season, the farmland was allocated at 25% per each of 4 crops: sunflowers, wheat, barley, and flax. Current rate of return is 15%. The farmer currently has $55,000 cash in the bank. The clients succession plan is to hand-over the company to his/her son in 8 years, while maintaining a percent ownership in the farm to fund his/her retirement annually with $45,000 pre-tax. The farmers son is actively involved in the farming operations and is a reasonable choice to run operations after his parents retirement.

The neighbour is selling 650 acres of adjacent farmland for $3,200/acre (firm) cash on the transaction date. The neighbouring farms soil is ready for crops and the soil nutrients are suitable to grow corn or barley. Your client is considering purchasing the land to increase agriculture production.

Your client has been approached by a fellow farmer in the local community who is interested in sharing the production facility for his own harvest, starting next year. If new systems are installed to the production facility to allow for more efficient production, it will cost $250,750 in upgrades. The more efficient systems will result in 8% pre-tax cost savings of grain processed for each year thereafter.

The farmer has legal contractual agreements for the next 4 years with grain distributors to supply the following percentage of annual production: 40% sunflower seeds (at standard mix), 70% wheat, 55% barley, and 40% flax. The remaining crop is sold through the Manitoba Crop Alliance at fair value. Corporate tax is 28%.

1. CROP ALLOCATION AND PROFIT
   1. Based on the information currently available to us, wouldit be financially beneficial for a farmer to redistribute his crops? What would be the percentage distribution of the crop mix to maximize profits? What would be the financial benefit, if any?
   2. What are risks of the crop mix distribution that maximizes profits? How does the farmer mitigate therisks? Is therea more beneficial crop mix basedon the balancebetween risk and profits?
   3. What is the break-even price of each crop currently? What is the break-even priceof the recommended crop mix?
2. NEIGHBOURS LAND
   1. Should the farmerbuy his neighbours adjacent land to grow crops?If so, what crop should the farmer grow on the land? Why? Providea financial analysisto support your discussion.
   2. Assume the farmerdecided to buy the neighbours land. How shouldhe fund the purchase of his neighbours land? What are his options? Be specific.
   3. When will the farmerbreak-even if he buys the neighbours land?
3. PRODUCTION FACILITY
   1. Should the farmerinvest in upgradesto his prodcution facility? Providea financial analysis to support your discussion.
   2. Should he allowthe fellow farmeraccess to production and for much?
4. RETIREMENT
   1. Will the farmer be able to retire in 5 years and live comfortably? Provide a financial analysis to support your discussion.
5. OTHER
   1. Are there anyother suggestions you have foryour client to add to his wealth?In thissection, you shouldshowcase your knowledge of course materials. Choose 3 robust topic areas to providefinancial analyses and in-depth discussion to assist the farmer in his decision-making. The more robust your answer, development of quantitative analyses, and integration across topic areas, the higher you will score.