It is highly likely that a good portion of this money will make its way towards reinvestments in new farm machinery that can enjoy accelerated capital depreciation under the tax code if purchased before the end of this year.
That is, after paying for labor and raw materials, they have at best 30 cents of the revenue dollar remaining to cover overhead and depreciation on their machinery.
That is because the average rate ofdepreciationof the capital stock has risen as investment has shifted from traditional machinery to shorter-lived assets such as computers and software.