Farm profitability improving through the use of older equipment

The average American farmer has $170,000 tied up in unused used equipment. These implements are too good to scrap and they’re left sitting around in farm yards, losing value every month.

That figure comes from BigIron Auctions in Nebraska, and is based on a university study carried out in the United States Midwest several years ago.

In a phone interview, BigIron manager Mark Stock said the estimate of $170,000 in unused equipment is likely much higher in today’s market.”

Although no Canadian prairie data is available, Jordan Clarke of Ritchie Auctions in Rouleau, Sask., doubts the dollar figure would be as high for prairie farmers. However, he says, there is still a lot of good equipment that would be welcome in a new home.

“Guys don’t realize there’s going to be a farmer somewhere who needs that exact machine you have. One man’s trash is another man’s treasure,” says Clarke.

There are thousands of prairie farmers doing well working with older equipment, according to Ron Settler at Lucky Lake, Sask.

Settler’s machinery cost is $80 per acre (see below). He crops 2,500 acres of wheat, flax, lentils, mustard and peas, plus other pulses, as well as oilseeds. And he does it all with old machinery.

“All this old equipment is paid for. That’s why our farm is consistently profitable. Plus, we do almost all of our own repair work,” said Settler in an email interview.

“We have five Case tractors, all of them more than 35 years old. That includes two 4690s and two 970s and a 1270. We might upgrade the 1270 as it’s the sprayer tractor. For combines we have two 8570 Masseys, plus one for parts. They all work well and we hope to get at least 10 more years out of all of them.

“We’re farming profitably with this old stuff. And we’re not sitting on open tractors seeding with discers. We’ve got GPS, AutoSteer, drill monitors and technologies like that. But no new iron.”

Settler says that if farm media only talks to big farmers who buy shiny new implements, then people forget about the thousands of other farmers who never buy a big-ticket implement. Dealers need a market for trade-ins from the big farms. They need small farms to remain viable to buy the second, third and fourth generation trades.

“There are likely thousands of small- and medium-sized farmers like us who don’t have all the new technology in tractors and combines. We might have it in 10 or 20 years when the price comes down, but we sure can’t afford those machines now.”

Settler says the electronics are the weak spot in new equipment. He’s concerned that maintenance will be a problem when the current crop of 2020 big-ticket implements become affordable trades for farmers like him in 10 or more years.

In Otterburne, Man., Emil Morin says keeping equipment costs low keeps him in farming. Buying big-ticket items new would upset that balance.

“My newest tractor is a 2004 John Deere. The other tractors are a 1980, 81, 82 and 1984. Some of these old John Deere tractors have up to 13,000 hours and they still have the original motor, transmission and rear end. The combine is a 1994 model. Everything works 100 percent.

“We try to do most of the maintenance ourselves. I put my money into a nice, heated shop so I can do preventive maintenance in the winter. The way I look at it, on a cold winter day I can get the shop warmed up and then have an expert come in and do some of the more technical jobs that I can’t do. Plus that saves me from having to bring the machine in to the dealer.

“With the older tractors, I can do all the work myself. With the new tractor, I have to get the technician from John Deere to come out to do some of the things with computer codes and all that.”

Morin says availability of parts for the old tractors hasn’t been a problem, which is why he sticks with Deere. He recently needed carburetor parts for a 1949 Model A. His local dealer didn’t have the parts in stock, but was able to get them out of Regina in three days.

In Ile Des Chenes, Man., Don Doerksen raises grain, cattle and chickens. He has no aspirations to buy new equipment. He is a careful buyer. For tractor power he ran a 4840 Massey from 1995 until 2017 when he bought a 1997 model 9380 Steiger.

“So I moved up 26 years, but it’s still a 20-year-old tractor,” Doerksen says with a laugh.

“It had only 2,800 hours and it was immaculate. It was showroom condition. So for me it was like buying a brand new tractor, but it just didn’t have a half-million-dollar price tag. This will probably be my last four-wheel drive. I’m 50, so if it lasts me another 25 years like the previous one, it’ll work out just right. The thing about the Massey is that it was starting to be a problem getting parts.”

For a combine, Doerksen bought his dad’s 1980 model 860 at auction in 2000. He ran it until 2007 when it broke down again. He says he was finally fed up with fixing the old 860, so he found a 1995 TX68 that had been totally overhauled in 2005, and was in perfect condition.

“I was toying with trading it off in 2018, then I decided to keep it. And that’s when the engine destroyed itself. I was looking at the engine and decided I’m not going to put $25,000 dollars into an engine for a $20,000 combine. I bought a 2006 CX860 in perfect condition from the same guy who sold me the TX.

“I’ve been very fortunate over the years in snagging some prime machines. You’ve got to be very patient in looking around, and then be willing to grab when you find these deals. It still costs a fair chunk to upgrade, but at least I’m running machines that are reliable and there’s parts available.”

Doerksen says he hasn’t experienced electronic problems because he gradually updates to newer machines. He takes the combines into the dealer every second year for a thorough digital checkup, something he thinks is necessary to keep the glitches out of the computers. If you run older equipment, preventive maintenance is essential.

He used to run a hay and straw business, so he needed a good loader tractor. Once again Lady Luck was on his side. He ran a 1984 front-wheel assist. While in the dealership one day, a sales representative told Doerksen about a new two-year old Cat Challenger MT535 they wanted to unload. Once again, it was a case of having the cheque book ready.

“I bought it on the spot for less money than the used ones they had on the lot. It had a hundred demo hours on it and I paid $85,000. I never intended to buy a new tractor, but it just turned out that way.

“I remember back when I was a young and struggling farmer, my accountant gave me some good advice. He said, ‘if you expect to keep farming, don’t fall in love with shiny new paint. If you fall in love with the paint, you likely won’t be my client for too long.’ ”

In Niverville, Man., John Nikkel says farming with older equipment for the past 40 years hasn’t been a matter of choice. It’s been a matter of economic necessity. For combines, he runs a pair of TR98s from 1998. His main tractor is a 2007 model T9020. The sprayer is a 100-foot Flexi-Coil 67.

“I generally stick with New Holland because there’s a really good dealer in Steinbach. That’s always important. But I never buy new implements.

“These machines are all old enough that there’s not much computerization yet. The next set will be different. It’s certainly something I’m not looking forward to. But I may not have to worry about it. I’m 57 now, and the next generation doesn’t want to take over, so I may just run this machinery until it stops, then rent out the land.”

John Gehrer of St. Anne, Man., had whittled his machinery cost down to $100 per acre, then decided to upgrade a few things.

He says his investment in the 2003 model 2425 Versatile and Case disc drill added $250 per acre in machinery costs.

“If I divide it up, including the custom acres, it’s an additional $120 per acre. So I’m no longer a cheap farmer but I still don’t have new equipment,” said Gehrer.

“I bought the disc drill so I can custom seed cover crops right after combining. As for the tractor, I had a 2007 Versatile but it had too many electronic repair expenses. The 2003 tractor is a simpler machine and should be more reliable. We should consider that the new equipment we buy today will not last 35 years like previous machines did. The electronic repairs will be substantial.

“Maintenance is critical if you want to farm with older equipment. There are farmers who try to farm with junk, and they are often late and things don’t work out well.”

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