Buying new and new-to-you farm equipment is a big decision that affects the profitability and sometimes the future of a farm business.
Farm equipment manufacturers are probably not the first contacts producers use when making equipment purchase decisions. But John Deere is ready when they are.
In Deere and Company’s Farm Business Management series, readers can find a book and computer program called Machinery Replacement Strategies. The book and software program provide advice and examples for obtaining or retaining farm equipment.
Farmers and ranchers might expect that every option suggested by a manufacturer might boil down to one suggestion – buy new.
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But the book and software do suggest many options, from buying new to hiring custom operators.
Cost of ownership tables include the average repair costs for any piece of farm machinery depending on age of equipment and annual hours of operation. Estimates on total hours for the practical life of machinery are listed.
For example a rubber-tired tractor’s life expires around 12,000 hours, a self-propelled combine at 3,000 and a round baler at 1,500.
Numbers like these were provided to John Deere by the American Society of Agricultural Engineers.
Best game plan
The book includes rationales for trading equipment or extending the life of a machine through additional repair and rebuilding. It examines whether a farmer could best increase profits by extending use of an older, smaller machine or by hiring a custom operator for part of the work.
The package also includes information on estimated annual fuel consumption for various pieces of equipment and tables that include cash flow estimates for trading a combine and determining whether more than one machine is required.
There are tables and strategies for financing, leasing and purchasing equipment.
The 98-page book is designed for the American farmer and refers to U.S. farm programs but most of it deals with issues that face farmers on both sides of the border.
Accompanying software is designed for the IBM compatible PC, 386 or better, with 510K of memory, running a DOS operating system. The software performs calculations so farmers need not worry about the dozens of formulas in the book.
Consultants on the book are mainly agriculture professors from Ohio and Oklahoma state universities. It is an easy read for any producer interested in long-term planning.
The book and computer program are priced at $34.95 (U.S.) and are available from John Deere Publishing, Dept. 3735440 Corporate Park Drive Davenport, Iowa, U.S.A. 52807.
