BRANDON —The costs and benefits of buying new equipment can vary dramatically depending on why it’s being bought.
That’s why producers have to apply different math to their equipment-buying decisions that accounts for why they are thinking of buying something new, say Manitoba Agriculture farm management specialists.
“Try to take the emotion out of it and leave it as a dollars and cents discussion and dollars and cents conclusion,” said Darren Bond in an interview after his presentation at Manitoba Ag Days.
Bond and Roy Arnott described various scenarios in which a farmer wants to buy new equipment and showed how the pluses and minuses can be quite different.
Common situations include:
• Replacing worn-out machinery;
• Replacing old machinery farm laborers don’t know how to use;
• Replacing old machinery with higher efficiency new equipment;
• Replacing custom operations;
• Adding new, innovative technology.
Those different reasons create different costs for the same equipment. Worn-out equipment needs to be replaced some time. Higher efficiency equipment can boost a farmer’s ability to work fast or use less labour.
New technology can improve efficiency or add to the quality of crops.
Replacing custom operations can improve crop and harvest quality, plus “remove stress.”
But sometimes the costs of financing the new equipment outweigh the benefits, Bond and Arnott said.
Farmers need to know exactly why they are making a purchasing decision and need to understand what the final, bottom line result will likely be.
“Understand your situation or what scenario you’re in to decide what you need to do to monetize both the benefits and the costs to your decision,” said Bond.