5000ac Farm won’t buy new

Discussion in 'Machinery' started by D14, Jul 14, 2018.

  1. D14

    D14 Member

    I was at a farm walk yesterday on a 5000 ac diversified farm. All the land is owned and farmed in house. The farm owner and manager were saying that their machinery replacement policy will stay in place but they now can’t see buying new as an option. They changed both combines last year and with prices of new ones at £350,000 each they were forced into buying one ex demo and one at a year old and saved themselves a cool £120,000 over the pair. They are on tractors presently and instead of buying 3 new ones at £115,000 each they were opting for 800 hr versions at £80,000 each. Next autumn their current drill is due to be replaced but having a loose verbal quote of £50,000 to change out of the existing one they said that buying a second used drill is probably the way they will go and then run them both for another 10 years thus taking themselves out of the market.
    This a very diverse operation with a big property portfolio, some renewable energy things and also a big farm shop/restaurant. If these guys don’t see the value in new equipment then how do the rest of us stand a chance.
    When they did the combine deal the farm owner said he had a call the next day from the UK M.D. of the chosen brand asking why hadn’t they bought new.
     
  2. It isn't that they can't afford them , they are business people and see a better/cheaper way.
     
    Alf, Renaultman, Shovelhands and 33 others like this.
  3. Clive

    Clive Staff Member

    Location:
    Lichfield
    Anyone not making significant money on 5k acres of OWNED land really shouldn’t be farming - any less that 750k profit would be a poor result

    Unless carrying a massive amount of debt I suspect they are more than able to afford new if they chose but as above feel they can get better return with a used machinery policy

    Personally I think that you only ever really swap depreciation for repair cost so it doesn’t make a lot of difference to costs just capital requirement
     
  4. Kiwi Pete

    Kiwi Pete Member

    Location:
    Owaka, New Zealand
    The previous owners of those 5 machines have effectively given this business a £45/ac advantage?

    That was awfully nice of them :love:
     
    Nick Adams, Dman2, SF1 and 3 others like this.
  5. Clive

    Clive Staff Member

    Location:
    Lichfield
    Yes, the fool is whoever bought the combines / tractors new and then sold them so soon. They took a massive hit, why would anyone do that ?

    Buy top quality new and keep it / look after it is my policy on most machines now
     
    Nick Adams, Grassman, Davey and 9 others like this.
  6. Kiwi Pete

    Kiwi Pete Member

    Location:
    Owaka, New Zealand
    That's as good a policy as any IMO.
    I can definitely see the "value" in buying new but it takes a long run to realise that investment, as you said the costs are swapped.

    I would love to know the justification behind losing this amount on a machine though - I thought I could work most things out, but not this time :hilarious::hilarious:

    Even working on one tractor £35k is a massive cost for 800 hours of use.
    £44/hr!!
     
    glasshouse and holwellcourtfarm like this.
  7. ts115

    ts115 Member

    Location:
    Kildare, Ireland
    Probably ex hire/lease tractors, NH dealer near here hires new tractors out to Dublin airport for the winter, sells them on with 300-500 hours work done.
     
  8. Deutzdx3

    Deutzdx3 Member

    Why buy new! It’s when most money is lost on the value. 25% the first year. Buying nearly new and letting some one else take the hit. Look at the demand for second hand machinery. The problem in the uk is perception. People care what other people think of them to much. Good on them for buying nearly new. That saving will allow them to invest in other diversified activities like property. That’s where real money is at present.
     
    Will Wilson, Nick Adams, PuG and 7 others like this.
  9. I cant believe deprecation from new to 2-3 yr old is cheaper than repair costs.
     
    neilo, Smudge and silverfox like this.
  10. Im on a totally different scale to you but for me i think im better off to buy very good quality old and have very low deprecation and the odd repair bill and be slightly overcapacity/ able to call in a contractor/friend.

    All different
     
  11. Still Farming

    Still Farming Member

    Location:
    Glamorgan Wales
    Some employ fitters and like messing with good simple kit .Cheaper way.
     
    roscoe erf likes this.
  12. Mursal

    Mursal Member

    They can afford to take the hit if the secondhand unit stops, probably have the dealer died up that tight, he has to respond.
    Smaller operators can't afford the risk of modern secondhand kit .................
    I'd say they'd be gamblers, always assessing the risk

    Interesting thread .............
     
  13. how things have changed.... from1976 until 1980 I used to work at the local IH main dealer and I remember many times farmers used to buy new tractors and machinery on lease because their accountants had told them it would work out cheaper than paying tax..... Highland Leasing was the name of the company and the guy's name from there was Peter Quigley who used to call and visit farmers every Thursday... I am not too well up to date with new machinery now but I would say well done to the farm owner for not buying new, but I would say there are many things that he did not say while on the farm walk
     
    Mursal likes this.
  14. Steevo

    Steevo Member

    Location:
    Gloucestershire
    A 5000ac farm would have one employed mechanic/engineer I would expect. Pretty simple therefore to buy a used machine (get him to look at it first), then if something breaks, or needs repair....they've got someone on the place to fix it asap at a sensible cost without risking downtime.

    Most farms either buy new to try and minimise downtime and accept this has a cost. Or buy used, accept some downtime/repair cost and pay less as a result.

    This farm has the ability to do both - buy used and pay less, but having a sensibly priced mechanic available at the drop of a hat, the downtime/repair costs are minimised too.
     
  15. james ds

    james ds Member

    Location:
    leinster
    Its not , but some lads tell themselves that to justify new machines .
     
    davedb, roscoe erf, Hilly and 3 others like this.
  16. icanshootwell

    icanshootwell Member

    Location:
    Ross-on-wye
    I would expect the combines and tractors would of been on hire, there is a firm by us who sell tractors that are one year old with 2500 hrs on, its a good way of buying nearly new for 20 or 30 k less than new.
     
  17. The kit they buy should still be in warranty too. Extended warranty probably cheaper than buying new
     
  18. Will Blackburn

    Location:
    Cheshire
    Compromise and buy new and keep for a long time. You cannot always get the correct spec with buying 2nd hand.
     
    Treg, ollie989898, hally and 3 others like this.
  19. Clive

    Clive Staff Member

    Location:
    Lichfield
    I’m a long way past caring what anyone thinks of me !

    We buy new because it works out cheapest way to get the job done within our business structure - but we keep stuff and don’t change it every year like some seem to !

    I’ve tried most ways and the way we do it today seems to be the best way so far for our situation

    Different solutions suit different businesses, I don’t have an in house fitter, we don’t have spare capacity in our machines or staff and we get the best from latest tech. Buying new, running warranty first 3 years to iron out bugs then servicing religiouly and looking after stuff pays well, storing it undercover etc and rarely produces unexpected bills etc
     
    Robert K, R J, Treg and 3 others like this.
  20. Deutzdx3

    Deutzdx3 Member

    If you don’t have a fitter available then it makes sense to some degree, that might change with longer warranties becoming a standard thing. Machinery is becoming more reliable than ever so buying a 2 year old machine with 3 year warranty remaining might be more appealing in the near future,
     

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