5000ac Farm won’t buy new

Clive

Staff Member
Arable Farmer
Location
Lichfield
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.


A full time mechanic on 5000ac is a big cost and the dealer tech would probabaly still be needed for a lot of repairs
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
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,

I can see us running new tractors to 10 years - they are reliable

Bateman just done 11 years and would keep it 10 more if we were not needing more capacity / wider tramline system. It will have been very cheap to own despite buying it new !
 
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


The previous owners of those 5 machines have effectively given this business a £45/ac advantage?

That was awfully nice of them :love:


They have actually lost more in depreciation than the figures in the OP suggest because, don't forget, the man that sold them second hand to the 5000 acre estate has made money on the deal.
 

Woolly

Member
Location
W Wales
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.
1.5% return on capital?

Is that the bottom line after all incomings/outgoings?

A frighteningly small return given the risks, which could easily go the wrong way.
 

Cowabunga

Member
Location
Ceredigion,Wales
1.5% return on capital?

Is that the bottom line after all incomings/outgoings?

A frighteningly small return given the risks, which could easily go the wrong way.

The capital is probably all bought and paid for so the return is probably irrelevant to the owner in those terms. If land value halved tomorrow, the return on his capital would double, which is another meaningless statistic I throw in to illustrate the point.
 

curlietailz

Member
Arable Farmer
Location
Sedgefield
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

That's our CURRENT machinery policy....
Buy new, on 2-5 year finance....
Extended dealer warranty keeps them in good order.
Keep for as long as the machine is working & not costing in repairs...
We have a good maintainence policy, and things are kept clean and undercover. So "tend" to last for a long time before they need replacing.

That way we keep a stable machinery finance annual budget....

Last big purchase was a combine in 2015, will be paid for in 2020 and that's the last of the machinery finance paid off..... And it will then depend on Brexit as to what our ongoing machinery policy becomes.

I certainly won't be buying anything expensive until I can see profitability.

Each to their own
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
1.5% return on capital?

Is that the bottom line after all incomings/outgoings?

A frighteningly small return given the risks, which could easily go the wrong way.

Yes not exciting is it !

But there is capital value appreciation and tax advantage to take into account plus the numbers I mention should be the absolute worst case senario (rental equ really !(
 

Turra farmer

Never Forgotten
Honorary Member
I can see us running new tractors to 10 years - they are reliable

Bateman just done 11 years and would keep it 10 more if we were not needing more capacity / wider tramline system. It will have been very cheap to own despite buying it new !
Wait till you come to replace it
 
Finding and keeping staff.....?

I know a lot of you don't seem to care what stuff you have/drive but to a lot of young people just leaving college stuff it is a BIG factor in choosing where they want to work.

You could get no end of young chaps to drive a 1 year old Xerion but try advertising for them to drive a 15 year old Quadtrac with a breezeblock for a seat?

I still don't get this fascination with the prices of kit. YES the headline prices have jumped BUT so has the value of stuff second hand, in real terms it makes no difference.
 

glasshouse

Member
Location
lothians
Finding and keeping staff.....?

I know a lot of you don't seem to care what stuff you have/drive but to a lot of young people just leaving college stuff it is a BIG factor in choosing where they want to work.

You could get no end of young chaps to drive a 1 year old Xerion but try advertising for them to drive a 15 year old Quadtrac with a breezeblock for a seat?

I still don't get this fascination with the prices of kit. YES the headline prices have jumped BUT so has the value of stuff second hand, in real terms it makes no difference.
2nd hand values have not kept up, that is the problem.
claas have convinced a certain category of farmers that paying them £350k for a combine is good value
 

Al R

Member
Livestock Farmer
Location
West Wales
2nd hand values have not kept up, that is the problem.
claas have convinced a certain category of farmers that paying them £350k for a combine is good value
£350,000 divided by 3500acres is £100/acre, have that combine 5 years means £20/acre. I’ve seen worse business plans!!

Sell it for £100,000, so £250,000 it’s cost.
£250,000 divided by 3500acres is £71.42/acre, divided that by 5 years work is £14.28/acre.
 

Al R

Member
Livestock Farmer
Location
West Wales
E23E1975-D05D-4263-B63D-59FAF27A58C5.png


Base it on £200,000 cost of ownership (350k - 150k like in the picture above)

£200,000 divided by 3500acres is £57.14/acre. Divided that by 5 years doing 3500acre it’s £11.42/acre.
 

Al R

Member
Livestock Farmer
Location
West Wales
Now go and pay a contractor to cut your corn for 5 years on 3500 acres and the bill will equal 2 new combines!!

Of course it will, fuel and labour etc hasn’t come into it at all. £35/acre were charged I think, 30acre in 7-8 fields. He’s running a few really old JD’s.
 

Woolly

Member
Location
W Wales
Yes not exciting is it !

But there is capital value appreciation and tax advantage to take into account plus the numbers I mention should be the absolute worst case senario (rental equ really !(
So loss of BPS would reduce that return further - to sub 1%?

Any significant changes to the tax regime would pretty well wipe out new machinery sales and indeed UK agriculture itself.
 

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