Combine and tractor replacement policy

[ace]

In the 2000's replacement policies were easy. You could buy high end machinery as reasonable prices and they would halve in value over 5 years. Financed over 5 years you could then px for the newer model and costs per acre would be similar.
Today. Machines halve in 3/4 years and second hand values have not tracked.The new price has gone up astronomically, the gap has widened.
Costs per acre are up nearly £10/acre per machine replaced.This is not sustainable, yes many already know this .
There is then the con of warranties and care packages which are tieing you in for longer and making a business less flexible.You pay huge amounts of money for warranties that should not be needed.They are needed as generally they are not as solid as they used to be. I have a ckuple of machines where all of my warranty allowance is being used,for whose benefit?
Where will it lead? Discuss.

 

[Clive]

my “policy”

1) complex machinery with engines etc (tractors, loadall etc )

buy new high spec high quality with warranty first couple of years, finance over 5 yrs, keep for 10 (10k hrs). and dealer service religiously


2) simple machines (drills, sprayers, trailers ,rolls etc)

buy new or used, high quality, high spec and service and maintain well and keep for ever, only change if a replacement that offers significant cost saving or increased efficiency comes along. cash purchases or finance the more expensive items over 3 or 5 years

 

[BRBX]

Tractors
Buy at 4 year old and warranty to 8 year , spend on warranty rather new depreciation
Combine/ sprayer
Buy at 5 year run to 10
Drills etc
Replace when we need to with second hand ( free flow a good example , very good but cayena a step up)

 

[bobk]

My policy is to buy when it breaks

 

[Brisel]

Tough one. We have bought new and traded in when there is a space in the schedule that keeps machinery reinvestment ticking over. I have gear with 3,000 - 7,500 hours on the clock & seasonal hires too. We had a year off this year as the manager had changed & with little wheat sown in autumn 2019 we knew we were going to have a small harvest in 2020. Thanks to an ageing fleet with breakdowns in key cultivation kit at the critical time, we didn't get drilled up this autumn either.

Combines - buy new & keep until 3,000 drum hours unless the land area changes significantly.
Main cultivation & drilling tractor - seasonal hire means security & reliability, at a price.
Main tractors - bought new with 5 year warranties with a view to running them for 5-10 years.
Occasional use tractors & forklifts - buy new or second hand and keep for a long time.

Almost everything is bought on finance and bought outright at the end of the period as the money is cheaper than an overdraft.

Our dilemma is that repair costs are rising steeply, along with replacement prices. It's the biggest inflation cost on the farm at the moment. We run JD tractors which are sold at a premium price, yet do not seem to go for thousands of hours with minimal breakdowns. A new Autopower gearbox in a 6 year old tractor with < 5000 hours on cost us £9.5k even with some fix-or-fail good will from JD. Our Bateman sprayer cost £138k in 2011. The same is over £200k now and is covered in components for emissions control that will go wrong and stop us.

 

[teslacoils]

As I go forward, I can only expect to reduce my machinery fleet. I've always worked on the idea of big, simple luggers, pulling wide gear. It's always paid to keep control of the low draught jobs like rolling, spreading, spraying but even now on 260ac can I justify owning a set of rolls that I could turn into 10k of cash? It's questionable if I can even keep up to date with nroso on my small patch.

So my policy now is not to replace. Reality is that at 150 hours a year, the old quadtrac is not going to be replaced. And even a large service or oil change is expensive per acre. But nothing as expensive as uncropped land.

 

[Spud]

In the 90's used to buy tractors new, keep them 4yrs (3500-4000hrs) then swap for new again. (For under £20k)

Then we had a period of expansion, where we kept what would of been the trade in, and bought a second hand extra tractor for about the same as the 'change to new' figure.
Smaller older tractors all the while step down the line but generally stay for smaller jobs/convenience/cheapness (or sentimentality!)
More recently, (last 5yrs) I've replaced:
A 12yo 7480 with 12600hrs for a 3yo 7618 with 1500hrs (and 2yrs warranty)
A 1996 6180 (lost to fire) for a 7yo 6480 with 2700hrs
A 2013 7620 with 7600hrs for a 2.5yo 7720 with 1200hrs(from the same home as the 7618) also with warranty remaining.
Replaced a sporadic hire tractor with a 15yo 10,000hr 7490 that had spent the last 4000hrs sat on a slurry pump. Bought partly for extra capacity, partly backup.

At the present moment I can't see how we can justify new tractors, unless second hand ones become either hard to source or near new money.

Forklifts - we have three:
TM320s - bought new to replace a 12000hr 15yo TM300 that itself was bought new. Main workhorse - plan to keep it 10yrs+
2012 536/70 bought at 5yo/5000hrs, now done 7600hrs. Probably keep it another year or so then look for a second hand replacement.
530/70 20yo, here from 2yo. Did it's engine up last year, don't plan to change it any time soon.

Combine policy - buy at 10yo, keep it another 10yrs unless workload increases significantly

Potato harvester last two have been bought at 1-2yo, kept 7yrs.

Smaller machines (financially) are a mix of new and second hand, generally kept a long time.

Usually finance anything over £10k, unless we've had a good year, or sold several old things for one replacement - doing that allows us to upgrade more things at a time.

Periodically, I update my fixed asset register (that focuses the mind on depreciation!)
This time I listed out things and allocated them to the crops on which they are used, and divided by the area of each crop, as a means to calculate roi. Enlightening. Frightening!!

 

[Zippy768]

My policy is to buy when it breaks

You do mean "buy the parts when it breaks"?

 

[Zippy768]

As I go forward, I can only expect to reduce my machinery fleet. I've always worked on the idea of big, simple luggers, pulling wide gear. It's always paid to keep control of the low draught jobs like rolling, spreading, spraying but even now on 260ac can I justify owning a set of rolls that I could turn into 10k of cash? It's questionable if I can even keep up to date with nroso on my small patch.

So my policy now is not to replace. Reality is that at 150 hours a year, the old quadtrac is not going to be replaced. And even a large service or oil change is expensive per acre. But nothing as expensive as uncropped land.

I'd be cashing that £10k roller

 

[snarling bee]

Usually buy ex demo/ ex hire/ up to 5yo depending what it is. Keep a long time unless good reason to change.
Employee and I are not bad with spanners so happy to fix a lot of stuff ourselves, increasingly you need a lap top to sort the issues though.
Every time you change kit a dealer will be taking something out of it, so that's why I would rather keep stuff a long time rather than changing it for the sake of it.
The only thing I have bought brand new in the last 10 years has been the fertspreader, and I was upgrading to new technology.

 

[Hampton]

my “policy”

1) complex machinery with engines etc (tractors, loadall etc )

buy new high spec high quality with warranty first couple of years, finance over 5 yrs, keep for 10 (10k hrs). and dealer service religiously


2) simple machines (drills, sprayers, trailers ,rolls etc)

buy new or used, high quality, high spec and service and maintain well and keep for ever, only change if a replacement that offers significant cost saving or increased efficiency comes along. cash purchases or finance the more expensive items over 3 or 5 years

That has been my policy too, although I’ve just bought a Lexion with 200 hours on it (2 seasons) that is bigger than I need. I think I will be able to keep the hours low on it and should be able to keep it for 15-20 years if needed.

 

[Clive]

That has been my policy too, although I’ve just bought a Lexion with 200 hours on it (2 seasons) that is bigger than I need. I think I will be able to keep the hours low on it and should be able to keep it for 15-20 years if needed.

we need to do something about our harvesting soon but can’t bring myself to even consider new big lexion prices

not sure whats best ! we need a big combine but do not want the big cost !

current machine is hired and cheap/ acre but wont last forever/ maybe sold

 

[7610 super q]

Hmmm...well....used to buy something in " Good " years. 1976 seems a long time ago though.......

 

[Spud]

That has been my policy too, although I’ve just bought a Lexion with 200 hours on it (2 seasons) that is bigger than I need. I think I will be able to keep the hours low on it and should be able to keep it for 15-20 years if needed.

To keep the hours down, you need the infrastructure a shade ahead of the combine capacity

 

[Spud]

we need to do something about our harvesting soon but can’t bring myself to even consider new big lexion prices

not sure whats best ! we need a big combine but do not want the big cost !

current machine is hired and cheap/ acre but wont last forever/ maybe sold

If it's hired, that's not your problem really?
I guess at big acres, hiring becomes attractive - it's certainly an expensive way to cut 600acres, but won't be 10* dearer to cut 6000

 

[Clive]

If it's hired, that's not your problem really?
I guess at big acres, hiring becomes attractive - it's certainly an expensive way to cut 600acres, but won't be 10* dearer to cut 6000

its been cheap but i have a feeling hire of a similar sized replacement would be a lot more than we pay now

i say its been cheap but had we bought this current machine when new I think we would be better off today - however hire hasn’t tied up lots of capital and the risk has been someone elses

not sure which way to go on this in the future

 

[Rob Holmes]

Similar conundrum here, got 2 mainline tractors, one 13 yo, the other 11. Both done around 6000m hrs.
One of them should be replaced by something bigger. Price to swap is huge.
Can’t get contract hiring to stack up either.

 

[Hampton]

its been cheap but i have a feeling hire of a similar sized replacement would be a lot more than we pay now

i say its been cheap but had we bought this current machine when new I think we would be better off today - however hire hasn’t tied up lots of capital and the risk has been someone elses

not sure which way to go on this in the future

The Claas dealer in out area is top notch (think you are probably with MC too) and I’m sure they would help steer you to the right outcome

 

[Two Tone]

The answer is Working Classics:

They hold their value really well.
You don't need to be a computer savvy nerd to know who to drive them.
(So,) I enjoy driving them.
When they break down, I can fix them. And even if I can't, there are plenty of who can for a hell of a lot less than any main dealer.

Simples!
And Simples again!

 

[Clive]

The Claas dealer in out area is top notch (think you are probably with MC too) and I’m sure they would help steer you to the right outcome

i think i will wait for ELMS details before committing to any 500k machinery purchases

it could seriously alter the area we harvest (for food) potentially