What's really going on in the machinery business?

[ridger]

Only if it is overpriced. I had someone come to pick some seed up from me lately with his wife. She works for a local finance co and so I said to her that I thought they would be a bit short of work at the moment. She said that they were stacked out with work at the moment but all with people financing old kit. They were struggling to get finance agreements on 15/20 year old tractors. IMO if you need to finance a 20 year old tractor you're on a slippery slope. I've always said that you can afford either finance or repairs but never both.

Maybe refinancing to raise cash?

 

[Drillman]

Where does all the money go when farming has a good year?
Is land really falling in price? How are input costs compared to three or even five years ago.
I'd be interested to know real world uk cost to grow a ha of wheat five years ago compared to now. Very easy to be doom and gloom but farmers are still buying

In a good year the taxman gets the 1st 20% then the banks get some (not all) of there's back and machinery dealers, Landlords and agents etc get the rest.

 

[Robt]

Is everyone like drill man?

 

[franklin]

I expect we could go 5 years without buying or replacing anything beyond wearing parts and normal servicing. This will be the first year in 12 we dont buy anything for harvest, unless I'm offered a cracking deal on a combine. Will want value after 5 years underwriting.

 

[Selectamatic]

If the used stock in dealer's yards are too expensive, from now on all the dealers have to do is give the farmer less for his part exchange.

You lot wont mind, will you?

 

[Bumble Bee]

I was talking to a guy who is fairly high up at a major dealer and he suggested that a realignment of new machinery prices may well happen.
He said that farm machinery prices had got out of hand and that car & truck prices over the last 10 years had not increased at anything like the rate that ag machinery has. Why is this so?

Makes you think.

 

[Clive]

The internet is going to hit the dealers margins ever more as our profits decline, We now have the tool to compare prices in different countries and get an idea on the value of a similar machine. We have been ripped off in this country for too long! I was looking at a forestry winch for instance, £6000 in this country, £4500 in Germany ! I know of 3-4 dealers locally that have accuired vast fortunes in the past 30 years , who cares if their good times are over!

this is a fair point - my recent drill purchase would never have been possible without the internet but it gave me easy access to euro priced machine that make anything UK look pricey

 

[ridger]

I was talking to a guy who is fairly high up at a major dealer and he suggested that a realignment of new machinery prices may well happen.
He said that farm machinery prices had got out of hand and that car & truck prices over the last 10 years had not increased at anything like the rate that ag machinery has. Why is this so?

Makes you think.

Iv always said that a new tractor shouldn't be more expensive than my house was (£112000)

 

[Clive]

Basically the whole job is well and truly fecked and unfortunately needs a disaster or war of epic proportions to get prices up again.

lets not get carried away - we have seen £200/t wheat in 3 of the last 5 years

1 shite price year and the sky is falling it, and even current prices leave a margin just an unexciting one that leave little cash to reinvest

 

[jonnieboy]

Shush all this talk of cheap tackle
You've just put £25 on every fbt up for renewal

 

[spin cycle]

decent kit at genuine dispersals may hold up as people buy s/h rather than new

 

[Mursal]

But on smaller farms there wouldn't be a margin as the price falls ...............

 

[Sparkplug]

The problem is the agricultural machinery sales market has been in overdrive far too long, supported by the weak pound and strong prices across the commodity market. As dealers fight each other for the business, margins have collapsed and now it's all come home to roost. What continues to amaze me is that over the last ten years, part exchange allowances bear no relationship to true value, but the weak pound has supported the export market and over zealous part exchange allowances given. The industrial Fork Lift Truck Market went through this phase a good number of years ago, resulting in major changes in used machines being available to the market at "true" value, not 20-30% overpriced similar to what you see happening now in agriculture.
At the time there were 20 or so independent Linde dealers, now I believe Linde own all the sales outlets, the same has happened to a number of Toyota dealers I believe, so Toyota have a firm grip on how the product is sold in most of the UK. I am a little out of touch with dealer changes but you get the jist of what I am saying, just like the moves that Claas and others have done. In the construction industry, most of the big volume deals are now done by the Manufacturers, with dealer being given a commission and left to look after parts and service. At a recent meeting with a dealer, he said the manufacturer doesn't want us, but he needs us! so all these fancy dealer outlets can not be supported on commission and parts, when in the past the sales division produced the majority of the profit to cover overheads and take the business forward. A web site I came across today sums up the dire state of overpriced used equipment - see agmachinery.co.uk which is probably for Claas u/e. disposals. So a lot more pain for the dealers to come before common sense prevails, which will result in lower volume sales as the farmer makes machines last longer, and as others have said, the manufactures will not reduce prices (they have worked hard to get them up to these levels) but offer incentives to mask any actual price drop.

 

[Drillman]

Is everyone like drill man?

I expect we could go 5 years without buying or replacing anything beyond wearing parts and normal servicing. This will be the first year in 12 we dont buy anything for harvest, unless I'm offered a cracking deal on a combine. Will want value after 5 years underwriting.

Same here we could happily run for several years with little more than maintence even with our kit of which the vast majority is in its teenage years.

 

[Drillman]

lets not get carried away - we have seen £200/t wheat in 3 of the last 5 years

1 shite price year and the sky is falling it, and even current prices leave a margin just an unexciting one that leave little cash to reinvest

@Clive definatly a glass half full sort of chap

 

[Robt]

Drillman, so what was your cost per ha five years ago compared to today?
It really isn't all doom and gloom out there!

 

[quattro]

How many years ago was barley£70

 

[Drillman]

Drillman, so want was your cost per ha five years ago compared to toady?

Honestly haven't a clue as regards machinery as we are over tackled, and always will be, partly as we do a bit of contracting, and as a 1 man band it's easier to have a bit more kit kicking about to save hitching on and off all the time.
Partly because the vast majority of our kit is the same as 5 years ago and partly some things can't be bought any smaller in size than what we have. eg 3 metre combi.

We're not as flush as we were but are still paying what I consider to be too much tax so either were doing ok or our accountant is crap.

 

[Robt]

So you don't know what it cost to grow 1ha of wheat?
Can anyone give me figures, I may be wrong , just curious. Surely diesel is cheaper, so is fert. I doubt labour is much more

DrillMan, do you not study your profit and loss sheet? Do you not know if you make a profit or a loss?

 

[Robt]

Quattro, is barley £70 a ton now? I don't get your point!