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Someone explain it

grandpa Love

grandpa Love

Well-known Member
We were at a tractor show a couple weeks ago,and and elderly gentleman comes up and was reminiscing about using a Farmall Cub back in the day. He then tells me they just took delivery of a John Deere cotton picker/ baler. Cost.......$980,000. How do farmers justify spending that much money on a machine that gets used maybe 6 weeks a year?? How many acres do you have to pick to justify it? Will you pay it off before it's worn out?? I'm sure that farm has a picker, dump wagons, and the module maker. If the stuff still works why take on massive debt?
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Couple screen shots from the web
 
You've never had a child make you so angry you went I'm about to spend your inheritance and make sure your kids don't have one either?
 
I can't remember the town I went through on my way to Florida, but I saw round bales of cotton.

Thanks for the pic.

How can farmers afford it??? I don't know.

A 4th generation farmer a mile down the road has a gazillion dollars invested in his Green equipment and has irrigation pumps too. 5 pole barns to park his equipment in.
He farms about 4000 acres. Just think about the property taxes on 4000 acres.

When I ride by on my trike,, I can only see $$$$$$$$$$$$$$$$$$$$$$$$$$.

Not to mention what it takes just to plant his crops $$$$$$$$$$$$$$$$$$.
 

Farmers pass their farms onto younger generations..
I know one farmer that required his son to go to Purdue
as part of him getting the farm.

There are a few 100 year old farms in my hood.
 
Some of it has to do with the tax man. When you make money, you have to pay taxes on it. If you spend it instead, then you take a loss on the income and you don't pay taxes. Then you get to depreciate the loss over a bunch of years. It's playing the system.
 
Farmers just like everyone in business, Have to do more with less people. 1 person picking cotton vs 3 or 4 people.
 
for one you don't need a couple of drives, boil buggys and tractors, a module builder and a person to run it. Then the fuel for the tractors and you have to have a picker any, not sure the difference in regular picker and one that bales.
 
One guy can pick his 10,000 acres by himself vs running 2/3/4 strippers, 2/3 boll buggys and couple of module builders. That takes 5/9 hands off payroll and takes out tractor on every boll buggy and module builder. Where I live in West Central TX within 10-15 miles of me there is 5 or 6 of them and young man my son runs with his dad has 2 of them.
 
More details are involved to fully answer your question. I have a friend who buys two brand new combines every few years. He has 5000 acres to combine.
 
Nobody buys anything that expensive with the intention of ever paying it off. They will use it for a few years and then trade it in on a new one. The payments are part of the business model.

That's the way of the world now. You're just borrowing it. Let the next guy deal with paying for it. Got a friend who is in his 60's, built a fancy new house, 30 year mortgage. Clearly not going to pay the house off in his lifetime. By his own admission he is just "renting."
 
Kind of like baling round bales of hay. Less labor. More automation.

Look out, some days everything will be operated by artificial intelligence.
Farming will be done on a laptop.
 

I can't explain it.

But I am curious as to how those pickers get to the farm?

Some in those pics look to be very tall, as in too tall to be trailered on the lowest drive-off trailer even if tires are removed.

Does the lower and upper ship separately and assembled at the farm?
 

t wouldn't make much sense to ever pay that off. Uncle sugar pays a minimum of 30% off the top in tax savings. Take depreciation, insurance cost, repairs, service etc and the cost gets better fast. Then figure in that the used value is still high and you look even better.

Gotta spend money to make money - no one gets to be a BTO with ancient equipment held together with tape. As far as real income goes, antique equipment if for nostalgia only. There is a value to nostalgia, but not enough to seriously pay out.
 
GP,
Anyone in business needs a sharp CPA.
I'm a small business. I used jubilee to mow rental property lawns. My CPA saw nothing wrong with writing off my Kubota as a business expense. Perfectly legal.

It's even better the bigger your business, because your federal taxes increase as your income increase. Rich pay higher percentage.

So instead of paying taxes to the Fed, you buy new equipment, pole barns, irrigation, grain bins, drying equipment, semis. the list goes on.. That how rich people think. Look at all angles to save money.

I don't do anything before talking to my CPA.
 
My sister lives in Yazoo City, MS, right on the edge of the delta. The fields there are huge - so big you can't really scale the size in acres visually. Corn and cotton. Assuming it brings a decent price, I can see why they need such large machines. Up here a big field is 15 acres, so I was pretty impressed.

Tim
 
The numbers must ad up or theyd never have financed it. Its good for everyone if they can make it viable,a lot of dollars to be spread around from building and selling a piece of equipment like that.
 
here in west central Mo, we have seen some of these pickers going down
now I-49, part of the back half unfolds down and top folds down into that
to get them on low boy semi, just like hauling large self propelled sprayers.
they fit on the low deck trailer too. GG
 
If you had slaves they probably couldnt collect welfare. Which is something a full time minimum wage earner can do.

The other side of this is that in many rural areas, everyone that wants a job has one. Hard to find help you would trust to run equipment for seasonal jobs.
 
At minimum wage it would probably take a couple years to pay for them. In 1861 a slave was going for 800.00 which would be near 25,000 today by the time you adjust for inflation. Just think though just how many slaves it would take to equal the production of that machine. No, the slave would be obsolete today. With the machinery being developed shortly after the civil war the institution of slavery would have been replaced without that awful conflict.
 
George: Doesn't Indiana have agricultural assessments? Here in Wisconsin, 4000 acres of farmlant would be taxed about $15000.
 
High tech is going to make this trend even bigger even faster.

You need to look at the specs and cost of JDs newest combine.

Paul
 
Yes, crop producing acreage is less.
I don't think farmers get a break on property taxes on buildings.
 
No break on buildings here either. Some break on 'Managed Forestland'. I have 50 acres enrolled. State forester comes out 3 days per year and cruises stand. Selects trees to be cut. No state income tax on proceeds of timber sales. I could get away with no property tax at all but I would have to open it up to camping, hiking, etc. I didn't want to do that.
 
Speaking of J D equipment, I think J D is offerng a corn combine now with a window sticker of roughly the same price as that cotton picker. Made for the BTO very large farm operation. J D would have a credit subsidiary that allows you to borrow money to buy this stuff. We would be surprised at how much new equipment is leased from J D , not purchased. Not familiar with cotton farming but many corn belt farms could be receiving some crop subsidies when markets are down.
 
HI Grandpa

The round module building picker has been a game changer in the cotton industry. Much reduced labour and machinery requirement. No boll buggies, No module builders with a tractor and operator. No tarping the module which is about 40 ft long and was moved by a specialised chain bed semi trailer. People have been killed putting ropes in the modules to attach the tarps. This machine has continuous picking produces a wrapped module and drops it at the end of the row. Nothing more is needed until it is transported to the gin. Field efficiency of this machine is vastly higher than the old basket type pickers. Yes they are expensive to buy but one machine with multiple drivers can do so much more. Another point is that cotton has the highest return of any broad acre crop. This is an Australian perspective your situation may be different.
 
I remember our neighbor across the road picking cotton with a Farmall M and 1row picker in the 1970s, then around 1979 they hit it big and managed to buy a used 2 row International Harvester. And most of the guys went back through their fields a second time.
 
A slave was going for $800 and you still had to feed, cloth and house him. An Irishman off the boat made $5 a week and you fired him if he got sick and found another one.
 
Don't know about the whys but they, at least one, is used around here. When they finish the bales can sit in the field weatherproofed, and as time permits, transported on 18 wheelers. Neat....don't know the financial end of it.
 
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