Re: How can farmers justify to purchase new tractors ?

Posted by Straw Boss on July 09, 2015 at 01:48:17 from (66.35.127.122):

In Reply to: How can farmers justify to purchase new tractors ? posted by crackerjack on July 08, 2015 at 07:49:42:

Consider a farmer brought home a new 200,000 dollar tractor. No reason for this number other than it's in the middle of the price range for a new tractor and something an average size farmer would use on say 2500 acres. Yes they make them $400,000 plus. He likely traded in an older tractor worth 100,000. With that he puts down 50,000 cash and finances the remaining 50,000 at zero % interest for three years. His payments are 16,666/yr over 2500 acres which figures out to 6.67/acre. Even if he's paying interest and his payments are 20,000, his cost is still only 8/acre. Considering the cost/acre of rent, seed or fertilizer, the tractor cost is pretty reasonable. Its all about cost/acre, cash flow and tax strategy.

But that's not all. Also consider a big new tractor means this farmer is likely doing more acres with no hired help. Two months of hired help to put in a crop would cost 10,000. No repairs means another savings of 10,000 easy. No down time means crops get planted on time. Only one bushel of lost yield due to late planting on 1250 acres of 9.00 beans figures out to 11,250. Three bushel of lost yield due to late planting on 1250 acres of 3.50 corn figures out to another 13,125. He also receives full warranty so he can sleep at night. Newest in engine and transmission technology will save on fuel efficiency. Newest in computers, gps, auto steer and iso bus compatibility with the newer planters and implements allows for additional savings in seed and fertilizer by using variable rate technology. Auto-steer allows some farmers to forego markers on planters and drills, saving an additional 10,000 and up to 20,000 on 50-60 foot equipment. The auto-steer also saves time from constant over-lap when doing tillage meaning more savings on fuel. It also allows for planting after dark and covering more acres/day since you don't have to see your mark. Timely trading for newer tractor also allows one to keeps up with trade in values.

Last but not least, he gets the latest in creature comforts. A farmer who goes home hot, dirty, tired and grumpy soon has a wife who is also grumpy. Cost savings of a happy wife and no divorce....priceless! If wifey likes to drive the new tractor....even better. More time for farmer John to go to the sale barn or coffee shop. Maybe he gets more work done in the shop while she's on the tractor. Maybe, just maybe, he spends more time on YT.

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