What is in this article?:
• For individual farmers, decisions about machinery and equipment are quite often their most financially-impacting.
• Making equipment decisions may appear daunting, but the good news is that farmers have several sound options when considering farm equipment needs.
Looking across the U.S. farming landscape, machinery and equipment represent one of the agriculture industry’s most significant expenses.
For individual farmers, decisions about machinery and equipment are quite often their most financially-impacting.
Making equipment decisions may appear daunting, but the good news is that farmers have several sound options when considering farm equipment needs. Given our particular line of business, the conversations we have with farmers revolve around their decision to own or rent harvest equipment (combines).
The short answer? It depends.
Every producer has a different situation which affects the decision-making process on whether renting or purchasing provides more benefits. Over the 12 years MachineryLink has been in business, we’ve seen the trend move toward renting as the cost of new or even used machines continues to grow.
You will see this trend consistently across industries with high-dollar, relatively low-utilization equipment whether combines, private jets, or construction equipment. We like to compare it to the construction industry — think excavator for a pipeline company which only needs the heavy equipment for a part of a project at a particular time.
The construction industry has been operating under the rent vs. ownership model for many years, and in farming, smart farmers are adopting the same philosophy.
When farmers try to determine whether to rent or purchase, we advise them to understand the true economics of ownership by looking at independent economic assessments produced by universities such as Iowa State, Kansas State, and others.
In addition, we advise them to approach the decision with several considerations in mind:
• Priorities for your cash or capital;
• Tax implications;
• Acreage and harvest equipment efficiency/usage;
Priorities for your cash or capital
Harvest equipment is typically the most expensive and least utilized on the farm. Depending on the size of the farm and the type of combine that will best suit you, the list price of a new combine can range anywhere from $280,000 for a bare bones machine to over a half-a-million for a new, fully loaded machine.