Absurd equipment costs AT what cost?

[goalieguy847]

Alright. I have a serious question to those more in the know aka.anyone who has the biggest and best ..most likely the BTOs.
Doing some mental gymnastics here and wondering if, even for some.of the big farms, has this equipment priced itself out of its own market.
My main example would be a new x9 but i def need help with the numbers. Around here 1 big combine is expected to do 4000 acres. A 1200 x9 with 50 foot header would be what... 1.4 million? Less.. More?
So lets say you throw down 280 k (20%)and finance over 7 yrs...
If you had a loan of 1.15 million over7 years with interest of 7% ( which is low for equipment loans)..

Is your yearly payment just to own the darn thing not roughly 170k after interest?
So if you are even pushing that thing to 4500 acres your payment for ownership would be 37$/ ac?

Then fuel...maintenance...someone to run it.... etc.
I know there arent many custom.combining crews up north here but wouldnt a crew move up for a 10 k ac farm at say...
40$/ ac?
See where im getting at here?

Are we not so close to cost per acre for ownership that custom farming @100% write off almost makes more sense?

I saw a tractor on kijiji for 1 million bucks. A used... john deere.. 600 hp whatever. Doesnt matter.
Ive always thought a tractor was nothing more than a hydraulic pump.. a seat a steering wheel( with gps) an engine and some.rubber. How does that tractor do anything different on a drill than a 450 k used machine?
A new holland sectional control tank is electric so you can basically run a dual fan tank with 44 gpm ( we are and sectional control etc works great)..so a 78gpm hydraulic is sort of moot...

For me... we get one chance to put seed in the ground so the MOST money should be spent on that. The drill. Its the one thing on the farm that is TRULY the most important.
5000 hp worth of combines doesnt mean crap with poor seed placement or cruddy germ and giving it the best opportunity right from the hop..


Am i naive to think that we are our own worst enemy or are we all truly justifying these costs?

I understand warranty and needing X number of acres done per day... is this the justification? Lease payments would be even higher than finance costs...no?

A million buck sprayer to buy over 5 years would be well higher than the cost of having it customed even if you were spraying 15-20 k per year...

At what point does the equipment outprice itself out of its own market? We have to be close or else my pencil needs to be sharpened?

Im seriously not trying to step on toes... to each their own and every farms finances are different. Im in a situation where we could do some serious upgrades ( financially atleast) but i keep looking at these costs and think....

Why?

Its the equipment companies that im angry at. They all really just suck.

[SmallTimeOperator]

I am surprised nobody responded to this thread so far. For my little farm of 1800ac, new combines are now out of reach. It might not ever happen again. So can’t offer any current experience with costs of new iron.

When I was at 3500ac, in 2012, we tried doing it all with a brand new 9120. That only worked for the first year. Then it got wet and we had to get a second machine, a 7010 to get done in a harvest that started Sept 30. We finished Nov 6 that year, about 4 hours before snow set in. So as you can imagine, the cost per acre was way out of line. Then as the 9120 aged, we were still making $30k semi annual payments and footing an annual shop bill for $25k. The 7010, had payments of $35k annual and a shop bill of $13000. Then it got stupid wet in 2014, rained 10 inches in Aug, 8 inches in Sept, and 6 inches in Oct. We picked up a 3rd machine on Oct 8 that year, an 8010. Payments were $12000 semi annual. All for the same 3500 acres, and we ended up with one quarter out for the winter. How do you like those acres per machine.

As you you can see machinery costs were getting stupid for us. In 2016, we still had the 3 combines, and although we had rented more land to get to 4200 acres, we still could only seed about 3500 due to wetness. That year we had big crops, fungicide on everything. Harvest was much like the past years with over 20 inches of rain in the harvest. We still had 2000ac of wheat to go in Nov. Brought in 2 more custom combines to help. It was a warm Nov, but showers kept hitting us. Wheat was lodged bad. Had 1000acres out for spring. That is when I realized going full bore on fert and fung was killing me.

Today I am back at 1 combine, 12 years old class 7. Granted it rains less than 8 inches in a whole year now. $11000 semi annual payments. About $15000 per year repairs. My cost is about $20 per acre. And no fungicide yet since it been drought every July till Aug 10 like clockwork, then the rains come.

I get why the big boys flip everything. Equipment is always under warranty. Never have a surprise shop bill. Your equipment costs are locked in at the cost of the lease payments. And the dealership mechanic is now your personal mechanic. But the problem is, when you have a shit crop, and can barely cover your input costs, you still have to make the lease payments. That eventually takes some farms down.

Right now I am happy owning an older machine and pulling a few wrenches. I used to lease a sprayer, barely made sense. Got it done fast though. Now running a Spra Coupe. No payments. Almost no repairs. Basically spray for the cost of the fuel.

I can’t make sense of how the costs in farming have changed so much so fast. And I think when the war in Ukraine is over, and World grain production gets back on track, we could see some scary changes backwards on grain prices. Till then, I’m just laying low, trying to keep my costs down, and trying to turn a profit in year 5 of drought.