By Christy Couch Lee

He’s an information technology specialist and configures the computer infrastructure for his local school district. But he can’t touch the computer system on his own farm equipment for repairs.

“With this new equipment, I have no control over the computer systems,” says Richard Lousberg. He and his wife, Christa, manage 3,500 acres of dryland wheat and proso millet near Fleming, Colo., along with their 9-year-old triplets.

This inability to handle home farm repairs, as he’s done in the past on older equipment, has led to increased costs, he says. And he’s not alone.

DIY mindset

New equipment and its digital, company-owned proprietary technology is discouraging some farmers from buying if they can’t work on their equipment as they would prefer. As a result, some farmers are taking a new look at older equipment that may be easier and cheaper to repair.

Many farmers have long believed upgrading to new equipment will cost more now but will save in the long term. And if you are looking for the latest technology, an upgrade may be in order. Yet, some farmers are discovering that newer equipment may not bring the long-term savings they had hoped for.

If you find yourself in that situation, a hard look at your numbers may be in order.

Lousberg says he’s noticed an increase in the cost of parts through the years. But he says the most concerning expense, in relation to equipment, is labor and repairs.

“We are fully itemizing every accounting entry, comparing past years to see what has increased or decreased and why,” Lousberg says. “We updated a 23-year-old tractor to a newer tractor and noticed that we have spent more money on dealer repairs in the past three years on that tractor then we ever did in the past 20 years on our old tractor. All of our newer equipment purchases are costing more on repairs. Newer equipment is harder to work on without dealer help. Labor and driving mileage really adds up. We are at their mercy.”

Kelvin Leibold, Iowa State University Extension ag business management specialist, says he’s heard similar stories from farmers in his area.

“I had a farmer tell me about a $40,000 repair bill on a newer piece of equipment, which I thought was huge,” he says. “But he said he was lucky they caught it before it became an $80,000 repair job.”

Lousberg says he believes he’s traded the ability to repair his own equipment for modern conveniences and technology.

“If it’s something electrical, the manufacturer won’t give us the tools to tap into the system to clear the codes — deciding then if it’s something we can fix on our own or something we would like the dealership to handle,” he says. “It could be a simple little sensor that costs $60 to replace. But by the time the dealer comes, it’s a $500 repair. I’ve lost that choice.”

Leibold says he’s hearing similar stories in relation to reparability.

“From that standpoint, we become more reliant on manufacturers — both for diagnosis and repair,” he says. “When you look at the cost of repairs, we are facing new issues, as farmers are no longer able to diagnose their issues as the computer codes are proprietary. The dealership network has a pretty firm grasp on that diagnostic component.”

More than dollars at stake

Curt Blades, senior vice president of ag services, Association of Equipment Manufacturers, says a look at expenses on farm equipment isn’t simply about the dollars involved.

“This equipment is more technologically advanced and more complicated than ever before,” he says. “To simply look at it from a cost perspective isn’t showing the whole picture. The research and proprietary nature of each piece of equipment is remarkable. A farmer can’t simply look at it as owning the piece of equipment and all of the technology that comes with it.”

Equipment manufacturers are consistently being challenged with meeting safety and emissions standards, among other regulations, Blades says.

Lousberg says he understands the proprietary nature of the technology. But some farmers can be trusted to handle repairs, he says.

“I know the equipment companies own that technology, but I understand technology. I won’t mess it up,” Lousberg says.

However, farm equipment is continually designed for maximum performance and standards, Blades says. And although a farmer may have knowledge of certain technology, that knowledge may not extend to the technology within his piece of equipment. Therefore, he says, the training of a dealer mechanic is valuable.

“Every action within the software of a piece of equipment has an effect,” Blades says. “When something is tweaked, a farmer may not see the harm in what was done — but that action may have fundamentally altered something else. There’s a reason those checks and balances are built into place, for the diagnostics and repairs to be completed by trained professionals.

“You must look at the cost of the dealer repairs as more than just materials — that professional training has great value.”

Even so, some farmers believe new equipment may not be warranted in today’s markets.

A shift in the markets?

With tighter margins than in years past, Leibold says many large farmers are saying they can’t justify upgrading to new equipment.

“If you look through records of used equipment sales, much older equipment is selling at or above record prices,” he says. “Some farmers are saying, ‘This is older technology we can still fix ourselves.’ They can retrofit with auto steer or basic technology, and control costs more effectively.”

However, a move to older equipment means no — or limited — warranties.

“So how do we deal with those repairs now — both from cost and timeliness perspectives? When an older combine breaks down, will it be as much of a priority to the dealership as the newer combine if the producer hasn’t purchased a service agreement?” Leibold asks.

The shining star both to the dealer and the farmer, Leibold says, is that the shop is a major revenue stream for a dealership both in good and bad years. Perhaps even more in bad.

“As we shrink the size of the pie — going from more than $1,000 an acre in corn revenue down to about $700 — everyone is struggling to get a piece. But there’s just not enough pie to go around,” Leibold says.

Run the numbers

If you’re in the market for an upgrade on your operation, a few questions are in order. Is that new piece of equipment and new technology right for you?

Leibold recommends you push a pencil before making a decision. Review your depreciation, interest, repairs and taxes. How has that evolved over time?

“At the end of the day, it’s all about cost per acre,” he says. “Start looking at your balance sheets and profit statements. Machinery is typically the second-largest expense on a farm. And you can have shiny, new paint with low numbers, or old, rusting equipment with low numbers. You simply have to do the math.”

To know how your operation stacks up against others, Leibold also recommends using a system such as the University of Minnesota’s FINBIN database, or the University of Illinois’ farmdoc benchmarking tools.

Lance Burditt, account manager at Water Street Solutions, Peoria, Ill., says growers must make technology purchases with ROI in mind.

“If a farmer feels their choices are becoming more and more limited by newer equipment and technology, he can return the ‘volley,’ if you will, in a few ways,” Burditt says. “He can negotiate extended warranties and service contracts on new and used purchases; negotiate the hourly wage in a market with multiple options on who can service the equipment; and ensure every invoice is accurately accounted for — as I’ve witnessed, with our clients, errors that do add up over time.”

He says producers must also prove how that new technology will pay for itself in one or two years.

“With the compressed margins every operation is facing, we are simply not in a time period where we should be entertaining the purchase of ‘luxury’ items, hoping they’ll pay for themselves over a five-, seven- or 10-year time period,” Burditt says.

Burditt also recommends reviewing equipment and service providers from the view of a procurement or purchasing agent — similar to how large, multinational companies operate.

“Larger companies are particularly in tune with their margins and utilize that powerful information to negotiate with their vendors on what they are willing to pay, and the vendors essentially must bid for the company’s business,” he says. “Why can’t each farmer do the same? If each of us are not willing to step outside of our comfort zone to push for a different result, then we really give up the right to complain about the one we’re getting.”

Couch Lee writes from Hoopeston, Ill.