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Profit Planner Q: Cash out conventional tillage tools?

A young farmer sought Profit Planner panelists' advice on selling conventional tillage equipment in his shift to no-till. Here's the question and their responses.

February 9, 2016

5 Min Read

We’re heavy on conventional tillage equipment, but have a good no-till planter and are shifting toward no-till. We’re thinking of selling the tillage equipment to raise funds in what’s likely to be a breakeven year. A smart move? Any thoughts or reservations?

Related: Can you pass this 5 Q soil health test?

Mike Evanish, farm business consultant and manager of Pennsylvania Farm Bureau’s Members’ Service Corp: Anytime something is good for the environment, positive for crops and good for the wallet, I say go for it!


But selling paid-for equipment always makes a farmer nervous. What if you need it in the future? What if the needed chemicals or parts are no longer available for that no-till planter?

In my mind, it always comes down to dollars and cents. What’s the equipment worth? Figuring its value is relatively easy.

Your next calculation is a bit harder. What’s the carrying cost of keeping it? This calculation begins with the “cost” of not retiring some debt with the money. How will it affect cash flow and interest that has to be paid?

What’ll it cost you in yearly upkeep to keep it in good working condition? Finally, what’s the cost of taking up machine shed space in one of your sheds or deterioration in value leaving it outside to rust?

If it’s worth more than the carrying cost, perhaps keeping the equipment is a good idea. If the result is negative, moving it makes accounting sense.

Dale Johnson, University of Maryland Extension farm management specialist: Get rid of idle assets and put the money to better use. I came home from college with this same question for my father.

We had an old tractor, vehicles, tillage equipment and other machinery sitting around. I asked my father why we didn’t get rid of that stuff. He replied “We may need it sometime.” We hadn’t used them in years. The farmyard looked like a junkyard.


Yet, we needed other things and needed to pay down debt. We went through the list and sold some of them. Even if you occasionally use some of the equipment, it might be more economical to rent equipment or custom hire a job done.

One caution: If you’re selling assets to pay the feed or fertilizer bill, you have bigger cash flow and profitability problems to deal with. Tackle those first.

George Mueller, dairy farmer from Clifton Springs, N.Y.: We’re just starting to use no-till at Willow Bend. It’s exciting to see emphasis on soil conservation and the building up of our soils, rather than just taking valuable nutrients from them.

But please go slow in selling all tillage equipment. Make sure no-till’s going to work for you on all your crops.

Farmers are well on their way, with the aid of GPS, to perfecting zone-till planting. When putting in new forage seedings, we still like to have a well-fitted and smooth field that we’ll be cutting hay on for the next four years. The chisel plow, field cultivator and disc harrow are great levelers. You may also need them to smooth out ruts after a wet fall harvest.

On a dairy farm, there’s always manure and straw to chisel under. When we’re spreading in a field, we like to chisel plow around the edge to be sure the liquid manure doesn’t leave the field.

Some experts believe there’s a benefit to plowing under the trash every four or five years to control some insects and mycotoxins living in the moist crop residue cover. If this is the case, keep a chisel plow back for special assignments.

Glenn Rogers, University of Vermont Extension professor emeritus and ag consultant: It's interesting how we go in production circles through the generations. No-till was popular in the 1950's thru the 70's.

Problems occurred, including germination, weed and pest controls, soil temperatures, planter technology and pricing. Now, with new technologies, new seeds, pesticides, planting tools and methods, we’ve overcome those issues. We’re continuing to battle soil compaction, soil erosion, and water quality issues, and no-till helps combat those problems.

With the high cost and singular purpose of planters, most crop producers don’t need, nor can afford two sets of planters. In fact, many no longer own a planter and rely on custom operators. Many have switched to no-till. Some have gone to a cooperative ownership.

Tillage isn’t cheap. Labor, fuel, equipment investment, changing economics, public product demands and much more have re-shaped our tillage equipment. Too often, we’re over-equipped with machinery that once seemed the right purchase, but with time and technology is now outdated.

While we don’t know your operation’s details, the logical answer seems to be to get rid of equipment no longer useful and use those funds to increase our rate of return on our new investment. Purchase with the long term in mind – with a relative quick payback.  

Use some of the funds to focus on improving yields and increasing long-term profitability with your no-till equipment. I also recommend setting aside some gains from the sale to hedge on a "break-even" year, to assure you’ll have the ability to continue with next year’s crop.

It never hurts to talk with a local person knowledgeable of your situation. It might even be the neighbor who has a similar situation, is well respected in the community for his smart short- and long-term decision-making skills, and has the solid financial skills to weather the storms tossed our way.

That local confidant might present a solution you hadn’t thought of. He/she might even provide a lead on where you can sell the equipment for a decent price. It's amazing how "talking through" a problem often leads to solutions.

For more detailed panelist remarks, see March’s column in American Agriculturist.

Got a question? Our Profit Planner panel would like to hear it. Send your questions to Profit Planners, in care of American Agriculturist, 5227 Baltimore Pike, Littlestown, PA 17340. Or e-mail them to [email protected]. All are submitted to our panel without identification.

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