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Should it stay or should it go?

Panel at Cover Your Acres tackles the farm equipment trade-in questions farmers ask themselves.

Jennifer M. Latzke

January 25, 2023

3 Min Read
Man repairing farm equipment
REPAIR OR REPLACE? A panel of farmers, equipment dealers, lenders and economists discussed the decision whether repair or replace equipment at the 2022 Cover Your Acres conference on Jan. 17 in Oberlin, Kan.Andy Sacks/Getty images

Making the decision to keep a piece of farm equipment or trade it in is a struggle every farmer faces. But with recent supply chain issues on the parts side and the scarcity of new equipment or delays in delivery, farmers have a lot more to factor in the decision.

A panel at the Jan. 17 Cover Your Acres conference in Oberlin, Kan., talked over the various factors that farmers, lenders and equipment dealers weigh in this decision process.

Availability

The past several years have been full of challenges for farmers and equipment dealers, but there’s some optimism that equipment availability may loosen up a little bit going into later 2023 and 2024.

Terry Kastens, Kansas State University emeritus professor of agricultural economics, farms near Atwood, Kan. He said part of that availability opening up is that demand is dropping off.

“Demand is really strong as long as farmers have a lot of cash in their pockets today,” Kastens said. Farmers might want to then consider, if they’re able, to hold on and make those purchase or trade-in decisions later when supply is greater.

Focus dollars

Michael Juenemann says his farm near Colby, Kan., used to be on a regular trade-in cycle for equipment based on hours used. Recently, though, they decided to hold on to their baler, spend the money to fix it and keep running it. He says for their farm, they look at what pieces are going to be the most critical to keeping operations efficient and focus their repair or purchase dollars there.

Consider your capacity, Kastens added. If you have the option to farm more land, do you have enough equipment capacity to do so? Or would you need to invest in equipment?

Does your labor match up?

For Jim Kopriva, Atwood, there’s a balance between bigger or more advanced equipment and making sure you have employees who can operate that equipment.

“I don’t know that you can have a machinery discussion without also talking about labor, because you got to have people who run stuff,” Kopriva said. If he buys larger equipment with more technology that increases efficiency in the field, his machine costs may have gone up, but he also may be able to reduce his labor costs.

Lender perspective

Randy Wilson with Farm Credit of Western Kansas, Colby, says lenders like him are having these repair-or-replace conversations every day with their customers, and lenders are seeing more stretching of equipment loans. He says he has members tell him that they could spend money to trade in their combine, or they could spend less money to take it in and have it serviced at a price that’s less than a payment on a new combine.

“Now, we lose some trade-in value, potentially, when we trade in,” he cautioned. “But in the same token, as long as we’re maintaining very timely productivity, we’re on top of our job — I’m not particularly worried about how shiny the equipment is.”

Another caution is making sure that with higher interest rates, you have the repayment capacity to make the payments on the equipment loan.

Final thoughts

The panelists all agree that the decision to repair or to replace is one that requires a lot of research and forward-thinking.

  • Stagger your equipment replacements to lessen the financial pinch.

  • Keep up with technology at a pace that’s comfortable to you, but make sure it makes sense for your farm budget.

  • Don’t rely on custom work to pay off machinery, unless you’re charging enough to cover your costs to operate that equipment.

About the Author(s)

Jennifer M. Latzke

Editor, Kansas Farmer

Through all her travels, Jennifer M. Latzke knows that there is no place like Kansas.

Jennifer grew up on her family’s multigenerational registered Angus seedstock ranch and diversified farm just north of Woodbine, Kan., about 30 minutes south of Junction City on the edge of the Kansas Flint Hills. Rock Springs Ranch State 4-H Center was in her family’s backyard.

While at Kansas State University, Jennifer was a member of the Sigma Kappa Sorority and a national officer for the Agricultural Communicators of Tomorrow. She graduated in May 2000 with a bachelor’s degree in agricultural communications and a minor in animal science. In August 2000 Jennifer started her 20-year agricultural writing career in Dodge City, Kan., on the far southwest corner of the state.

She’s traveled across the U.S. writing on wheat, sorghum, corn, cotton, dairy and beef stories as well as breaking news and policy at the local, state and national levels. Latzke has traveled across Mexico and South America with the U.S. Wheat Associates and toured Vietnam as a member of KARL Class X. She’s traveled to Argentina as one of 10 IFAJ-Alltech Young Leaders in Agricultural Journalism. And she was part of a delegation of AAEA: The Ag Communicators Network members invited to Cuba.

Jennifer’s an award-winning writer, columnist, and podcaster, recognized by the Kansas Professional Communicators, Kansas Press Association, the National Federation of Presswomen, Livestock Publications Council, and AAEA. In 2019, Jennifer reached the pinnacle of achievements, earning the title of “Writer of Merit” from AAEA.

Trips and accolades are lovely, but Jennifer says she is happiest on the road talking to farmers and ranchers and gathering stories and photos to share with readers.

“It’s an honor and a great responsibility to be able to tell someone’s story and bring them recognition for their work on the land,” Jennifer says. “But my role is also evolving to help our more urban neighbors understand the issues our Kansas farmers face in bringing the food and fiber to their store shelves.”

She spends her time gardening, crafting, watching K-State football, and cheering on her nephews and niece in their 4-H projects. She can be found on Twitter at @Latzke.

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