We made it through fall with our 12-year-old combine, but it needs lots of repairs. We want to upgrade to a newer machine. Should we make repairs and sell this one outright or trade as is? Should we trade yet this year or wait until closer to next harvest?
The Profit Planners panel includes David Erickson, farmer, Altona, Ill.; Mark Evans, Purdue University Extension educator, Putnam County, Ind.; Jim Luzar, landowner and retired Extension educator, Greencastle, Ind.; and Steve Myers, farm manager, Busey Ag Resources, LeRoy, Ill.
Erickson: I suggest a combination of approaches you listed. You could make the most necessary repairs, assuming you can do that yourself, and try selling the combine outright. I would also have a dealer assess your combine and give you values for both trading and an outright purchase. With these numbers in mind, make your decision on what works best for you without limiting yourself should market signals dictate a change in your approach.
Evans: You know your machine best since you’ve had it 12 years. Consider if the core machine is sound. Will repairs and general maintenance provide another couple years of use? A new machine is tough to justify with current revenue forecasts and continual decline in farm capital.
Take a calculator, pencil and paper, or computer and spreadsheet, and run numbers. It can be a challenge, but make sure you obtain sound values and not values that allow you to look good in a new combine. If the farm economy continues limping, there may be opportunities in new or newer combines as vendors try to move machines from inventory. Perhaps “newer” is a key rather than “new.”
I wouldn’t worry as much about setting a time frame for upgrading as I would researching and working to find and evaluate opportunities.
Luzar: I talked to veteran equipment vendors, as this question is debated by many farmers, each with different perspectives on what factors are most important and what constitutes “want” versus “need.”
A 12-year-old machine can be viewed as pretty much depreciated out. Another year of operation will not lessen the value of your trade. How substantial are planned repairs? If you spend over $5,000 on repairs, you may struggle to recoup your money on a fix-and-sell-or-trade strategy, especially in winter.
Can the machine be repaired cheaply and enable you to have a timely, efficient harvest? One scenario would be to fix it, especially if you can do the work, and run another year, and then trade or sell outright the next summer.
We haven’t touched on financial considerations, future cropping plans, or if your operation is expanding, static or contracting, or other ways to gain harvest capacity like combine sharing. My main suggestion is to watch pouring money into the machine, hoping to recoup cost by trading or selling!
Myers: If you’re committed to the upgrade, your experience with this machine and its marketability need to be considered. Consult a combine dealer, whether you use them or not, to help you understand the value of what you have currently and what impact those repairs will have on your trade. If you’re not committed to upgrading, here’s a simple question: Can I get a reliable machine with repairs and keep my money together?