Re: Just wondering

Posted by dph on June 15, 2005 at 07:03:29 from (64.12.117.13):

In Reply to: Re: Just wondering posted by Andy Martin on June 15, 2005 at 05:17:15:

Andy, totally agree, except for one thing. Everyone pays the same, almost, for their seed, fertilizer, chemicals. What seperates the high profit 1/3 from the low profit 1/3 is almost always equipment expense. Most guys are running more equipment than they need. I think most people who run farm analysis will tell you that. There is a certain degree of "luxury" built into some operations today, which isn't bad, but it should be luxury that is paid for, not finaced. You will find a lot of sharp producers that tell you most of the time you stand to lose a ton of $ on the new tractor just in its valuation, and a slightly used tractor at auction avoids that. It is no longer $2,000-3 dollars, it is $20,000 and $30,000. And if a fella cash rents, or has what he owns mortgaged pretty hard, that is a ton of money. Although here in the last year, with auction prices they way they are, some of them are over the dealer's price, I don't know if used equipment is selling as hard as new. But I wouldn't think it would remain like that too long.

One thing I wonder about is the $ some people are paying for GPS guidance. I mean there are some very big farmers with very big fields that are making GPS technology pay for itself. Then there are some more that must just have an aversion for steering. I think, by the end of the next decade, we will find out if buy now, pay later is viable or a disaster. IMHO, I think there are some tough times for everybody down the road. And it will be what pushes the ineffecient ones out, and will cause at lot of the large ones to grow even bigger, but hopefully the producer with his or her eye on the budget will be able to squeak by.

Explain to me this. A neighbor bought a new Deere combine and heads at around $450,000. Now 9600s, which are a heck of a combine, were selling at auction for around $30,000-$40,000. Grant it, you have to buy heads for them all, but is that one combine really worth the price of 7-8 equipped 9600s with around 1500 hours? It is like the used Cadillac I bought. Nobody wants them, anyone who is going to buy a Cadillac buys new. That's fine, but I feel pretty good about buying a 1994 Deville with 80,000 miles for $3,000 USD. And I feel pretty cofindent I can get 120,000 more miles out of it pretty cheaply. That is what worries me, the disparity that existed up till this spring between new and used. And it isn't worrying me any less that used is selling for more.

Follow Ups:

• Re: Just wondering Andy Martin 07:43:22 06/15/05 (0)
• :? ) 94 Deville Sloroll 07:08:26 06/15/05 (0)

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