Building a farming business without equipment is like trying to play soccer with one boot on.
It’s a challenge every new farmer understands. Equipment prices are insane. But if you don’t have the proper machinery, your business won’t survive.
Luckily, it doesn’t have to break your budget to invest in smart equipment. There are options for new farming businesses to outfit themselves without going bankrupt.
Let’s go over:
- Why Used Equipment Listings Are Your Best Friend
- Essential Equipment Every Farm Should Own
- Prioritizing Equipment Investments
- Avoiding Costly Mistakes When Buying Equipment
Why Used Equipment Listings Are Your Best Friend
The mistake most new farmers make is feeling like they need everything new.
They don’t.
Used equipment listings are every budget-conscious farmer’s best friend. Not only can you get quality equipment for a fraction of the price, but the savings can be astronomical. Think of all that extra money going towards seeds, fertilizers, and actual operating expenses.
Think of it this way….
Let’s say you’re a farmer in the market for some harvesting equipment. You can browse a variety of combines for sale from trusted used equipment listings at a fraction of the cost of new. The equipment works just as well as they did the day they rolled off the lot (if not better!). And because they’re used, that harvester has already gone through the largest part of depreciation.
Win-win.
Farm equipment is only going to continue climbing in price. According to University of Illinois, farm equipment went up by more than 20% in price between 2021 and 2023. When new equipment costs keep rising, preowned is going to be your best bet.
Essential Equipment Every Farm Should Own
Yes, all farming equipment is important. But some pieces of equipment are essential while others can wait.
Here’s what you need to know:
Tractors
You can’t do much on a farm without a tractor. Tractors till the land. They plant material. They can haul things around your property.
If you’re just starting out, get a solid mid-range tractor that does what you need it to do. You don’t need the newest and shiniest tractor on the market. But you do need one that works.
Tillage Equipment
Tillage equipment includes all the things that break up and prepare your soil for planting. Items like plows, cultivators, and disc harrows are some of the first equipment you’ll need to purchase.
Age is less important when it comes to tillage equipment. A beat-up old disc harrow isn’t going to do you any favors. But if you find a well-kept disc harrow that is a few years old, buy it!
Planting and Seeding Equipment
Planters and seeders are self-explanatory. Without them, you won’t be able to get your product in the ground.
Tip: Make sure the planter and seeder match the material you’ll be planting. Don’t buy a corn planter if you plan on planting soybeans.
Harvesting Equipment
Your combine or harvester is probably going to be your largest equipment investment. There’s a reason why.
This big guy is essential but also very expensive.
Thankfully, used equipment listings can come to the rescue once again. You can often find quality preowned combines for sale that will save you thousands or even tens of thousands of dollars.
Irrigation Systems
I’m sure you’ve heard the saying, “You can’t make silver from poop.” Without proper irrigation systems, all your fertilizer will do is melt away.
Irrigation systems like drip tape, sprinklers, and center pivots allow you to control how much water your crop receives. They also conserve water and ensure your crop gets enough water during droughts.
Prioritizing Equipment Purchases
Every farmer wants all the equipment at once when they first start. This is unrealistic.
Buy the things that you need to generate revenue first. Tractors and basic tillage equipment should be the first things on your list. You can’t do anything until those items are purchased.
Planting equipment should be next on your list. You still can’t grow a crop without planting the seed.
While harvesting equipment is important, there’s always the option to rent until your business is up and running. This allows you to hold onto your money for things that may need purchased sooner.
Remember…
Different types of farms require different equipment. A farm raising livestock has different needs than a row crop farm. Make sure the equipment you spend money on matches the need of your business.
Understanding Depreciation Advantages
When you buy something new, it loses value as soon as you drive it off the lot.
A farm machine can depreciate up to 20% after the first year it’s purchased. That $750,000 machine you bought could be worth $500,000 just one year later.
That right there is the beauty of used equipment. It’s already been through that first massive depreciation. While used equipment will continue to depreciate, it happens at a much slower rate. That means your equipment will retain its value and you’ll have an easier time reselling it down the road.
Another nice benefit?
Because you spent less money upfront, your insurance premiums will cost less. Since insurance is bought based on replacement value, used equipment insures for much cheaper.
Avoiding Common Equipment Buying Mistakes
This one hurts me to say but farmers who’ve been in the industry for a while make these same mistakes when they started.
Buying too large of equipment
New farmers feel like they need to go big or go home. Don’t spend more money than you have to on equipment that does more than you need.
Focus on brand over maintenance
Just because a piece of equipment is from a well-known brand doesn’t mean it’ll be in good shape. Learn to weed through the flashy items and look for equipment that has been well maintained.
Not thoroughly inspecting before buying
If you’re buying used (and you should be), always get the equipment thoroughly inspected before you buy it. It doesn’t matter if it’s from the dealer down the street or someone selling out of their front yard. Get it inspected.
Forgetting to look at maintenance history
Speaking of maintenance, always look at the service history of any equipment you intend on buying. Quality dealers who sell used equipment have those records available. Maintenance histories tell you how the previous owner took care of their equipment.
Over financing
Just because you can finance that new pickup truck does not mean you should. Think about your cash flow and how purchasing something will affect it.
Building Equipment Relationships
Get to know your equipment dealer.
Sound silly? I thought so too when I first started. But the equipment dealers that I really love go above and beyond for me and my family. When they have equipment that I might be interested in they let me know. They’ve also provided me with above and beyond service when I’ve needed it.
Don’t be afraid to foster those relationships.
Wrapping Up
Equipment is the foundation of every farming operation. The decisions you make when it comes to equipment will determine whether you’ll succeed or fail.
Preowned equipment allows new farmers the opportunity to get their business off the ground without drowning in debt. Just remember these 5 things:
- Buy the things that you need first.
- Do your research.
- Build relationships with your dealer.
- Understand how depreciation works.
- Purchase equipment that matches the need of your operation.
You don’t need to buy the biggest and baddest equipment out there. Starting off smart is infinitely better than trying to “keep up with the Joneses”.
At the end of the day, equipment is just a tool. What matters is what you do with it once it’s working on producing goods.
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