Is Your Ranch Suffering From 'Death By Machine?'

Is Your Ranch Suffering From 'Death By Machine?'

Depreciation on farm equipment and tied-up capital says you should always consider leasing or renting instead of buying.

By Robert Fears

Are you dying financially from heavy metal disease, also known as too much equipment?

The array of machinery on many ranches may include welders, air compressors, trailers of every type and size, hay baling equipment, dump trucks, maintainers, dozers, tractors and shredders. Rust on some of the equipment suggests it is seldom used.

Jason Banta, beef cattle specialist for Texas A&M AgriLife Extension Service, says the same. He adds that many things on ranch equipment inventories are so infrequently used their ownership cannot be justified.

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"A goose-neck stock trailer is probably not necessary if you only haul cattle to market once or twice a year," Banta says. "Used 16-, 24-, or 32-foot trailers in good condition will range in price from $8,000 to $13,000. Save input costs by renting a trailer or hiring someone to haul cattle for you. It is a good idea to own a bumper-pull stock trailer with a four-or five-cow capacity, so you have a way to haul sick cattle to the veterinarian."

Unless you are in custom farming or manage scattered blocks of land, ownership of a gooseneck flatbed also is likely unjustified. A used 35- to 40-foot flatbed trailer ranges in price from $2,500 to $9,000. If the trailer is only used to haul equipment to the dealer for repairs, it would be less costly to have it hauled for you. Another cost associated with large goose-neck trailers is that a one-ton truck is usually required to pull them.

ATVs and other small machinery

"The ATV is America's new horse and is very fuel efficient," Banta says. "Additionally, an ATV doesn't require fuel unless it is being used. A horse has to be fed whether it is working or not. ATVs can be used for multiple purposes – stretching fence wire, checking cattle, carrying feed, running errands and many other chores. One of its advantages over a tractor or other large vehicle is that an ATV can be driven into smaller spaces."

If ownership of a tractor is justifiable, purchase one that is large enough to handle the required tasks. A tractor that is too small for the job is inefficient and unsafe. A front-end loader usually adds versatility to a tractor.

However, a skid-steer may be more usable because of the varied attachments it can apply.

Welders are also commonly found on ranches and sometimes used only a few times a year. Rather than purchase this equipment, a better option may be to lease or rent for the duration of the job and then return it.

Hay balers and harvesting equipment

"One of the highest input costs that reduce ranch profits is depreciation of hay harvest equipment," says Banta. "This equipment usually includes a mower, conditioner, rake, baler, at least two tractors, hay forks and trailers. It is hard to justify this much equipment unless you are in the custom hay harvesting business."

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"Always lease farm and/or hay equipment if at all possible," Banta adds. "The best way to avoid these expenses is to avoid harvesting hay. When and where possible, let your cows harvest the forage while it is standing in the field. Consider purchasing hay that is needed during the cold part of winter instead of trying to produce it yourself. Above all, try not to practice recreational hay baling."

It's good money management to buy only the equipment that you will use often enough to justify the initial expense, meaning it will save you significant money over hiring the job done or renting equipment to do it.

Equipment purchases can erode available capital very quickly. Annual depreciation costs are real and can seriously reduce ranch profits.

Five-point checklist helps decide purchases

Banta suggests asking yourself the following questions before buying equipment.

Will it help me accomplish my long term goals?

What is my availability of capital money?

What is my availability of operating dollars?

How often will I use the equipment?

Can the equipment serve multiple purposes?

Fears writes from Georgetown, Texas.

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