There are many items of equipment that a farm needs to survive, from vehicles to machines for processing and harvesting. This equipment costs money, and it may not be the wisest move to buy outright. Why do we say this? In this article we will be comparing the merits of buying or renting farm equipment and considering the benefits and pitfalls of each. Let’s start by talking about buying farm equipment.
The Pros and Cons of Buying
The type of equipment a farm will need to perform depends upon the type of farm. A dairy farm, for example, will need equipment for milking the herd and so forth, while an arable farm – one which grows crops for food or other uses – will need machinery to tend the fields. This has a great effect on the cost of the relevant machinery.
Let’s consider an arable farm that needs to harvest its crops using tractors and attached equipment. Tractors are not cheap – expect to pay around $30,000 for a good one – so you need to have the budget in place. This may involve raising a loan. What are the benefits of buying a tractor? Here are a few:
- You own the asset outright.
- It’s there for use without delay.
- You will become familiar with the machinery.
Those are a few benefits. Now here are a few possible pitfalls:
- You will need to pay for regular maintenance.
- It will need to be insured.
- Depreciation on farm machinery is steep.
In short, you have the advantage of owning your own tractor, but you will never get back the money paid for it when you come to sell, and it will cost you money throughout. Let’s look at the rental option.
The Pros and Cons of Renting
There are many companies that rent out agricultural, construction and industrial equipment and this method is becoming ever more popular. Let’s go straight to the benefits of renting farm machinery and equipment:
- Rental costs are not as high as purchase costs.
- There are no maintenance costs.
- Insurance is paid by the owner.
- You can rent for when you need and not at other times.
Now, a few of the downsides of renting:
- Unfamiliar machinery may take some learning.
- The precise equipment you need may not be available when you need it.
- It is not there for emergency use.
Those are a few of the pros and cons of renting farm machinery, but which is the best way to go?
We need to go back to the start of this article and repeat a point, which is: whether it is best to rent or buy depends upon the type of farm. For an arable farm that harvests once a year there is no need for expensive machinery such as a combine to be on site all year. Fr the dairy farmer who milks all the time, that equipment needs to be on site permanently. Check out rental options for farm equipment and see if you could save some money.