Your machinery is one of the largest investments on your farm. An equipment maintenance schedule will help you get the most out of your machinery, but, eventually, you’ll need to replace it. With all your expensive equipment, it’s not usually feasible to replace them all at once. Here are four strategies for you to consider for replacing your machinery.
Strategy #1: Replace Farm Equipment Frequently
Using this strategy, you aim to minimize the risk of costly repairs by trading in your key machines frequently. Consistently having newer farm machines also means you have a better chance of your repairs being covered by warranty. If you are responsible for a large number of acres and can’t afford to have a disruption, this may feel like a safe strategy for you. It may seem like a more expensive approach, but some of that cost could be offset by less time off if a breakdown occurs, allowing you to farm more acres.
Strategy #2: Replace a Piece Every Year
If you’re looking for a strategy that’s a little more modest about spending, this may be a good choice. With this strategy, the goal is to replace one or two pieces of farm equipment each year. Try to put the same amount each year in your budget if you are already prepared to make the replacements. This does mean you may end up replacing machinery before it is truly necessary. If you prefer to finance machinery from your cash flow rather than a loan, this could be a good choice for you. The strategy is the strongest when your operation is earning about the same every year or you have significant reserves.
Strategy #3: Replace When You Have Extra Cash
The third approach is to postpone any major purchases until a year when your cash income is higher than usual. This takes pressure off your budget and keeps it from cutting into funds for other purposes. The largest downside would be you aren’t always sure when you will have a higher income, and a machine could become severely rundown or unreliable before you have the cash available.
Strategy #4: Don’t Replace It
Or, your strategy could simply be hanging onto your farm machinery until it no longer works and is not worth repairing. It may see like the cheapest option, but it is high risk. A machine could quit working during a crucial time and you may need to get financing very quickly. If you aren’t concerned with the latest agriculture technology or the shiniest new machinery, this could be your go-to strategy. This strategy works best if you have a lot of flexibility in your operations. You’ll also need patience and the ability to make repairs and do maintenance.
No matter your strategy, we’re here when you get a new piece of equipment. Our Replacement Cost Coverage for Machinery is available for machines up to eight years old. We’ll help pay to repair or replace equipment if your machinery is damaged by a covered occurrence. Reach out to your Farm Bureau agent for more information.