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MN | Well I sense you have minimal experience with grain farming so here goes: First most machinery is paid on a yearly basis(minor detail) Next, most operation that are buying a 125k tractor are running lets say 1200 acres. Lets say they are 50/50 corn soy rotation-pretty common here. Now you have 600 acres of corn, I just figured my rough input cost the other day and without equipment I was around $550(I have high input costs-land), now the crop insurance yields here are about 165(been able to get this pretty easily the last few years) Now for easy figuring lets say the price is 5.50(insurance price is set at 5.68 so right now this is realistic) So we take 165 times 5.50=907 per acre less expense= about 350 per acre net or just over 200K on the corn acres. Now you still have 600 acres of soybeans which won't net as much but you should still make a profit. So lets say you just use that corn income for machine purchases, if you are spreading the cost over 5 years you can make payments on 10 pieces of equipment worth roughly $100,000(5 payments of 20k) That would cover most of a machine lineup. Keep in mind these are all rough numbers and are rounded some just to give you an idea. I also left out interest, taxes and what many will jump on: the fact that next year corn will be $2 and the yields will be 50% of normal or something along those lines- you probably have a good idea now. | |
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How do you afford expensive tractors / machinery?
