Buying equipment is one of the largest investments that a farm business can make. Large amounts of money are committed and some of the equipment is used only a few times during the year, and in many cases it is difficult to sell this equipment at a suitable trade value. Furthermore, the machinery needs to be constantly maintained and eventually replaced.
Reasons for replacing machinery:
- You need to replace machinery when repair costs exceed the benefit of using the machinery.
- Machinery that is not reliable can lead to losses, both in time and produce.
- The need for capacity can be a good reason to upgrade your equipment.
- New technology can mean that replacing your machinery is profitable for your operations.
Planning when and how the equipment will be replaced can mean a difference of thousands of rands in annual production costs. So, when do you make these replacements?
a) Keep it until it no longer functions
Some farmers hang onto machinery until it no longer operates and it is not worth fixing. You run the risk of machinery breaking down during a crucial time and/or having to arrange finance on short notice.
b) Replace when cash is available You can choose to replace machinery only in years when income is above average.
Can you predict when extra cash will become available? What if the machine breaks down before there is extra cash to replace it?
c) Replace something every year
You can plan to spend almost the same amount on new machinery every year by replacing one piece of equipment every year. This helps to avoid making large purchases in one year, but you should take care not to replace the machinery before it has reached the end of its economic lifespan. This will benefit you if you have not only made provision for capital replacement but also have some cash reserves. You can then put down a deposit and borrow less.
d) Replace regularly
This minimises the risk of breakdowns and costly repairs by replacing crucial machinery every few years. Even if the equipment breaks down, the repairs could often be covered by the original warranty. This approach is more feasible if you cultivate a large number of hectares. Several finance options exist. Check with your bank or agribusiness to find which best suits your operation.
Source: adapted from the article “Provision for capital replacement” in AgriReview. Find these publications at www.standardbank.co.za.
2. Commercial farmer points of interest
It is possible to equip a wide range of tractors with programmes linked to satellites that enable the tractor to “drive itself”. The sight of tractors being built now without any driver's seat is a new step though! Find the clip on Youtube explaining how one such automomous tractor works in tandem with other vehicles in farm operations. (The Autonomous Farm Equipment Market size was valued at over USD 55 billion in 2016 and its demand is projected to cross 3 million units by 2024).
Precision farming is the way of the future for the commercial farmer in the quest to limit wastages and improve efficiency, and these programmes play a vital roll in this farming method. Refer to the "Precision farming" chapter or enquire at your dealer for more information.
You can extend the life of your air filter by removing up to 90% of the dirt and contaminants before it reaches the filter. The pre-cleaners are designed especially for equipment operating in very heavy dust and debris environments such as agricultural and construction vehicles and mining equipment. The Donaspin™ Pre-cleaner has a durable, corrosion-resistant steel construction. There is no maintenance required and it has no moving parts.
The Pre-cleaners are self-cleaning and require no maintenance. They also offer a lower restriction which means:
Source: Donaldson Filtration Systems Pty (Ltd). Call 011 9976000 or visit www.donaldson.co.za.
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