Summer Series: Old machines,new technology

One of my first jobs was working as a mechanic’s helper at a farm equipment dealership in the late 1970s. Among my duties was using an F-250 Ford pickup and gooseneck deck trailer to pick up and deliver equipment. I even recall delivering a combine on that unit. Granted, it was a smaller, older machine even for the time, but it was still in demand by average-sized farmers of the day.

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Recently, I filled in as a temporary replacement for a driver at another dealership, delivering and picking up equipment. There was a little over 40 years between those two jobs. The truck I used this time was a T800 Kenworth pulling a tridem RGN trailer with loads that have sometimes pushed the truck’s gross weight north of 80,000 pounds — with a permit, of course.

That’s how the scale of farm equipment has changed in my lifetime. And the farmer that took delivery of that earlier combine would laugh out loud at the sticker prices for new equipment these days.

Farm size and machinery expectations have grown significantly over the last 40 years. But not on every farm. There are still many farms without high-end machines and the crew of employees to operate them, including many that are more of a lifestyle operation with income supplemented from off-farm jobs. YouTube is full of vloggers who document their day-to-day adventures on those types of farms.

For many of these farmers, the idea of buying brand new equipment has become more of an aspiration than a reality. Instead, they’re making the most of used machinery.

New iron and new tech

Many years ago I had a conversation in Germany about how most young German farmers dreamed of one day owning a Fendt tractor. Fendts, at the time, were among the few tractors with a very high level of technology, and their price tag reflected that. It took young farmers quite a few years to build a big enough bank account to buy one.

Famers took pride in owning German-built machines. On top of the comfort and convenience Fendt offered, they were also a kind of status symbol.

While there’s nothing quite like that new cab smell — just like that new car smell — is it still practical for many farm operations to consider buying new? Or is it even necessary? An average high-horsepower MFWD tractor will be somewhere in the vicinity of $500,000, depending on horsepower. A new top-of-the-line combine or four-wheel drive tractor can easily top $1 million.

A machinery brand executive once made a comment to me that spelled out pretty clearly what manufacturers see as the big reason more farmers are quicker to trade in for new machines.

“All machinery built in the last decade or two can still go out into the field and do the job very satisfactorily,” he said. (I’d go so far as to stretch that age limit quite a bit further in many cases.) “Incorporating advanced technology into new equipment is what brands will need to do now and into the future to convince farmers to spend their money on the newest machines.”

New technology gives buyers something they don’t already have in their existing equipment. Brands are spending a lot on R&D to make machines smarter and to automate as many features as possible, with full automation on the horizon.

“Productivity and yield for farmers … that’s where our (R&D) investment is going,” said CNH Industrial’s CEO Scott Wine during a technology day presentation in the spring of 2023.

Smart machines and automation can help increase efficiency and raise yields for sure, but the trade-off is the price of admission, so to speak. And the net return, if any, will depend on each operation’s specifics and needs.

How old can you go?

The year-end numbers on a balance sheet are also important for those choosing older, lower-cost equipment. But there are other factors besides affordability.

New equipment under warranty is likely to perform pretty well with limited downtime. Although it’s likely, it’s not a given. I once bought a new tractor and after just 25 hours on the clock it had to go back to the dealer for a major rear-end overhaul due to faulty assembly at the factory. The model was so new some parts had to be shipped in from Europe. It spent weeks sitting at the dealership.

My case was obviously an extreme one. Typically, when a new machine breaks down, a dealership technician will soon head out to determine the problem and fix it on warranty. And that’s important in some operations. But that kind of reliability may come with significant stress associated with living with the size of loan or lease payments.

It all means the cost of ownership for new machines is predictable, but very high. By comparison, the cost of running used equipment is likely to be lower but not as predictable. An older machine might perform flawlessly one season and leave you stranded the next.

Is that a stress that’s more suited to your personality and farming considerations than losing sleep over a finance payment?

If choosing the used equipment option, the first thing to think about is how old do you want to go? Here’s an example of what needs to be considered.

Ritchie Bros. Auctioneers recently sold a 1982 875 Versatile tractor at a sale for $29,000. They also sold a 2017 400 Versatile for $355,000. Those are both within the price range you’d expect.

The two tractors have similar capabilities with horsepower ratings of 360 and 400, respectively. But they have very different purchase prices and probable reliability levels, not to mention comfort levels. Which will best meet your needs and fit your definition of an ideal purchase? Or are you operating on a scale that allows you to buy both and keep the old 875 in reserve for some jobs, just in case? Compared to the price of a single brand new 400 horsepower model, you’re likely still money ahead.

But consider that the 875 will have a Cummins engine with a mechanical injection pump. No pesky computer, sensors or emissions system to fail, causing the tractor to derate its power or quit completely. Computer, electronics and emissions systems are the most common failure points on modern machines of all types, and often only a dealership service department can identify those problems and correct them, because of the proprietary software needed to diagnose them.

The 875 won’t give you any of that trouble. And if you need to completely overhaul its 855 Cummins engine, the parts are still readily available with rebuild kits available for around $2,500.

The cost of an overhaul kit for the QSM11 Cummins in the 400 is similar, but it is an electronically controlled engine. That means the 875 overhaul might be simpler to tackle in their farm workshop for anyone who isn’t as skilled as a Red Seal mechanic.

If you’re more than a little handy with a set of wrenches, you could opt for the 875, invest some money in parts and time and get a pretty reliable machine for well under $50,000, a tiny fraction of the cost of a new tractor of similar size, although finding some replacement components for older machines may require hunting for a donor machine at one of the few remaining wrecking yards, or looking for a parts tractor on Kijiji.

In this case, investing in a very good and well-equipped farm shop makes a lot of sense.

On the other hand, for someone who isn’t that handy in the shop, the newer, lower-hour 400 may be the better bet, unless they have a good friend who just happens to be a diesel mechanic.

Old dogs, new tricks

Maybe you want some of that new technology that goes well beyond guidance, such as features on the seed drill like zone control to prevent overlaps, or variable rate capability. New machines will definitely give you that, but increasingly those kinds of features can be added to older equipment. Going old school doesn’t necessarily mean going without some level of technology.

Want to put GPS auto guidance on that 875, which didn’t come auto-steer ready from the factory? Outback Guidance, for one, can set you up with a bolt-on kit for between $10,000 and $15,000. Raven’s RCM (Rate Control Module) system can give a variety of older drills variable-rate capability, as long as they have hydraulic metering systems.

Getting RCM installed on drills may require some specialized assistance from companies like My Precision Ag Ltd. in Rocanville, Sask., which specializes in that.

“You can’t just take it out of the box, plug it in and go,” said Matthew Yanick, owner of My Precision, when I spoke with him this past summer. “You have to change some connections and that kind of stuff.

“There are more and more people wanting to upgrade tanks to get the newer technology.” he said. “They just want to be able to do what the new tanks can do.”

If you want to add sectional control to a drill, there are some after-market manufacturers, such as Romafa Metal Works in Arborg, Man., that build updated metering systems to accommodate that technology. Romafra offers new metering boxes for John Deere, Flexi Coil and Morris drills.

Of course, there are still older, cheaper seeding equipment options other than air drills that can get the job done efficiently and won’t put comparable hydraulic demands on a tractor. But they aren’t compatible with VR or sectional control technology. So once again the question is: “Will the rate of return justify the increased investment in implements to put behind the tractor?”

Increasingly, major brands are taking notice of the farming segment that can’t or won’t pay the kind of money they demand for a new machine. They’re starting to look seriously at the retrofit market as another revenue stream for their businesses. That’s good news for producers running older machines and wanting to get more out of them.

In his third-quarter earnings address to shareholders, AGCO president and CEO Eric Hansotia said the brand aims to offer “autonomous retrofit solutions” for grain cart hauling by 2025. It will also offer a retrofit targeted-spraying system by 2024 that will work on any brand of machine. That’s two full years ahead of the company’s goal of releasing the system as an OEM option on new sprayers.

John Deere, too, is offering a limited range of upgrades for its late-model S Series combines and sprayers to bring their features a little closer to the current range of machines.

For its part, CNH Industrial spelled out just how important precision farming technology will be to the company in the coming years. A good deal of their revenues will come from providing retrofit solutions to farmers.

“CNH Industrial’s full year 2022 agriculture net sales are expected to include an estimated $900 million contribution coming exclusively from precision technology components,” reads the company’s press statement from early 2023. “We forecast a 10 to 15 per cent annual growth rate across the next two to three years and are aggressively pursuing an estimated US$1 billion in 2023 net sales contribution from precision technology components. Precision technology components include technology contained in whole goods, retrofit components and Raven third-party sales.”

It means a good portion of the digital wizardry on the newest and shiniest machines can now be bolted on to older equipment. Is that food for thought?

– This article was originally published in the January 2024 issue of Country Guide.