The Rural Voice, 1979-11, Page 7New or
Used?
Help is available
for the decision on
which sort of
equipment to buy
rMet
Kent Percival, who teaches farm management at the
University of Guelph, demonstrates the Texas In-
struments calculator which can be used as a
mini -computer on the farm.
BY ALICE GIBB
To buy used or new - that's the question facing anyone buying
either a family car or farm equipment. Purchasing new
equipment offers the advantage of capital cost allowance breaks
on your income tax and solves the initial repair problem while
the machine is still under warranty. Buying used equipment
on the other hand offers a substantial reduction in price and the
machine has already proven its' reliability.
Kent Percival, who teaches farm equipment courses at OAC,
points out the farmer buying equipment has his choice of
tradeoffs -he can have a piece of new equipment under warranty,
or he can buy a much less expensive piece of reliable used
machinery and each alternative can be justified economically.
Mr. Percival said today, with some farmers turning over new
machines every second year, there's always someone "out
there" ready to buy them.
In his agricultural management classes, Mr. Percival said
students tend to use an eight year lifetime figure for machinery
calculations. The figure of course can vary in fact, depending on
the individual farmer, and the way he maintains his equipment.
Mr. Percival said students base equipment purchase decisions
on three factors. A farmer will consider purchasing equipment
when his operation outgrows the machine or machinery he
already owns. Then of course, since machinery has a wear
lifetime, equipment can just plain wear out. Finally, there's the
obsolence factor - some equipment is replaced by better
machines.
FARM MACHINERY RESEARCH
Mr. Percival said right now a whole new area of research in the
farm machinery field is starting in the United States.
Studies are being carried out on warranties, the reliability of
equipment when first designed and repair and maintenance. Mr.
Percival said it isn't any secret that in order to reduce initial
costs, manufacturers of farm machinery are cutting corners. He
added the whole area of maintenance is one of the major
problems facing farmers and explains the reason some operators
opt to turn over new machinery quickly is that this way they don't
face maintenance costs.
Although much of the decision making in buying equipment
depends on the farmer's own operation and equipment needs,
there are some services which can help him.
CANFARM SERVICE
One is the Canfarm service, originally devised by OAC staff,
called "Machinery Planning: Buy Versus Hire" and "Repair
versus Replace." Both forms can be filled in by the individual
farmer, and then the Canfarm staff run the information through
the computer, breaking the costs down to a per acre figure. In
other words, how much will it cost an acre to purchase the
machine versus how much per acre to custom hire the work done.
Although the form is perhaps most commonly used with
machinery such as the combine, Kent Percival said it can be used
for other equipment calculations, if the results are interpreted a
little differently. The form uses informaton such as taxes,
insurance, interest rates, storage costs, operating costs of fuel,
labour and maintenance and depreciation estimates to come up
with final per acre figure.
The second machinery -related service offered by Canfarm is
the repair versus replace form. Here the farmer can calculate
whether a piece of equipment like a tractor should be repaired or
replaced,buy a new or used machine.
Don McArthur, of the Guelph Canfarm office (phone
921-8000), said these services are available to farmers at about
$5 a run. County ag offices will also assist farmers in obtaining
the forms and filling in calculations.
Stan Pacquette, of the Huron County OMAF office, said at this
point, his office hasn't had a demand for the service.
ON-FARM CALCULATOR
Another recent development in the farm management field is
a pocket calculator, manufactured by Texas Instruments, which
comes with a number of farm programs, which means the
machine can be used like a mini -computer.
Mr. Percival said the TI -59 calculator, which sells for
approximately $359 and is available in Canada, comes with
programs by two American universities.
The Iowa State University programs, which are available
THE RURAL VOICE/NOVEMBER 1979 PG. 5