Ron Bonnett laughs when he recalls the early days of the Internet.
“I can remember people saying, ‘Well, what we will ever use this for?’” says the Canadian Federation of Agriculture president. “Now before making any decision, we go to the Internet to do some research.”
A cow-calf producer from Bruce Mines in northern Ontario, Bonnett says the Net is his first stop whether checking for the latest cattle prices, what’s new in feed rations, or used equipment. In the past year, he’s bought a hydroswing haybine and a White tractor he found online.
“Before I make a decision on a make or model of equipment, I want to know how it performs, and people are pretty quick with their online comments – good or bad,” he says. “The other thing was that before, you’d jump in a vehicle and drive all day checking out different dealers. Now you go online, look at pictures, zoom in on them and then decide who to contact to see if you can make a deal.
“Where we live, we’re a long ways from most large dealers so being able to scout out equipment on the Internet saves you an awful lot of time.”
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Bonnett is actually describing two different things. Obtaining the latest market prices is a straightforward activity, and something even those early Internet skeptics could appreciate. But others come with a learning curve – such as investigating cutting-edge livestock feed research (Bonnett says he’s “plucked some good ideas” from universities as far away as Australia) or finding used equipment online.
Lance Stockbrugger has done a lot of the latter, and considers this expertise a business management skill that is central to the successful operation of his farm.
“I’ve always gone to a lot of auction sales but there’s so much more information available now,” says Stockbrugger, who farms 4,000 acres of grains, pulses and oilseeds with his brother Lane near LeRoy, Sask.
“I can go on a number of used equipment sites and find almost anything I’m looking for across the U.S. and Canada to compare prices. I’m pretty much keeping an eye out for deals all the time.”
In his yard are a pair of Super B grain trailers. The brothers picked up both for $25,000 when comparable models were going for $35,000 for a single trailer. They figure they saved about $30,000 on a high-clearance sprayer and another $25,000 on a combine.
“When I compare my costs to what I would pay for something on a dealer’s lot, I’m pretty confident I got some good deals,” he says.
Like Bonnett, Stockbrugger remembers when buying used meant driving from place to place all day.
“Now you look online for exactly what you want, there are high-resolution photos and videos, and you can search in a radius of thousands of miles,” he says.
The flip side is that the best bargains go to those who size up what’s on offer and then act quickly and decisively. Take, for example, the high-clearance sprayer Stockbrugger found on kijiji.ca last spring. It was a private sale, and he contacted the owner, and inspected and bought it that day.
However, he first called a buddy who sells that make of equipment and got some advice, including to check for worn bushings in the front suspension, how much tire wear to expect, and to look for cracks on the boom or frame indicative of hard use from driving fast over rough terrain. The bushings were worn but the sprayer was in good overall shape and Stockbrugger estimated, based on his research, it was priced about $30,000 less than the same model with similar options and hours. That spread easily covered the $4,500 a dealer charged for servicing it and replacing the worn bushings.
But if you don’t know what to look for or aren’t confident making a quick decision, then consider a dealer, says Stockbrugger.
“A dealer knows exactly what to check out,” he says. “You need to learn some of those skills so you know what to look for. And because you’re not doing it every day, you need to do some research. If you don’t know what the weak spot in that type and model of equipment is, then it’s easy to get caught.”
As well, dealers (who also scour the Internet for used equipment) generally give you more time to make a decision, often refurbish equipment, and may even offer a warranty, he notes. You also need to decide whether buying used is the right strategy for you, says Stockbrugger, who is also a chartered accountant with mainly farm clients.
“This is a management tool that will work for some people but not for others,” he says. “There are a lot of things to consider.”
Some are obvious. Used equipment has higher maintenance and repair costs and usually doesn’t come with a warranty. On the other hand, buying new raises amortization and interest costs.
Others are harder to assess. How much do you give up in fuel efficiency with older models? How will having a rainbow-coloured mix of different brands affect repair and maintenance costs? Do you lose out by not being on a dealer’s preferred customer list?
“When the Canadian dollar went up sharply a couple of years ago, I know a dealer phoned his regular customers and told them about some mid-sized tractors that were seriously on sale,” says Stockbrugger. “I never got that call.
“Also, on our farm, we’re over-equipped. But that’s because both Lane and I work off the farm and we need to get things done fairly quickly so we can get back to our day jobs.”
That’s why the brothers also sometimes buy new. For example, they allow their canola to ripen for as long as possible and then harvest around the clock, typically going 75 or more hours without pause. As they simply can’t afford a breakdown, they always purchase new swathers.
This is why so many large farms typically buy new or lease. Still, some big operators buy used while some smaller ones regularly trade in for the latest equipment.
“You have to do what works for you,” says Stockbrugger.
However, the bottom line is what counts, and equipment costs greatly affect profitability. A commonly used benchmark for equipment costs on Prairie grain and oilseed farms is $100 an acre. On 4,000 acres, beating that benchmark by $10 boosts profitability by about $40,000 each year. (Although Stockbrugger warns benchmarks are just rough guides, and notes something such as a breakdown during harvest can be extremely costly.)
“Still, it’s obviously a pretty big factor,” he says. “But it’s important to note that it’s not just one expense – it’s every expense. You can’t just say, ‘I’m going to worry about repairs and maintenance’ or ‘I’m going to worry about my chemical bill.’ If you want to be profitable and put lots of money in your pockets, you have to consider all of your expenses.”
But increasingly Internet savvy and expertise is becoming a critical farm management skill, he says.
“I have a dealer friend that I joke with when he wants to sell me a new piece of equipment. I tell him I just need a new seat for my old equipment because there is an uncomfortable lump on the side I carry my wallet.”