Buy, Lease or Hire Farm Equipment
The decision to buy or lease farm equipment can be a challenging one, and there is no one answer as to which is the best option. Really, this decision depends on your priorities, skills and specific needs. A third option which is becoming more popular as equipment gets larger and more expensive is the option to custom hire farm equipment.
Some questions to think about when making your decision include:
- Do I have the cash flow to buy farm equipment?
- Who will maintain the farm equipment (do I have this skill?), and what will it cost?
- How much use will the farm equipment get? Is the need worth purchasing or can I hire it out?
- What is the average cost for custom farm work in our area?
Below are the pros and cons of buying, leasing, or hiring farm equipment:
Buying Farm Equipment
Pro: You are building equity with buying, and you can often buy “like new” or gently used farm equipment at a decent price.
Con: Payments may tie up cash flow, or be more than your farm can handle.
Leasing Farm Equipment
Pro: Tends to have lower annual costs, freeing up cash flow, with possibility of less repairs/extended warranty. Often you can write off 100% of your farm equipemtn lease on your income tax.
Con: You don’t own the farm equipment at the end of the lease.
Custom Hire Farm Equipment
Pro: You don’t have the maintenance bills, or repairs. This option also means less labour requirements on the farm. (This can be a great option for new young farmers)
Con: Risk of spreading weeds etc on to your land through the custom farm equipment.
further information can also be found in the following links:
Alberta Agriculture has an online calculator that lets you quickly compare different scenarios. Their farm machinery calculator can be found by typing “machinery calculators” in the search engine on their website.
What advice do you have to share for others looking to obtain farm equipment? Buy, lease, or custom hire – what works best for you?