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jrslick

How to Justify and funding major purchases

How do you justify and fund major purchases for your garden?

I want/need to buy a tractor. Justifying this purchase isn't the problem, it is funding it. If I buy a tractor, it will take all my profit for a year or more to pay for it. I am not crazy about getting a loan, but it may be the only option. The reason I am not crazy is that if my market garden is a total bust, hail, tornado, drought. I am stuck with a payment that I can't pay for. I try to keep my "business" finances separate from my personal finances. How have you paid for a tractor? Was it wort it?

Thanks!

Comments (12)

  • jnjfarm_gw
    14 years ago
    last modified: 9 years ago

    JR Looking at the purchase as a business decision, how much more profit/ labor saved can I make with this purchase. If a tractor will save you x number of labor hours this can allow yuo to being other activities that can make a return on investment. If you can't make an increased profit from the tractor, it is a want and not a need. Or maybe rethink the size and price of the tractor. I recently borrowed a friend JD c ompact tractor with loader and tiller. I really want one of them but $20000+ plus investment can not be justified. but I bought a lottery ticket and guess what is on my list WHEN I win!! john

  • gardendawgie
    14 years ago
    last modified: 9 years ago

    The economy is terrible. Winter coming. You should be able to find one cheap or at auction. There are used tractor dealers. I would try craigs list etc looking for the actual seller why give the dealer a big markup. Let out word to all your friends you are looking. What state are you in. You must have agriculture newspapers with advertising. etc. a little work should find one low priced before spring.

    Times are tough. No body is spending. how about ebay. I think you can have ebay notify you when something shows up. You want it locally. there are auto movers that are low cost. they should be able to move a tractor if not too real big.

  • joe-il
    14 years ago
    last modified: 9 years ago

    I dont market farm but did farm for more years than I should have lol. I am thinking pretty hard at market farming for next year. I did it for a long time when I was much younger, sold tomatoes for "3 pounds for a dollar" How do you like those prices lol (was like late 80's) If your looking for free advice heres mine based on what I would do in your situation.

    Take some profit put down on a bigger tractor than you think you need, you will find uses for the extra horse power. (What tractor are you looking at btw?) Get a loan, hold back some profit to get through some lean months if they should arise. If things go really sour you can always sell the tractor and pay off the loan.

    Your high tunnels are an insurance policy against bad weather. Drought can be overcome with drip tape. Ht's will afford some protection against hail. If a tornado hits you have other problems to worry about. Its hardly weather that hurts farming its the prices/ sales/ competition. That is of course the biggest hurdle. The worse thing that could happen is to have an excellent growing year and the markets (and peoples backyard gardens) bulging with produce and low prices.

    The flip side.

    The biggest problem I have with getting into market farming ( or farming in general) is what your up against. Reinvesting profits. All your work (money)this year is going to go into buying a tractor, seed , potting soil, fertilizer for 2010. Next year it will be something else. When do you get ahead? How does it compare to getting a part time job?

    Can you go another year without a tractor? are there ways to get around not having a tractor? Like borrowing/rent one a couple times a year. What about using mulches (plastic /straw) so you dont have to cultivate. I plan on growing in plastic with drip tape and laying straw between rows.

  • jrslick (North Central Kansas, Zone 5B)
    Original Author
    14 years ago
    last modified: 9 years ago

    Joe-il: Thanks for everything you said. It makes perfect sense. I grew up on a family farm. I have always had to make due without things or make other things work.

    Currently I am a Full time Hobby Farmer and Full Time middle school Math teacher. Once school starts, I "Burn alot of Midnight oil" it is not uncommon to get 4-5 hours of sleep 2-3 nights a week. I am currently market gardening on 1/2 acre. I have 3 home-made High Tunnels (check out the needed equipment post on this forum) I am going to be building a 4th one. Next year is already looking better. All the tunnels are paid for and I don't have to repay the credit card. I am looking to expand my garden next year. I am going to add another 1/4 acre for sure (don't tell my wife!) and maybe up to a half acre. I am looking a 3/4 to 1 acre next year in addition to the tunnels. Why? I have been so intensely growing on my limited space, I want to spread things out. I am tired of stepping on one crop to pick the next. I also want to grow more vining crops. Winter Squash, Pumpkins, melons, etc. Our home is surrounded by 160 acres of farm ground. There is a huge ditch/draw that I am looking at farming next year. They have been digging dirt off one side and it is really opening up the area. I know who farms and who owns the ground. They already offered me use of the well (I have to get it going again) and said we could talk about renting more ground from them.

    I am going to invest in drip tape next year and use mulch again. With a new baby and very wet spring, I was just happy to get my crops in. I never had time to mulch. I noticed a reduction in production. I am going to use old straw again. In Kansas, old straw bales are dirt cheap to free (if you know the right people!)

    If I have to, I can ask neighbors for use of equipment. I just hate having to ask. I am a very independent person. I do have an option for a tractor. My deceased grandfather had an old Massey that has been sitting for 3 years. I don't think it has been ran at all in that time. I am going to get my mechanic Brother in Law and we are going to see if we can get it to run. If so and everything seems to be in good working order, I am going to move that to my place, with the grace of my Grandma. I don't want to sink alot of cash into something that could or could not work. But 200-300 for fluids, plugs, filters, belts, hoses, and fuel maybe worth it. I know it was running and was in working order prior to the parking of it. We will just have to see. I am not getting my hopes up, that is why I asked this question in the first place.

    Ideally, I am looking for a 25-35 hp tractor. Brand doesn't matter. Although I would prefer a Case, Ford or John Deere. We have all three of those dealers in town. It would make a parts run a piece of cake. I would like a 540 PTO,3 point, Hydraulics, loader preferred. I was looking at some older models, but they are hard to come-by with those options. I found a Case-IH Cub tractor with cultivators and a plow, but it was too much at the time. Also, it was pretty small. I could see it being very useful though.

    When do you get ahead you ask? When you sell the land for mega bucks to build a hospital or Mall. That is where the money is!

    Sorry for the ramblings, I guess I will see if we can get the old tractor running and go from there. If not, maybe borrow this year and hope for the best.

  • joe-il
    14 years ago
    last modified: 9 years ago

    posted Mon, Sep 21, 09 at 1:45

    ...thats AM.. your not kidding about burning the midnight oil. lol

    Masseys are great tractors , as they all were back then. My dad found a M.F super 90 in a farmers field, paid 500 bucks for it , engine ran but wouldnt move. Drained the water out of everything cleaned the clogged hyd pickup screen , put new fluids in it and away she went. A 60 hp wide front diesel tractor for $500. I should have kept it. I painted it real nice , pretty as can be. crap. What I wouldnt do for it now.

    Clean the points , new plugs , wires , cap, fresh gasoline clean the sediment bowl, and a good battery and she will pop right off for you. Cant think of anything more satisfying than farming with grandads tractor. It needs to stay in the family. Hope it does. Post a pic when you get it going, I love old tractors.

  • joe-il
    14 years ago
    last modified: 9 years ago

    I should add that if its a diesel then just new filters and fuel and good battery. The perkins diesel engine is very good. The one we had ran with the nastiest fuel I have ever seen. (of course change oil when you get it going)

  • jnjfarm_gw
    14 years ago
    last modified: 9 years ago

    Sounds like an old massey or an 8n ford should be ok for what you are wanting to do. they can do a lot of work for very little money with the right tools(tiller, disc, mower etc.) john

  • dirtdigging101
    14 years ago
    last modified: 9 years ago

    I was in the same situation or so I thought a few years ago. When I realized well actually some one pointed out to me the question was Why do i Need a tractor? the more I thought about it in that light i figured I did not need a tractor. Bought a dump trailer instead now I haul a lot of free or very cheap mulching materials and do much less work and have a more intensive operation. utilizing more of my land. which I do not have a lot of so the tractor made less sense. my next purchase will be a large leaf/debri vacuum to load the trailer. or to unload it by blowing the material right in place.

    Just another angle to look at.

  • hanselmanfarms
    14 years ago
    last modified: 9 years ago

    Jr, we just got a Massey Harris 44 gas, wide front a couple of months ago. I came with a bush hog. It needed alot of work, someone painted it ORANGE, should've been RED. You started it with a screw-driver. We paid $900 (the guy lost his job and wife said get rid of it), and have put $200 more in it for re-wiring, belts and Ujoint for mower. The wheel falls off the mower every so often, IF we don't tighten the bolts. But it was the best thing we have done yet. It also doesn't have a 3-pt hitch, so we have to find the 'pull' type of equipment.

    Keep in mind, we have done market gardening for 10 years now. Before Massey, we rented a tractor/tiller from the rental place in town (costs about $300/weekend 8hrs), tilled everything we could in the time we had it. One year, we borrowed a relative's tractor and a neighbor's disc. Neighbor relations still good, relative not so good.

    The weeds got ahead of us every year, and this year after the Massey we actually have mowed down areas, some of them haven't been mowed for years and years.

    How we got the money? We worked to be able to pay all of our bills out of 1/2 month's worth of money and took the other half and bought the tractor. Then the next month, played alittle catch up and bought the repair parts.

    Next thing, find a disc, locally if possible, since we don't have a truck or trailer to go it.

  • sunnfarm3
    14 years ago
    last modified: 9 years ago

    I have been a full time market farmer for 36 years and as a kid I invested my college education money in new high quality farm equipment and it has served me well. I have a good life though I don't have the perks you hobby farm guys have. First thing you should do is decide how serious you about market farming and if you will still be here in 5 years. If you are serious then go for broke and buy whatever you need. Be careful because there is a lot of rusty iron out there that will make you more of a hobby mechanic than a farmer... Bob.

  • prmsdlndfrm
    14 years ago
    last modified: 9 years ago

    How many acres do ya put in to garden ? If more than 2 you need a tractor , less than 2 you dont. I just boght a JD 5103 50 hp 2006 with warranty 2 yrs loader , 12 foot boom sprayer and a 2 row precision planter with multiple seed plates for 20k at 5 years thru JD credit at 2.5 % which is a little over 5k a year. I plant 8 acres of berries and vegetables though. My profit and size justifies the purchase. Also I have crop insurance thru farm bureau incase something were to happen so that all my expeses would be covered. My experience with tractors is to only buy one that has available parts and dealers who will repair them ,my first tractor was a Chinese job and I could not get parts or service, also get a tractor big enough plus as was stated earlier , I failed that one with Chinese tractor also. I now have 2 tractors, a Ford 5000 a 70hp , 1976 and New Holland carries the parts and services it, I paid 10k for it from a New Holland dealer who also put o loader on it and a year warranty for that price. Then I have my JD. Also you are a farmer if you sell at least $1000 worth of products, and as such are entitled to all tax laws as such. Example you should pay no sales tax on anything you buy for your farm use, also all machinery is tax deductible and depriciable. I hope I have helped , if you have any questions I might be of help on holler
    josh

  • divadeva
    14 years ago
    last modified: 9 years ago

    Our situation is a little different, as we have a timber preserve, and we only grow crops on 2 acres. But we came to a compromise on equipment long ago. We only buy used. It has to have a common PTO. If the brand doesn't have a particular tool we've found that there is always someone local who can adapt one or make one that fits...but you have to plan a year ahead because it's not a fast process.We use a mini excavator on our land more than a tractor. We made a bad purchase once with a tractor, we were too cheap and didn't get the 4-wheel drive we really needed.If we'd rented it first we would have known that. We use a skid steer more than the tractors.
    Your Massey is exactly what we would go for. I have to admit that when we go to the county fair we drool over the new equipment. If I had my druthers we'd have a $129K "Brusher". But, to pay for that one of us would have to do brushing commercially for the next 6 years, at which time we'd need to invest in a new machine due to the enormous wear and tear. It's not where we want to put our energy.
    You might want to form a schedule S corporation...your personal assets are protected from a bankruptcy of your business. It's a hassle every year, though, on the paperwork.
    Most people around here don't purchase a tractor for anything under 5 acres...they buy one or two Gravelys
    instead. Hobby Farms ran a review of smaller tractors for smaller farms last year...they looked impressive. I'm betting that you need a smaller unit than you've been thinking about.

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