Hired horsepower pulls its weight
Published 03/06/2015 | 02:30
We had to hire a tractor for the family farm last week when my cousin was taking first cut silage in the form of round bales.
It was a great crop, nice and heavy and just right for cutting, but the only issue was that the land was around 14 miles from the home farm. Whatever way we looked at it there was quite a haulage distance involved.
With the forecast good for a few days we decided to go for it and lined up plenty of horsepower (and manpower) to get the job done in one day.
After making some intial enquiries I soon realised that a few of my local dealers are actually no longer hiring tractors.
The main reason, apparently, is that a lot of the time hire tractors tend to come back 'incomplete.' It seems the appeal of a shiny new top link can be overwhelming for some.
Anyway, after that I cast the net a little wider than my home county of Waterford and rang the well-known John Deere agents, Templetouhy Farm Machinery (TFM) in Clonmel.
David Murray of TFM organised a 140hp John Deere for me for a few days and it did the trick for us over the weekend. Mr Murray said the TFM hire business is thriving at the moment, with this obviously being one of the busiest times of the year for farmers and contractors seeking an extra tractor for silage or slurry work.
The experience got me thinking that renting a tractor is your only man when you need it for short spikes in demand.
A bought tractor or machine is just another fixed asset and like any fixed asset it will depreciate sharply with the rate of depreciation frontloaded onto the newer years of ownership.
It seems strange that tractor hire hasn't been more popular with Irish farmers over the years but I think this is going to change.
The cost of ownership of a 140hp tractor valued at €90,000 is a serious one. Before taking out your cheque book you need to sit down and do your sums carefully. Ask yourself the following questions: What do I need the tractor for? How many hours per year will I be working it for? And will it pay for itself over the next five years?
If the answer is yes, then you should probably invest in a new tractor. If the answer is no then you have automatically answered the first question as well. For those of you in this category renting is the better option.
Many contractors opt for the renting approach as well, and take out an extra tractor or two to increase work rates and keep up with farmer demand. The idea is that the extra tractor is rented for a few weeks at the busy shoulders of the year in spring and late summer/autumn.
In this way the contractor will get the benefit of the extra work the hired tractor gets through when the weather suits and demand is high.
When work is quieter, the contractor can hand the tractor and keys back to the dealer and settle the bill for whatever he owes.
The tractor doesn't have to sit idle in a shed through quieter winter months while the contractor worries about how he is going to meet repayments.
Weekly hire rates
It isn't difficult to find out what typical daily and weekly hire costs are. A quick internet search will throw up a number of well-known tractor dealers like TFM in Clonmel or WR Shaw, the New Holland dealers in Laois.
The good news for those looking at taking on extra tractors is that hire rates have dropped by over €100 per week since the 2008 economic crash.
TFM have 105hp tractors like the John Deere 6330 available for weekly hire rates from €490 plus VAT.
There is a significant discount for longer term deals, where you can hire that same tractor out for €200 plus VAT per week for 52 weeks, the equivalent of €10,400 per year.
The only caveat is that if you put more than 1,000 hours on the clock per year, there is a surcharge of €4 per exceeded clock hour.
The tractor we took out, a 140hp 6140R, hires for €800 per week. Hiring by the week is much more expensive than hiring out a tractor for longer periods where you can negotiate, but then again if you need it for long periods should you be hiring it the first place?
It's food for thought, but the hire option certainly solved a problem for us last week.