Agricultural Equipment Leasing Drives Modern Farm Economics
Agriculture is an ancient part of society and industry. People have been farming land and grazing livestock for centuries as a way of life and to feed themselves. There are two main parts of agriculture, which are subsistence farming and farming to make a profit. Subsistence farming is based on self-sufficiency where a farmer’s sole focus is producing enough food to feed their families. This form of agriculture is more common in poorer and third-world countries. Farming for a profit is very common in western and more developed countries and depending on the scale, can be a very profitable business.
For the average family involved in agriculture they are often no wealthier than the rest of us. Agriculture for them is a way of life and their family might have done it for generations. Often, as with all business and asset values, an agricultural business can go through very high periods of economic growth and then into low periods of stagnation. To allow farmers and businessmen to go with the flow of market cycles and economic upturns and downturns, leasing of equipment used in their agricultural sector is very important. This is where equipment needed for a particular purpose for a particular time is not actually purchased but leased or borrowed only for a certain period of time.
Examples of equipment leased are: For the growing of crops – tractors, harvesters, hay balers, any type of ploughing or seed planting machines. When it comes to other farms or even cattle stations, graders, loaders, other heavy machines, cattle trucks, complete road trains, small tractors and cars are often leased. These machines might be used for a particular time and then returned. By doing this you only have a machine or implement in your possession when you actually need it. This is a very common practice in this industry and has many advantages.
Reasons for leasing equipment is that it is only needed for a short period of time and the down time when you aren’t using it is not costing you money in interest and other expenses and also there are tax advantages in some countries. However probably the most helpful part of being able to lease agricultural equipment is the cost saving of a capital investment. Many people and business simply can’t afford the cost of a capital investment in a large machine such as a powerful John Deere tractor or an expensive harvester but they need them for a particular time of the year.
The most difficult thing about farming and agriculture is that your actions are always subject to the climate and the weather. This applies to all areas of agriculture, when to plant or harvest a crop or when to buy or sell livestock is always dependent on the weather conditions. This can be very difficult is some of the more extreme climates around the world. Leasing agricultural equipment makes it just that little bit easier for an agricultural business or company to survive. Often it is a dominant factor determining the sustainability of an agricultural enterprise.