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Harvest Public Media is a reporting collaboration focused on issues of food, fuel and field. Based at KCUR in Kansas City, Harvest covers these agriculture-related topics through an expanding network of reporters and partner stations throughout the Midwest.Most Harvest Public Media stories begin with radio- regular reports are aired on member stations in the Midwest. But Harvest also explores issues through online analyses, television documentaries and features, podcasts, photography, video, blogs and social networking. They are committed to the highest journalistic standards. Click here to read their ethics standards.Harvest Public Media was launched in 2010 with the support of a grant from the Corporation for Public Broadcasting. Today, the collaboration is supported by CPB, the partner stations, and contributions from underwriters and individuals.Tri States Public Radio is an associate partner of Harvest Public Media. You can play an important role in helping Harvest Public Media and Tri States Public Radio improve our coverage of food, field and fuel issues by joining the Harvest Network.

Why Farmers Want New Equipment

Bill Wheelhouse/Harvest Public Media

On a hot day in late August, Kevin Bien stood amid the shade of a large gray piece of farm equipment. 

The brand marketing manager forGleanerCombines gave his best spiel to a group of farmers attending the Farm progress Show  in Decatur, Ill. Torque, efficiency and new technology were among his key points for the prospective buyers of the large machines that can run anywhere from $300,000 to $500,000.

The most expensive time we have is if the combine has to stop or the corn planter has to stop

And farmers are buying. Frequently.

It has been a good time to be in the farm equipment business the last few years, whether you’re a manufacturer such as Gleaner or the local tractor dealer. A strong farm economy paired with a couple of business tax breaks have allowed some farmers to buy the expensive new equipment every year. But with falling grain prices and expiring tax breaks, there may be a few speed bumps ahead.

There was no sign of concern, though, on a sunny, windy day in central Illinois in early September. Len Corzine was gearing up for the first day of harvest season. He and his son farm 3,000 acres in Christian County. On this day they were putting their new John Deere combine along with a new tractor and new grain wagon into the field to start picking corn.

Corzine, 63, said he’s been buying a new combine and tractors every year for a long time because he doesn’t want an equipment breakdown at a crucial moment.

“The most expensive time we have is if the combine has to stop or the corn planter has to stop,” Corzine said. “You know you’ve got to get it planted in a timely manner when your conditions are right and you know you’ve got to get it harvested.”

Corzine said the local dealer has another farmer who will buy Corzine’s used equipment, keep it a year and then trade it in for Corzine’s next combine and tractors.

Over the last six years, sales have increased for both tractors and combines.  According to the Association of Equipment Manufacturers, new tractor sales have jumped more than 10% and combine sales were up 8%. The latest report from the association shows overall sales is on pace this year to top 2012.

Technology, too, is another factor driving farmers’ purchases of new equipment. A combine can now almost drive on auto-pilot using GPS, and the driver can look at a screen and see readings on the moisture in the crop and how much has been harvested. When planting, a computer program can tell the equipment how much seed to spread and the quality of the soil.  

And thanks to high commodity prices, farmers have been able to afford that technology.

There has also been the benefit of a couple of tax advantages to help business during the recession. A business investment deduction allows farmers to deduct up to a $500,000 from their federal taxes for purchasing equipment, rather than the $25,000 level it had been a decade before. In addition, those who buy new equipment have been able to take advantage of a bonus deduction.  

The business investment tax breaks is set to reduce at the end of this year and the deduction for new equipment is scheduled to go away. Industry observers say that could slow sales of expensive farm machinery.

“I think it’s reasonable to say that we will probably see a slackening in demand for ag equipment –particularly new ag equipment,” said Roger McEowan, director of Iowa State University’s Center for Agricultural Law and Taxation.

Still, Jim Steck, with Sloan Implement in Assumption, IL, said if grain prices hold steady he expects farmers to keep buying.  His company sells John Deere equipment throughout Illinois and southern Wisconsin. Steck noted that even before high corn prices set in, he had people trading for new equipment each year and now with the growth in technology, that makes it even more attractive for farmers to shop new.

“I still think guys are going to trade equipment. Because if there’s technology changing and they don’t want equipment that’s worn out because of downtime, they’re still going to trade equipment,” Steck said.

The tax breaks are not just earmarked for farmers, but business in general. However, McEowan expects renewed calls for Congress to extend the break beyond its expiration at the end of 2013, because of sales it has helped generate for agriculture manufacturers. 

More stories can be found on the Harvest Public Media website.

Harvest Public Media’s reporter in Springfield, Ill., comes to Harvest with a background of covering state government and rural issues. For the past eight years, Bill was general manager of public radio station WUIS in Springfield. Prior to that, he spent a decade as State Capitol bureau chief for Illinois Public Radio. During his time in the Illinois statehouse Bill won several awards including Best Investigative Reporter from the Associated Press and Best Statehouse Beat Reporting from the Association of Capitol Reporters and Editors in 2004. Bill also spent eight years as News Director at WIUM public radio in Macomb, Ill., and is a past president of the Illinois News Broadcasters Association.