4 ms·

Farming machinery and all heavy equipment/large capital investment items are moving to a use based model. Manufacturer raises debt (his cost of capital is low),

Farming machinery and all heavy equipment/large capital investment items are moving to a use based model. Manufacturer raises debt (his cost of capital is low), builds and leases machines to the customer. Customer pays per ton of grain harvested, per hole drilled, per cubic metre of rock crushed etc. As a farmer why would you want to pay for a machine that is idle most of the year outside of harvest time?

ohadron 5y ago
For harvesters, the machine will probably be idle most of the year no matter what, since it doesn't make sense to transport it to the Southern hemisphere. So ultimately the farmer will be paying for it.
- bluGill 5y ago
  Many combines are sold to custom harvesters. They buy them when harvest starts in the south (North America, other continents have different patterns), work them for 16 hour days, and sell them in the north when the season is over. They may be only one year old, but they have been worked hard - equivalent to 75000 miles of city driving on a car! Someone will still buy them (dealers in the north know this is happening and have plans to deal with the influx) as they have a few more years of life for someone who does their own harvest, but they are well used by this time.
aivisol 5y ago
Because the harvest happens at the same time for all farmers? The harvesting machine will be idle for most of the time anyway, so there can only be one renter at the time (unless you will ship it to Southern hemisphere for half of the year).
TheRealDunkirk 5y ago
> As a farmer why would you want to pay for a machine that is idle most of the year outside of harvest time? Because you want to invest in your business? So that, once it's paid off, you can stop giving part of your profits to someone else? You know, the old 7-year-payoff rule of thumb? That old chestnut? This is the problem with most industries in our over-capitalized system now. In every sector, large companies are trying to monopolize at least a horizontal -- if not an entire segment -- so that they can extract rent from the market forever. The very notion that people are allowed to own things, and not pay service fees till the end of their life, is utterly vanishing, from huge farm machinery to freaking light bulbs. Letting companies permanently insert themselves into our daily use of their products is a total change of mindset, and one which people over 40 will probably never be comfortable with. There's something fundamentally opposed to the idea of a free society when you have a dozen companies requiring constant access to your homes and appliances and cars and personal electronics at all times, in order to keep them running in any useful way. Beyond simple monopolization, every company is doing it. This is quickly leading to an almost collusive situation where there are entire product categories are becoming exclusively IoT devices, with soon-to-follow subscription fees, and there will be no other practical alternatives.
- bluGill 5y ago
  > Because you want to invest in your business? So that, once it's paid off, you can stop giving part of your profits to someone else? That is a factor, but there are counters. You miss out on whatever advances next year's model has. The machine won't last forever, so even after it is paid off you only get a few years before you have to buy a new one (or put major rework into the old one - often this isn't worth the labor costs since you don't get the scale of an assembly line) In the end each farmer has to make their own decision. Some will buy the equipment, some will lease it, and some will hire someone else to do that work. There are trade offs. Many accountants have run numbers and discovered that the obvious choice is the worst possible one, but this is a case by case analysis.
  - TheRealDunkirk 5y ago
    > after it is paid off you only get a few years before you have to buy a new one I get that you want to say "it depends," but the original context is a TRACTOR. Something that, historically, can easily last 20 years, if not 50.
rdedev 5y ago
I guess if the tractor is going to last for a long time, renting it wouldn't make sense for the long term for the farmer ? At some point the total rent paid would exceed the cost of the tractor. But yeah it makes sense for short term
- swader999 5y ago
  In my area, a lot of the seeding and harvesting seems to be done by fleets of machines that follow the harvest and work 24/7. I'm assuming they get a fixed rate per acre and aren't owned by any one farmer.
TeMPOraL 5y ago
> As a farmer why would you want to pay for a machine that is idle most of the year outside of harvest time? I wouldn't. That's why farming equipment used to be modularized - the drive unit would be in constant use around the farm, the add-ons were job-specific. With more expensive and infrequently-used equipment, someone would buy one and then lend it out to everyone in the village in turn, or offer using it as a service. If manufacturers want to step into that last line of business, well, that's a separate topic from right-of-repair, and mostly boiling down to how much are we willing to allow a corporation to tax users after the fact. Me owning and lending out a repairable, DRM-free harvester combine, vs. me lending out a DRMed combine, vs. manufacturer lending their combines directly to users differ primarily in the amount of operational money that goes to the manufacturer instead of staying within the local economy. (That, and the amount of money farmers have to pay in total. I can harvest your field for the price of a crate of beer and you welding a fence for my chickens. John Deere will only accept hard currency.) Regardless, keeping machines unrepairable is only adding inefficiency to the process - for which, as far as I'm aware, the manufacturer does not pay. If they want to provide "tractors as a service", perhaps they should be forced to go all in, and provide SLAs. When they're facing a choice between spending $100k to parachute a technician into the middle of nowhere, or spending $100k to reimburse for a lost harvest, perhaps they'll be more receptive to the idea of letting people repair their own things. (That, or Zipline will start getting inquiries about flying tractor parts back and forth via drones.)
- nickdothutton 5y ago
  I agree with what you say. The equipment manufacturers want a part of this sharing economy, which they are not currently involved in. There are farming machine companies currently working on “plant your field as a service” and mining machine companies working on “drilling a hole as a service”, with DRM controlled, on-net, live telemetry reporting and billing.
RandomLensman 5y ago
In a sense that is true (certainly from an RoE perspective). However, once usage is high all the time (not the case here) then leasing/renting might not be efficient. Not all machinery is equally shareable, though. I think for a combined harvester there are two challenges: (a) Can you move them around the world easily enough so that the costs actually can be shared by multiple users? Or will the payback period just become super long and everyone is happy with that? (b) From a policy maker perspective, do you want to rely on a supply chain for the full equipment on critical food infrastructure? What if all the harvesters are stuck in some channel?
motohagiography 5y ago
Because harvest time is the same for everyone, and you want to secure that equipment for that week or two depending on crop, or else you lose the quality if not the crop. When I was pitching around a marketplace for farm equipment sharing, this was one of the main objections - when you need it, you need it. This is also what makes withholding a repair key so pernicious, as they have you over a barrel, since your productive window with the equipment is also limited.

ohadron 5y ago

For harvesters, the machine will probably be idle most of the year no matter what, since it doesn't make sense to transport it to the Southern hemisphere. So ultimately the farmer will be paying for it.

bluGill 5y ago
Many combines are sold to custom harvesters. They buy them when harvest starts in the south (North America, other continents have different patterns), work them for 16 hour days, and sell them in the north when the season is over. They may be only one year old, but they have been worked hard - equivalent to 75000 miles of city driving on a car! Someone will still buy them (dealers in the north know this is happening and have plans to deal with the influx) as they have a few more years of life for someone who does their own harvest, but they are well used by this time.

aivisol 5y ago

Because the harvest happens at the same time for all farmers? The harvesting machine will be idle for most of the time anyway, so there can only be one renter at the time (unless you will ship it to Southern hemisphere for half of the year).

TheRealDunkirk 5y ago

> As a farmer why would you want to pay for a machine that is idle most of the year outside of harvest time? Because you want to invest in your business? So that, once it's paid off, you can stop giving part of your profits to someone else? You know, the old 7-year-payoff rule of thumb? That old chestnut? This is the problem with most industries in our over-capitalized system now. In every sector, large companies are trying to monopolize at least a horizontal -- if not an entire segment -- so that they can extract rent from the market forever. The very notion that people are allowed to own things, and not pay service fees till the end of their life, is utterly vanishing, from huge farm machinery to freaking light bulbs. Letting companies permanently insert themselves into our daily use of their products is a total change of mindset, and one which people over 40 will probably never be comfortable with. There's something fundamentally opposed to the idea of a free society when you have a dozen companies requiring constant access to your homes and appliances and cars and personal electronics at all times, in order to keep them running in any useful way. Beyond simple monopolization, every company is doing it. This is quickly leading to an almost collusive situation where there are entire product categories are becoming exclusively IoT devices, with soon-to-follow subscription fees, and there will be no other practical alternatives.

bluGill 5y ago
> Because you want to invest in your business? So that, once it's paid off, you can stop giving part of your profits to someone else? That is a factor, but there are counters. You miss out on whatever advances next year's model has. The machine won't last forever, so even after it is paid off you only get a few years before you have to buy a new one (or put major rework into the old one - often this isn't worth the labor costs since you don't get the scale of an assembly line) In the end each farmer has to make their own decision. Some will buy the equipment, some will lease it, and some will hire someone else to do that work. There are trade offs. Many accountants have run numbers and discovered that the obvious choice is the worst possible one, but this is a case by case analysis.
- TheRealDunkirk 5y ago
  > after it is paid off you only get a few years before you have to buy a new one I get that you want to say "it depends," but the original context is a TRACTOR. Something that, historically, can easily last 20 years, if not 50.

rdedev 5y ago

I guess if the tractor is going to last for a long time, renting it wouldn't make sense for the long term for the farmer ? At some point the total rent paid would exceed the cost of the tractor. But yeah it makes sense for short term

swader999 5y ago
In my area, a lot of the seeding and harvesting seems to be done by fleets of machines that follow the harvest and work 24/7. I'm assuming they get a fixed rate per acre and aren't owned by any one farmer.

TeMPOraL 5y ago

> As a farmer why would you want to pay for a machine that is idle most of the year outside of harvest time? I wouldn't. That's why farming equipment used to be modularized - the drive unit would be in constant use around the farm, the add-ons were job-specific. With more expensive and infrequently-used equipment, someone would buy one and then lend it out to everyone in the village in turn, or offer using it as a service. If manufacturers want to step into that last line of business, well, that's a separate topic from right-of-repair, and mostly boiling down to how much are we willing to allow a corporation to tax users after the fact. Me owning and lending out a repairable, DRM-free harvester combine, vs. me lending out a DRMed combine, vs. manufacturer lending their combines directly to users differ primarily in the amount of operational money that goes to the manufacturer instead of staying within the local economy. (That, and the amount of money farmers have to pay in total. I can harvest your field for the price of a crate of beer and you welding a fence for my chickens. John Deere will only accept hard currency.) Regardless, keeping machines unrepairable is only adding inefficiency to the process - for which, as far as I'm aware, the manufacturer does not pay. If they want to provide "tractors as a service", perhaps they should be forced to go all in, and provide SLAs. When they're facing a choice between spending $100k to parachute a technician into the middle of nowhere, or spending $100k to reimburse for a lost harvest, perhaps they'll be more receptive to the idea of letting people repair their own things. (That, or Zipline will start getting inquiries about flying tractor parts back and forth via drones.)

nickdothutton 5y ago
I agree with what you say. The equipment manufacturers want a part of this sharing economy, which they are not currently involved in. There are farming machine companies currently working on “plant your field as a service” and mining machine companies working on “drilling a hole as a service”, with DRM controlled, on-net, live telemetry reporting and billing.

RandomLensman 5y ago

In a sense that is true (certainly from an RoE perspective). However, once usage is high all the time (not the case here) then leasing/renting might not be efficient. Not all machinery is equally shareable, though. I think for a combined harvester there are two challenges: (a) Can you move them around the world easily enough so that the costs actually can be shared by multiple users? Or will the payback period just become super long and everyone is happy with that? (b) From a policy maker perspective, do you want to rely on a supply chain for the full equipment on critical food infrastructure? What if all the harvesters are stuck in some channel?

motohagiography 5y ago

Because harvest time is the same for everyone, and you want to secure that equipment for that week or two depending on crop, or else you lose the quality if not the crop. When I was pitching around a marketplace for farm equipment sharing, this was one of the main objections - when you need it, you need it. This is also what makes withholding a repair key so pernicious, as they have you over a barrel, since your productive window with the equipment is also limited.