NEWS BRIEFS
INTEREST
Continued from page 12 .
If the rate of interest you can lock in on a long-term loan is in the lower range of historical rates , and , if overall market trends are rising , then history would support locking in a rate .
Finally in many cases it comes down to a management choice . What are you – the business manager – most comfortable with ? There are countless variables and risks present for business operators to deal with . Managing those that have the greatest potential impact on the business and that management has the most control over generally returns the best rewards . Fixing interest costs on debt which has a longer duration in the lower range of historical interest rate levels in a rising rate environment can help limit upside risk and reduce some uncertainty associated with variable costs for a business .
If you have questions about your situation , please contact your FCS Financial loan officer to discuss interest rate program options .
Owning Machinery Series
Equipment purchase considerations during periods of tight profit margins
“ Five years ago producers didn ’ t hesitate trading in for the latest farm equipment ,” says Iowa AgDirect Territory Manager , Chris Steinkamp . “ But as profit margins have slipped , their buying habits have become a lot more focused on satisfying needs instead of wants .”
Owning machinery requires walking a fine line between performance and profitability .
While there ’ s no one-sizefits-all solution for evaluating equipment needs , producers can use the following tips and trends to help guide their next big iron investment .
explore all equipment avenues
From dealers to auctions and private party transactions , producers have a lot of options when searching for the best equipment bargains . According to Steinkamp , buying activity among these sales segments has shifted , creating new opportunities for savvy buyers and sellers .
“ We ’ ve seen the private party and auction business pick up ,” says Steinkamp . “ Some of it is due to producers not getting as much trade-in value from equipment dealers as they have in the past , but there are also some producers looking to eliminate a piece of equipment and they are turning to alternative markets to sell those assets .”
“ Producers should educate themselves on what deals are out there and keep an eye on each of these avenues as they consider equipment purchases this year .”
control costs , consider resale value
Maintenance , repairs and warranty coverage are another set of factors that frequently influence producers ’ machinery buying habits .
“ There are a lot of producers who haven ’ t traded in the last couple of years , and as that equipment is getting worn out , producers are starting to watch repairs and other costs associated
22 HEARTBEAT | SUMMER 2018