Farmers are some of the most resilient workers there are – but recent market challenges have made conducting farming operations more difficult than ever before.
In 2020, factors like COVID-19, the limited supply of farm equipment parts and the shutdown of various production facilities resulted in a global decline of farm equipment production. Fast forward two years and the cost of farm equipment has surged, seeing a 27% increase from last year; yet the demand remains sky high.
Farmers not only need the proper equipment to farm but it is more important than ever to protect the equipment they own.
Ensure Your Current Equipment is Insured to Value
It is always important to consider your insurance policy when market conditions are high to ensure you are not underinsured. The area of concern is in your insurance policy limits. If your insurance limits are lower than the cost to repair or replace your machinery, you could be responsible for paying additional money out of pocket to replace your damaged farm equipment in the event of a loss.
Underinsured – a policyholder has insurance coverage, but the limits may not be high enough to cover the full expenses of a claim.
Two areas to cover with your insurance agent include your farm blanket inventory and the scheduled equipment limits listed on your insurance policy. If you know a specific piece of equipment is hard to obtain and priced rather high, you may want to increase the limit scheduled for it on your policy.
Your agent will help you navigate any changes that might need to be made to your policy to make sure you’re properly covered in the event of a loss.
Weigh the Pros and Cons of Buying New or Used Equipment
As always, the show must go on. Farmers must keep farming, despite the challenges in their way. If you have a piece of equipment nearing the end of its life after helping you operate your business, obtaining a replacement at the right price is crucial to your bottom line.
Ask yourself these questions to help decide if buying new or used makes the most sense for your operations:
- How much will the equipment be used? If you invest in a nice piece of equipment, you’ll want to be sure it is being used thousands of hours over the next few years. Do some digging on the typical lifespan of the equipment you’re considering purchasing and weigh its remaining hours against its cost.
- Is the equipment in good condition? When looking into used equipment, you should perform a thorough inspection. You may even hire a specialized mechanic do a proper inspection for you. Honest sellers should be very open to an inspection, whereas sellers that are more closed off and particular towards an inspection may present a red flag.
- Can I maintain it? Anytime you’re looking at a piece of equipment, new or used, consider the difficulty involved in repairing it. Newer equipment may have advanced technology that only the dealer can repair, while you may be able to make small repairs to the older equipment.
*Equipment Breakdown Coverage is a fantastic coverage option to provide your equipment with additional protection.
Farming operations both big and small are feeling the effects of the current farm equipment market. Despite the increased costs at hand, there are a few ways you can control how much you spend out of pocket to continue doing what you do best.