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Comment by arbor_day | Hacker News Reader

Have you seen how expensive a tractor or combine is? The economies of scale are real in farming.

You need ~$1M worth of equipment to farm 80 acres (~$1M worth of land), but that same equipment can basically farm 800 acres (~10M worth of land). An equipment issue can destroy a years worth of work with 800 acres (e.g. frost damage from delays), but with 8000 acres you can have spares / avoid the loss with some overtime.

Fertilizer and pesticides aren't neatly contained. If you farm different crops than your neighbors, overspray can kill your yield (e.g. weeds spray for corn kills soybeans). Laws around who can grow/spray what and being big helps make that better

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> You need ~$1M worth of equipment to farm 80 acres

All new? That seems way too low. You'd struggle to get into a combine alone.

Used? That seems way too high. I doubt I'd get any more than $300k for my equipment (and that's more than I paid) if I were to sell it today, and it's pretty nice equipment compared to what I see a lot of farmers using.

> 80 acres (~$1M worth of land)

We always wonder why so cheap? The 18 acres for sale down the road from me wants just about $1M (I expect that will be a hard sell, to be fair). The 130 acres further down the road wants nearly $4M (quite realistic; comparable parcels have sold for more). If you could pick up 80 acres in these parts for $1M, you just won the lottery. And, to be clear, it's not like on the edge of a city or something where other interests are driving up the price. It's just farmland. The yields are respectable, but not quite like Illinois will produce.

1M was a nice round number for equipment. I see people without much land buy new equipment all the time, it’s wild! They tend to not stick around long though.

You must have better land than we do. Land by me goes for around 14K/ acre. The bigger plots or better land goes higher.

> You must have better land than we do.

It's decent enough, but hardly the best ever known. 200-220bu corn and 50-60bu soybeans would be pretty typical for good ground. Whereas, as I understand it, that is merely average ground in Illinois?

But the farmers are really hungry. Case in point: When I was a kid there were eight adjacent farms, including where I grew up, that all had farmers living on them. Of their kids (my generation), there are now 12 of us trying to farm in the same area. That's a 50% increase! As you can imagine, the competition is fierce.

Anyone with 80 acres is buying used tractors. They are likely hiring someone else with a combine to harvest their fields (harvest needs a lot more labor than the 80 acre farm has so when you hire a combine you get a team of 3-4 people which also includes grain carts and semi trucks to get your grain from the field to the elevator (which might be something you own and might be something town).

I work for John Deere, though I don't speak for the company. All tractors are built to order, which means when someone buys a new tractor the dealer has several months to sell the trade-in. When the new tractor arrives from the factory the truck unloads the new one, and loads the trade in to take to someone else. A good dealer will have a list of farmers and what equipment they all have so they can put this deal together. As a result the only tractors a dealer has are service loaners (which are sometimes rented), which makes all the accountants happy.

> Anyone with 80 acres is buying used tractors.

You'd think, but you'd be surprised. In fact, one of the families I rent land from (aging couple who was looking to work less land) is still working around 50 of their acres themselves and they got a couple of new tractors recently.

> They are likely hiring someone else with a combine to harvest their fields

They even combine the crop themselves. But, to be fair, the combine is pretty old (IH 1420).

The other possibility is they have had the land for a long time and it is paid for. Payments on 80 acres of land will pay for some really nice tractors. The rational economic actor will still be going for used tractors on 80 acres, but humans are not rational. Larger farms a new tractor makes sense for various reasons.

Don't forget tax deductions. There is a reason the week between Christmas and New Year is a big on for tractor sales - your accountant suggests you want to get the down payment out now and off your books. As an accountant to explain it (I don't fully understand this)

> The rational economic actor will still be going for used tractors on 80 acres

A rational economic actor would sell the land. 80 acres would fetch around $2M around here pretty easily. You're not getting $2M of pure economic value of 80 acres.

But what are you going to supplant the enjoyment of being out on the farm with? No amount of money can buy a suitable replacement.

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