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Letter from Europe   Paying by the hour for more tractor power Though it’s still only a fraction of total tractor sales, renting tractors by the hour is proving good business for both dealers and farmers. And for the farmer, it means no finance payments, no warranty problems and someone else doing the maintenance by NORMAN DUNN It started with a few machinery dealerships asking an hourly rate for trade-in tractors that were lying around the back lot. This was fairly common, at least in Britain 20 or 30 years ago when there were always farmers looking for an extra tractor for a few weeks during busy periods. Back in the 1980s, Andrew Deptford, a vegetable planting contractor in the east of England, was one of the biggest hirers of such tractors in his area in spring. But they were often typical trade-ins -- old, not too well maintained and sometimes highly unreliable. He reckoned that, as with automobiles, there had to be a market for a rental fleet of tractors that were new or nearly new, under warranty and well looked after. Deptford was right. The tractor rental business he started in 1987 with a fleet of 10 new John Deeres rose to 40 in just three years and is still going strong. And in areas throughout Britain and some parts of the European mainland, the concept has expanded since then. When you consider that the current rental charge for a new 130-h.p. Case IH is about the equivalent of  $25 Cdn per working hour and compare that with the buying price (around $105,000 Cdn), you may well wonder why the expansion of the rental idea has been so slow, and why it’s still only a fraction of total tractor sales figures. “The answer here is that most farmers still like to think they have complete control of their machinery fleet and that it is always available,” explains Reiner Rupella, a tractor rental expert and editor of farm mechanization magazines in Germany. “But the increasing capital cost of powerful tractors only used for a few weeks of the year during cultivations and planting is beginning to accelerate the acceptance of short-term rentals.” Rupella adds that the system is now catching on faster on mixed farms -- for instance, with a dairy herd and some cropping. “There, there’ll typically be two or three older, smaller horsepower tractors around the place. It makes good sense nowadays to think about backing them up by renting a high-horsepower machine for silage and again for fall cultivations or spring field work.” He points out that official German comparisons of a 120-h.p. owned machine and the same size of tractor rented for dung spreading, cultivations, fertiliser spreading, spraying and harvest grain transport work over 100 acres this year concluded that the owned machine cost the equivalent of $105 Cdn/hour of operation against just $27 for the rented machine. “On top of that,” notes Rupella, “with the rental machine you’ve got a tractor that has been fully maintained and is completely guaranteed. If it breaks down, you get a replacement the very same day.” He feels the systems makes good sense for the hirers, too. “Where you have livestock farms as well as arable specialists, you’ve got almost year-round, short-term rental business from plowing and drilling through silage making, harvest, stubble cultivations and muck hauling.” September in Europe is traditionally the season for tractor and machinery demonstrations and I had the opportunity to ask the manufacturers what they thought of the rental trend. I got a surprise. I was prepared for condemnation of a concept that, in effect, meant several farmers might be sharing one new tractor instead of big bucks changing hands for a new model for every farm. But this is not how Europe’s major tractor manufacturers look at things. “We’re moving on from the concept of complete capital purchases for the biggest machines on the farm,” explained a manager for one of the largest manufacturers. “Leasing of combines and tractors over a set period of years is growing, too, and is now very big business. And, let’s face it, leasing and rental can increase demand for new tractors. Your average farmer might invest in a new tractor and then keep it for 20 years. A rental fleet has to have new machines every year and after a few hundred hours they’re sold on. The trading cycle actually moves faster this way!” I found that some tractor manufacturers are actually encouraging dealerships to start a rental business in addition to selling tractors. Britain’s McCormick network, for example, supports rental firms which use the make’s dealerships as outlets and maintenance points. One of the largest such concerns using McCormicks launched a 140-tractor rental fleet this spring with a horsepower range of 130 to 200. And this make is by no means the only one. The general feeling at most machinery demonstrations this fall is that soon every dealership -- at least in Britain and Germany -- will have, as well as a leasing department, a tractor rental one too. For the farmer, this means less finance payments to keep up, no warranty problems and someone else taking care of maintenance. For the dealers: the chance of a new department in the business -- and nowadays one probably a lot busier than the selling sector! BF Norman Dunn writes about European agriculture from Germany.