An interesting tidbit of information came recently from a Russian agricultural report.
According to the report in The Moscow Times, the Russian government plans to start a cash-for-clunkers program for farm equipment next year, Prime Minister Vladimir Putin said. This is similar to the incentives it offered for used passenger cars, apparently taking a page from the U.S. economic playbook.
The authorities may allocate 3.5 billion rubles ($125 million) for the rebate plan to spur demand, Putin said recently in Rostov-on-Don, southern Russia.
The incentives are designed to spur demand in the tractor market. With Washington in an intense battle over its budget, don’t expect such a program to be offered here. However, depending on the popularity of the program and the demand for U.S. based tractors, it will be interesting to see if there are any ripple effects in the U.S. market, especially for late-model used tractors.
How would a government-sponsored buyback program in the U.S. for farm equipment impact you and your operation?
A government sponsored program would be great for my operations. It would allow me to rid my fleet of a clunker for a much more productive tractor.
I also think this will help the U.S. economy. The Cash-for-Clunkers program for cars generated a ton of economic activity. I think I read somewhere that the net impact of the program was easily north of $25 billion.
I am looking to upgrade a few of my tractors but concerened about these new Tier 4 engines. The clunker program would probably help me move forward with these purchases.
One thing that is always overlooked in these rebate/buy back/stimulus programs is the fact that they are funded with money that has been confiscated from the private sector from productive citizens and businesses. The government produces nothing of value and therefore has no money of its own to be buying back equipment with. It is true that programs such as these may spur some artificial growth in specific sectors of the economy in the short term but once the government money runs out these industries will again retract because there was no real increase in demand for their product in the first place. For an easy example you need look no further than what happened to the housing industry with the “help” of our politicians. Furthermore, it is almost impossible – and rarely attempted by our polital thinkers and media outlets – to estimate the opportunity cost of what all of those confiscated tax dollars could have produced in the hands of productive business owners in the private sector instead of being clumsily handed out to the latest popular voter block by bureaucrats and politicians.
My vote on a program such as the one proposed above would be “no.” Instead lets try letting productive citizens keep more of what they earn just as the great American experiment intended
I agree with Aaron:
“It is true that programs such as these may spur some artificial growth in specific sectors of the economy in the short term but once the government money runs out these industries will again retract because there was no real increase in demand for their product in the first place.”
In the cash for clunkers passenger car program, the buyers of the almost 700,000 cars for which dealers have filed $2.88 billion in refund requests included many who merely accelerated their purchase.
Estimates are that 60 percent of buyers would have bought cars without this incentive.
So in a nutshell cash for clunkers robbed future sales that were going to happen anyway. I vote no for such a program as it can not ensure sustained demand.
Pingback: Will confusion delay your Tier 4 buying? | TractorLife.com Blog
Pingback: New TractorLife.com Blog is a Forum for Farmers to Share Information and Ideas about Farm Equipment Maintenance | BriefingRoom on BeefMagazine