Machinery

Machinery spending trends revealed in farmer survey + VIDEO

Grain Central, August 28, 2017

Crop machinery investments vary according to a combination of strategy, attitude, business phase and economics.

Kondinin Group’s Ben White says machinery replacement and operating costs, including the use of contractors, can be more than a farm business’ combined spend on fertilisers and chemicals. (Photo: Kondinin Group)

This is a key finding from a project exploring how growers in western areas of Western Australia’s Kwinana port zone make machinery investment and replacement decisions and divide up capital expenditure budgets.

The project was initiated by the Grains Research and Development Corporation (GRDC) Kwinana West Regional Cropping Solutions Network (RCSN) – with the aim of increasing knowledge about how much growers are investing in machinery; ownership models; and triggers for and frequency of replacement.

Carried out by agricultural engineer and Kondinin Group research manager Ben White, and farm adviser Chris Warrick, it involved interviewing growers across the WA central grainbelt.

Mr White said increased farm machinery capacity had enabled the State’s grain growers to lift scale and productivity without necessarily employing more labour.

“But there is always a trade off in potential efficiency gains from machinery investment versus erosion of business profits,” he said.

“Machinery replacement and operating costs, including the use of contractors, are estimated to make up about one third of farm income and can be more than the combined spend on fertilisers and chemicals.”

Mr White said project results showed there was an average $1.35 million invested annually in farm machinery by the 27 growers surveyed in depth, with the amount ranging from $350,000 to $3.37 million.

“The resulting average total machinery investment per hectare was $381 but ranged from $113 to $813,” he said.

Mr White said this represented about 65 per cent of average gross income potential (GIP) (based on an assumed wheat price of $250 per tonne and long-term wheat yields).

He said, on average, the growers surveyed in the Kwinana West port zone allocated:

  • 31pc of total machinery investment on seeding equipment
  • 26pc on spraying equipment
  • 25pc on harvesting equipment
  • 9pc on trucks
  • 9pc on other machinery.

Mr White said triggers for machinery replacement were highly variable, but commonly included maintenance costs and number of machine hours.

“Ownership models included: running machinery for longer periods; leasing versus owning; and having two or more pieces of similar equipment,” he said.

“Case studies were prepared to illustrate in-depth examples of the range of machinery replacement strategies being used in the Kwinana West region.”

 

GRDC has a new Farm Business Fact Sheet ‘Cost effective investment in machinery’ at: https://grdc.com.au/InvestmentInMachinery

Source: GRDC

HAVE YOUR SAY

Your email address will not be published.

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

Get Grain Central's news headlines emailed to you -
FREE!