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Analyzing machinery costs

08/01/2012 @ 10:09am

As you look through Mike Blashill's scrapbooks of machinery that have come and gone over the years, there's a definite progression that's taken place.

“I've always had my eye on growth, and obviously, to grow, I have to have a little bit more and a little bit more equipment,” he says.

Whether it's new, used, or even a lease, Blashill has been able to keep equipment costs down with a conservative equipment strategy.

While every scrapbook entry documents the evolution of his operation with a photograph, purchase date, and often times the original receipt, what's lacking is a concrete system for analyzing each machine as an investment.

Becoming automated

For the 20-plus years he's been farming, Blashill's system for calculating machinery costs has been very basic.

“Everything was in a filing system. When a new bill came in for the month, I created a file for it, wrote the amount down in a notebook, and kept a total off to one side,” he says.

“Everyone analyzes equipment purchases and costs a little differently,” says Brian Stark of Farm Works. “Some analyze every piece of equipment through a spreadsheet; others are at the opposite end of the spectrum and don't do it at all. Is Mike's the most cost-effective way to do it? Probably not. But that's how he's been able to make it work.”

With an equipment lineup worth over $500,000, Blashill knew it was time to implement a system that would help him more carefully analyze the cost per acre of machinery.

He recently invested in Farm Works Mapping, which is integrated with its accounting software, and retails for $750 each. He also signed up for the Update Service Plan, which includes 12 months of toll-free phone support and software enhancements and updates for $300.

This commitment comes with an investment of time, too. Installing the software on his computer is fairly straightforward. But to get the most out of the programs, Blashill invested nearly three days in training. There's also time spent inputting all of the data of his operation.

But compared to his old system, it will be time well spent.

With Farm Works, bills not only are entered into the system, but also can be allocated to a specific piece of equipment.

“As repair bills come in, this system lets me enter that expense and allocate it to the appropriate machine,” says Blashill. “The system will then give me a cost per acre for that particular machine. It's a great way to track my expenses and to know how much each machine is costing me each year, especially since much of what I buy is used and breakdowns are common.

“Being able to generate a report at the push of a button vs. what I was doing is a huge benefit,” he says. “Even though I kept all of my information organized in a file, it would take me three hours to compile data. Now that it's on the computer, it will be more efficient.”

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