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3 ways to tighten your farm's machinery belt

Jeff Caldwell 02/19/2014 @ 10:07am Multimedia Editor for Agriculture.com and Successful Farming magazine.

The last few years have been a heck of a run for a lot of farmers, and in few places has that been demonstrated as in the farm machinery market.

A lot of farmers have spent money on new paint in the last few years and now, with crop income projections pointing lower, the iron market may be a place that offers a way for farmers to protect themselves from too much exposure to profit potential loss. In other words, trimming machinery costs -- both the iron itself and the costs associated with keeping it running -- is the best way to survive the expected farm income downturn. But, it's not exactly just a matter of spending less at your local dealership or auction, says University of Illinois Extension ag economist Gary Schnitkey.

"The increase in machinery purchases is fundamentally related to higher capital purchases, which on grain farms are predominately machinery purchases. In the early 2000s, capital purchases averaged near $40 per acre. In 2011 and 2012, capital purchases averaged over $100 per acre," he says in a university report. "Now that crop revenues have decreased, reducing capital expenditures from over $100 per acre level back near $40 per acre range is important. Previous experience suggests that lower capital expenditures may be difficult. During the 1970s, farm incomes increased, leading to increases in capital expenditures. When farm incomes declined in the 1980s, a commiserate decline in capital expenditures did not occur immediately  The lagged response of lowering capital expenditures contributed to some of the financial stress occurring in the 1980s."

How can you get that cost back down to that $40/acre level? Think both in terms of each individual machine on your farm, as well as the entire complement of iron, especially when it comes to general use and maintenance. Schnitkey recommends these 3 tips when looking at your machinery:

  • Making sure that combine is used over the proper amount of acres. Combine costs often are the lowest when a combine is used to harvest between 3,000 and 4,000 acre.

  • Making sure that the proper amount of equipment is maintained. All equipment owned by a farm should be used fully. Often, differences in equipment costs between farms are related to the number of tractors that exist on a farm.

  • Making sure that only needed tillage practices are performed. After harvesting, tillage is often the highest cost field operations. Limiting the number of tillage operations will lower power costs.

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