Are you spending too much on your farm machinery?

Several of AHDB’s cereal monitor farmers undertook a review of their farm machinery to see how they could save costs by better understanding their equipment spend.

Farm equipment costs post-Brexit

Research by AHDB’s Harry Henderson has found that growers spend too much on their machinery which, on average, accounted for 25-30% of the farm's wheat-growing cost.

With Britain's departure from the European Union bringing significant changes in agricultural payments, the pressure on farms to streamline costs is considerable. By reviewing substantial components of a farm's operational spending, growers can identify where they can make savings.

Farm machinery costs analysis

Twenty-two of AHDB’s cereal monitor farmers undertook an in-depth analysis of their machinery operational costs. They took into account tractors, implements and other equipment such as sprayers and harvesters.

The analysis involved looking at:

• purchase price
• number of years of ownership
• the estimated value at sale
• depreciation
• running costs such as fuel and labour

Although the sample size is not big enough to draw firm conclusions, there were some common themes. The farms with the lowest 25% of costs had:

• depreciation below £63/ha
• low repair costs through tactical hiring and experience 
• diesel use below 100 L/ha
• farm size 500–1,000 ha

The review has given insight into how farmers can reduce their machinery expenditure. However, farm strategy shouldn't focus on spending as little as possible, as this could mean exposing your business to potential machinery breakdowns.

It is not possible to apply a set of common rules because every farm is different. However by having a good knowledge of what the equipment cost, it is possible to weigh the potential benefits of contractors and analyse timelines, allowing a manager to adjust their system accordingly. 

Where to begin with your farm equipment

As a first step, you should start looking at tractors and other machinery, particularly if they're being used for non-essential work. In addition, keeping a piece of equipment on-farm over a longer period could dramatically reduce its running cost per hour.

Trade-in values will be lower, but the cost of keeping machinery for longer is still lower than early replacement. In the longer term, a planned replacement policy, a review of the whole system and appropriate machinery care responsibilities placed with the operator are all important factors. Work with your dealer and remember that a special deal is unlikely to be the last: trade-in when you are ready.

You can use Farmbench to help assess machinery and business costs. The online tool helps you to manage resilience to risks and to cope with volatility. It is free to levy payers and allows farmers to analyse their cost structure and compare with others.

Find out more about Farmbench

Work-life balance

Robert Cross, AHDB's Warrington's Monitor Farm host, said that having a better understanding of his equipment spend enables him to reduce the amount of time he's out in the field. One such initiative was implementing a sprayer with extra capacity, resulting in more free evening family time.

Find out more

Webinar: Farm labour and machinery

Farmbench: helps you to identify where you can improve efficiency and increase profits.

Calculate the cost of farm machinery, per hectare or per hour

Contact

Harry.Henderson@ahdb.org.uk

Harry is a specialist in practical arable farming, an expert in agricultural mechanisation.