Farmers’ machinery costs are ‘too high’

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Staff Member
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UK farmers are spending too much on their farm machinery, says AHDB expert Harry Henderson.

Harry has been part of the team leading a Monitor Farm project to look at machinery and labour costs across the 21 farms of the scheme.

Although the reviews have found huge variation between farms, the key thing, says Harry, is that machinery costs are too high.

“There are growers using very high capacity machinery and not getting the return on expenditure in either reduced labour hours, costs or higher yields. Make no mistake; machinery is priced on the output it is capable of.

“The biggest cost element in growing a tonne of wheat is machinery, at between 25 and 30 per cent of the total spend. So it has the biggest potential for some serious pre-Brexit reviewing.”

Harry Henderson is AHDB’s Knowledge Exchange Manager for the East Midlands.

Annual machinery and labour costs ranged from £288 to £593/ha per hectare across the farms, which measured from 97 to 1,278 hectares.

Harry added: “Perhaps the surprising revelation is there is no correlation between farm sizes, meaning economies of scale are not being realised.”

Some of the smallest farm businesses also ran the lowest costs and a few of the larger units incurred the highest costs per hectare. This means the common idea that scale helps to spread costs does not always ring true.

“While wet springs and catchy harvests mean that many farmers are keen to have increased drilling or harvesting capacity, farmers need to look at this policy in terms of cost to the business.”

Heavier, larger machines can also lead to deep compaction, said Harry, which can take years to correct. He said that soil care loses out when larger machines are operated in questionable conditions.

“Although we don’t know what the new domestic agricultural policy will look like, there’s no doubt that rural payments will be less.

“Running tractors and machinery on non-essential work may well reduce the overall cost per hour of operation, but every hour is still a cost to the business."

The first step for farmers, said Harry, is to review their tractor usage and to keep what they already have for longer.

“Sure, 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.”

Farmers should also use AHDB’s Farmbench to help assess their machinery and business costs.

Farmbench is one of the tools for farmers to help manage resilience to risks and to cope with volatility. It is a free to levy payer service for farmers to analyse their own cost structure and then compare costs with other local growers.

Harry said: “It’s a very powerful tool to see where your business might be poorly performing in comparison to others and need some attention.”

Monitor Farms across the UK have been carrying out labour and machinery reviews with Strutt and Parker.
 

J 1177

Member
Mixed Farmer
Location
Durham, UK
thats a bit unfair in this case IMO.....usually all we hear is same old platitudes....this research challenges some of that
Aye to be fair i agree with you on that but i couldnt resist.
I do think your standard paper exercises of machinery cost per hectare are far too simplistic...this does seem to deal with that.
 

An Gof

Member
Location
Cornwall
Do you find it useful ? Does it take long to do etc ?

Yes i have found it useful and i use it as part of a small local business group and also as part of two monitor farms. It takes a bit of effort and really needs the service we get from the local contact who helps input the data, at least that ensures that there is equivalence in allocation of overhead costs.
Relying on individual data input may not be as robust. BUT the crux is will people act on the results generated? In many cases no. Most in our groups use serviced agronomy, the difference to my supply only system is VERY large. They know it and can see it .......... have they changed ........ NO why ........ because they like the agronomist. Well good for him/her as they are truly adding value to their service ....... but surely they could have the conversation on paying a separate agronomy fee with the same person and then securing product outside of that arrangement.
 

puppet

Member
Livestock Farmer
Location
sw scotland
There are farms with far more tractors than drivers just to save a few minutes hitching up a machine each day. I think it is a myth that we need bigger tackle because the weather is changing. I remember some very wet years. If it was raining one day then spread some muck or some ploughing, dry the next day discing or drilling. All with 2 wheel drive. There must be a middle way to save all that horsepower. After all the tractor only needs to turn/pull the machine which is actually the important bit
 

Spud

Member
Arable Farmer
Location
YO62
Its too broad an industry to compare directly, because every farm is different. A stock farm might have muliple older tractors on feeder wagons, straw blowers, scrapers etc. A big arable unit might have two big tractors and a handful of hire tractors. A root farm will have higher machinery costs than a combinable crop farm. An owned unit might have higher machinery costs than a rented farm. Some farms may have investment money from other businesses injected into it for tax efficiency reasons. The possibilities are endless, how can a meaningful comparison be made?
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
Yes i have found it useful and i use it as part of a small local business group and also as part of two monitor farms. It takes a bit of effort and really needs the service we get from the local contact who helps input the data, at least that ensures that there is equivalence in allocation of overhead costs.
Relying on individual data input may not be as robust. BUT the crux is will people act on the results generated? In many cases no. Most in our groups use serviced agronomy, the difference to my supply only system is VERY large. They know it and can see it .......... have they changed ........ NO why ........ because they like the agronomist. Well good for him/her as they are truly adding value to their service ....... but surely they could have the conversation on paying a separate agronomy fee with the same person and then securing product outside of that arrangement.

I’m not at all surprised, some farmers seem beyond help !
 

Clive

Staff Member
Arable Farmer
Location
Lichfield
Isn't up to each farmer to make his own choices, some prefer a big new tractor they spend a lot of time in it, others may prefer a new disco for the school run, others may like expensive holidays & some like the pub every night..

Are they running a business or enjoying a hobby though ? Farming blurs the lines between business and pleasure like no other industry it seems

Not saying there is anything wrong with farming being a hobby / vocational if you can afford it and that’s what you want to do but it’s no good complaining there is no money in it if you do !
 

Skimmer

Member
Mixed Farmer
Location
North Notts
Are they running a business or enjoying a hobby though ? Farming blurs the lines between business and pleasure like no other industry it seems

Not saying there is anything wrong with farming being a hobby / vocational if you can afford it and that’s what you want to do but it’s no good complaining there is no money in it if you do !
As long as they are making a living and not moaning about isn't it up to them.
 

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