- Location
- Lincolnshire.
Of course your strongest competitors have so much capital they don't need to worry too much about these issues!
Machinery Cost Per Acre
- Thread starter Hillplanter
- Start date
this is true ! have always said there is little connection between land ownership and farming
owning land is a game for wealthy men
Yes. My bosses are mostly non farmers who believe in comparing their various businesses to others. It helps them understand technical performance & translates jargon into meaningful reportable performance indicators. Every year we benchmark against around 35 other farms, mostly within a farming company. I know & regularly see 4 of those in my area. We know a lot about each other's businesses. We take it in turns to host and have to show the farm, warts & all. We openly compare figures on all levels & discuss what worked or didn't work. A low number in one place is frequently offset by a high one elsewhere. Total labour & machinery is one of the key areas we look at. Replacement policy, buy vs hire, new vs second hand, tillage regime, soil management etc. On a personal level, every month I have P/L accounts that compare my farm to another within the parent company. monthly P/L doesn't have much relevance for an arable business but the post harvest wash up and year end do trigger some analysis.
Comparing a few numbers is one thing. The discussion it generates with like minded people is very valuable. If nothing else, it's comforting to share problems, ideas and future plans. If you aren't prepared to be open and honest to your peers then benchmarking isn't for you.
A straight comparison of one particular figure is worthless. Each business has its strengths and weaknesses and this will always be so.
- Location
- Lincolnshire.
I'm not quite sure what you mean, but a step back to look at the bigger picture is a key aspect. One isolated figure has little meaning.
What does the £60/acre @Hillplanter quoted include?
A low machinery cost may be offset by a high labour cost from more staff needed to run smaller kit or a greater number of smaller tractors. You could have one operator with expensive hobbies & insomnia so a massive overtime bill, or the inverse for a part time farmer with an outside day job & high capacity to do the work in less hours.
What does the £60/acre @Hillplanter quoted include?
A low machinery cost may be offset by a high labour cost from more staff needed to run smaller kit or a greater number of smaller tractors. You could have one operator with expensive hobbies & insomnia so a massive overtime bill, or the inverse for a part time farmer with an outside day job & high capacity to do the work in less hours.
- Location
- Lincolnshire.
I'm saying the de as you only badly!
Hillplanter
Member
My figure of £60/acer may be distorted as I'm working in euro so the exchange rate at this point in time is a little extreme.
So from my point of view machinery cost has nothing to do with land rent. A farm should be able to reach a simple sum. Inputs + Machinery + Rent/Repayments = Cost per acer. As if you were compiling a business plan.
Inputs are Fert, Spray Seed etc.
Rent is rent and/or new land repayments.
Machinery costs are,
1. Machine cost (new machine cost - trade in of old machine) /years it will be used / acres covered a year.
2. Labour.
4. Running cost acre. Fuel, wearing parts
I know this is very simplistic. More complicated profit monitoring excel sheets exist.
So from my point of view machinery cost has nothing to do with land rent. A farm should be able to reach a simple sum. Inputs + Machinery + Rent/Repayments = Cost per acer. As if you were compiling a business plan.
Inputs are Fert, Spray Seed etc.
Rent is rent and/or new land repayments.
Machinery costs are,
1. Machine cost (new machine cost - trade in of old machine) /years it will be used / acres covered a year.
2. Labour.
4. Running cost acre. Fuel, wearing parts
I know this is very simplistic. More complicated profit monitoring excel sheets exist.
- Location
- Lincolnshire
You can get machinery costs really low if you want, say a grey fergy with a drag and drill and old combine, use it over 10,000 acres and costs will be pence/ac, whether you get much planted or harvested is not the point of this thread, in the real world a farmer buys what it takes for his situation, and if its overkill, then its his money.
- Location
- Lincolnshire.
My machinery costs excluding Labour are about £100//ac. I right machinery off in a straight line over 10 years since there is no guarantee of resale value. This is over 430 acres. Hard to value the labour since it is my own. We have no borrowings or finance arrangements so as Lincs Man would put it the money is our own.
You have a good point there. If you ran said Fergie for 24 hours/day with 2 or 3 drivers on shifts you'd be surprised at how much you get done. During my time in Australia we'd do 120,000 acres of stubbles 4 times over with 6 articulated 360 hp tractors by running them 24 hours/day over 2 shifts. Harvesting in November & drilling in June helped a lot with spreading the work load.
How many people run their gear 24 hours in the UK? Not many I'm guessing. Last time I did that was autumn 2012, playing catch up with the drilling backlog.
- Location
- Freuchie, Fife
We last did our drill and drill tractor 24 hours in spring 2013 to get everything in. It's not something we ever want to repeat as everyone is tired and it's not good for morale. Tractors already do between 1200 and 1600 hours a year so it's not like we need to run then harder.
I think our overall machinery cost is a lot more than quoted here. If I were to write down over 10 years straight line, we'd be at about £150 so plenty to think about.
@balbirniefarm if you are buying new it is unlikely to be worthless after ten years. Arable kit I would expect to half in value every 5 years.
Tractors can vary so much.
Tractors can vary so much.
4course
Member
- Location
- north yorks
just a view but realistically most long term owner occupiers could at current values sell up invest the money in the financial markets and live the life of riley however doing so would preclude them of any future gains in land value which over my farming life has been more / acre than the margin/ year of actually growing a crop wether corn or horn
it would also create them a massive tax issue
Enry
Member
- Location
- Shropshire
Take that as a bonus - it would appreciate more if it wasnt worked
Enry
Member
- Location
- Shropshire
we are all very good at finding a reason not to cost things because it can't be done to perfection - as others have said, a good estimate allows you to see where you sit. Like with silage costs, always "impossible" - when in fact taking 3yrs av fert, reseeding, contractor bills and costing own tackle in at contractor rate did get to a figure which meant something. Tonnes fed recorded and end of year stocktake meant we have a far better idea than by not attempting it
Difficult thread to make comparisons to. Having gone back to older kit here I can guarantee it has saved us a lot of money, depreciation is not as simple as straight line these days, but maintenence and fuel are definitely a huge saver. Maintenance, fuel, wearing metal and insurance gets me to £48/acre, most of my kit is appreciating, but not much point subsidising that as one day, no doubt it will get back to purchase price. Far too many machines here for a farm this size and looking over the hedge most of it well over sized too, but it keeps the hours off machines, thus most of the other costs. Funny really, last new tractor here was a 6150m, it did 2700hrs in 14 months, still cost more per hour than the old stuff.
- Location
- South West
I always find it hard to find a true cost per acre until the machinery being used is sold.
for instance a tractor @ £130k. If your farming 1000 acres is it 130k divided by the 4 year finance hitch and presume it’s worth zero at the end, any PX value can be rolled on to the next calculation in 4 years time. Or do you punt that the tractor is worth 50 grand in 4 years time and divide the £80k…
personally I always plan for worse case and hope for the best case, so I would take £130,000 and divide that by the 4 year finance hitch giving me a cost of £32,500 per year. Divide that over 1000 acres gives me a cost of £32.50 for the tractor. Realistically the figures are much nicer as you’re already carrying over equity from a previous PX but purely for example presume no PX etc… it makes for some pretty humble thoughts wondering, and hoping, although the price of tractors and machines have shot up, the actual cost to change at the moment isn’t much different; the only difference being the figures are much much more.
for instance a tractor @ £130k. If your farming 1000 acres is it 130k divided by the 4 year finance hitch and presume it’s worth zero at the end, any PX value can be rolled on to the next calculation in 4 years time. Or do you punt that the tractor is worth 50 grand in 4 years time and divide the £80k…
personally I always plan for worse case and hope for the best case, so I would take £130,000 and divide that by the 4 year finance hitch giving me a cost of £32,500 per year. Divide that over 1000 acres gives me a cost of £32.50 for the tractor. Realistically the figures are much nicer as you’re already carrying over equity from a previous PX but purely for example presume no PX etc… it makes for some pretty humble thoughts wondering, and hoping, although the price of tractors and machines have shot up, the actual cost to change at the moment isn’t much different; the only difference being the figures are much much more.
- Location
- Lincolnshire
Or buy a much smaller tractor and the cost is half if thats all that matters... only problem is much smaller tractor cannot do the job.. I just buy whats needed and not waste time and effort doing a guess of what its finally going to cost in 6 years time, way too may variables to be anywhere near accurate.... and with any farming budgeting, what is the price of wheat going to be in 3 years time?
- Location
- South West
I think the reality is, with fuel prices being volatile and machinery not far behind it’s nearly impossible to know exactly what your costs are ahead of time. Not until after harvest is complete can you look back and say that wheat cost me X to grow per acre/ton because there are so many variables at steak. It’s good to have a rough idea so you know ahead of time if your heading towards the red or black but getting it pound perfect is impossible