Farmers warned that new machinery spend is ‘too high’
UK farmers have been warned that they are spending far too much on updating their farm machinery, according to a leading industry-funded research body.
Agriculture and Horticulture Development Board (AHDB) expert Harry Henderson 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.
‘Make no mistake; machinery is priced on output’
“Although the reviews have found huge variations between farms, the key thing is that machinery costs are too high,” he said.
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% 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/ha to £593/ha across the farms, which measured from 97ha to 1,278ha.
‘No correlation with farm size’
He added: “Perhaps the surprising revelation is that there is no correlation between farm sizes – meaning economies of scale are not being realised.”
The research showed that some of the smallest farm businesses also ran the lowest costs, and a few of the larger units incurred the highest costs per hectare.
“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,” he added.
“Heavier, larger machines can also lead to deep compaction, which can take years to correct.”
Henderson 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.”
Keep what you already have
Henderson said the first step for farmers 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.
Henderson added that AHDB’s ‘Farmbench’ programme could also help producers to manage their costs.
He said: “It’s a very powerful tool to see where your business might be poorly performing in comparison to others and need some attention.”