Huge variation in machinery costs on Irish tillage farms

The top 33% of tillage farmers spent €199/ha on machinery costs in 2016, according to results from Teagasc’s eProfit Monitor data.

Farmers who spent €199/ha on machinery can be divided into two categories. The first are small farms with old machinery that is underutilised. The second are large farms that have matched capacity to farm size.

According to Teagasc, these larger farms tended to have clever machinery purchasing methods and maintenance policies. These farmers are spending less money on diesel and 83% of the top 33% are farming within 8km of their base. In addition, only 17% of the top 33% of farms are fragmented.

It’s surprising to note how much machinery costs actually decreased with increased scale. On average, 0-80ha farms had machinery costs of €324/ha, 81-200ha farms had machinery costs of €320/ha, and farms over 201ha had machinery costs of €265/ha.

Land fragmentation

57% of the farms greater than 201ha were fragmented. The table below shows the degree of fragmentation in each category.

Source: Teagasc

Fragmentation can affect machinery costs. When Teagasc looked at fragmentation in more detail, it found that farms which were very fragmented had lower machinery costs (€320/ha) than farms with 75% of land within 8km (€336/ha). Farms with 90% of land in one area had the lowest machinery costs (€297/ha).

Very fragmented farms tended to be larger and Teagasc provided this as the reason for the small (11%) differential between farms with 90% of land within one area and very fragmented farms.

Contractors are cheaper in some cases

The report also stated that 14% of average-performing tillage farms could save money by getting a contractor to carry out all operations. These farmers have machinery costs above €400/ha.

The report stated that farms which completed some contracting (not large-scale contractors) had 16% lower machinery costs than farms which did not.

Teagasc developed a machinery costs calculator in 2016. More information on how this calculator works is available in the eProfit Monitor analysis report.