Farmers are small business owners, whether they farm a few acres or if they run a major spread. As with small businesses in any industry, historically the family farmer has owned all the equipment they use, regardless of how often they actually use it. This means that a farmer will typically own his or her own tillage equipment, seeders, combines, swathers, tractors and balers to name just a few of the major implements on the typical farm.
This adds up to a huge inventory of very specialized, very pricey equipment that, for the greater part of the farming year, is not used. Unlike some types of industrial equipment farming equipment is specialized and designed for one job and one job only. When not in use it is really dead weight, taking up storage space inside a building or parked outside exposed to the elements. Either option leaves you with big monthly payment and the risk of damage occurring even when the equipment is not in use.
In a recent 2013 study of the cost of crop production in Iowa, authored by the Iowa State University Extension and Outreach, it was found that most specialized farm equipment is used around 100 to 120 hours per year. This includes seeders and planters as well as mowers, balers, cultivators and tillage equipment. Some equipment such as sprayers, swathers and balers tended to be used more but still came in at about 200 hours per year.
The cost of this equipment was calculated using both a fixed and variable cost based on a per acre average. The fixed cost included depreciation, housing, insurance and interest on the loans. There was also a variable cost estimated per acre that included things like repairs, fuel, oil and replacements parts. Most of the common planting, soil preparation and harvest equipment ranged between a low of just a couple of dollars per acre, with the rotary hoe, to a high of up to $12 per acre using a chisel plow with NH3 application. Combines were another huge expense per acre ranging from about $18/acre for small grain to $33/acre for corn.
Farmers that choose to hire us for specialty equipment rather than buy can dramatically cut down on all types of costs associated with running that particular equipment. This leaves you with more cash flow to manage the farm, invest in the equipment you use on a daily basis, and avoid the hidden costs of storage, interest, depreciation and the need to have additional buildings.
If you haven’t considered the benefits of hiring us for equipment come in and talk to us today. We can provide you with estimates, costs and information on all the equipment on hand to help you make the best decision for your farming needs.