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Case Studies Help Farmers Make Machinery Purchasing Decisions

Case Studies Help Farmers Make Machinery Purchasing Decisions

Purdue University offers machinery purchase advice in new Crop Machinery Benchmarks report

Farmers have plenty to consider when they decide whether to invest in farm machinery, a Purdue Extension agricultural economist says in a recent Purdue Agricultural Economics Report article.

Crop Machinery Benchmarks, written by Michael Langemeier, highlights two of the most important factors farmers should consider when evaluating the economic efficiency of their farm equipment: crop machinery investment per acre and crop machinery cost per acre.

Purdue University offers machinery purchase advice in new Crop Machinery Benchmarks report

"Farm managers should calculate these benchmarks each year and then monitor them over time," Langemeier writes. "Understanding your machinery economics has great value in potentially lowering costs, increasing output and throughput, and in making decisions such as whether to own, lease, or custom hire machinery."

Related: Profit Pointers: Lease or Buy Machinery?

Because machinery is such a large investment, it is important to evaluate whether a farm's machinery costs are too high, Langemeier says. Farmers whose operations have high machinery costs should carefully evaluate whether further machinery purchases are necessary and affordable.

"If a farm has relatively high crop machinery benchmarks, it is likely to have above-average crop break-even prices or be less competitive than its peers," he said. "In this instance, a farm should be extra careful in determining whether future machinery purchases are prudent."

A farmer also should consider farm size and the options of owning, leasing or hiring custom work.

Related: Making the Combine Purchase Decision

Timeliness of field operations, particularly during planting and harvest, can have a significant effect on crop yields. That is why farmers should carefully consider what kind of machinery they buy if they decide to own.

Larger machinery can harvest crops more quickly, but is more expensive. Because of this, large farms might choose larger machinery, while small farms might find it more cost-effective to own or lease smaller machinery.

View the full article, Crop Machinery Benchmarks, including case studies.

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