Machinery Matters: Investment upgrades

In a new fact sheet on machinery investment from the Grains Research Development Corporation, farming businesses were found to have, on average, a 1:1 machinery income efficiency ratio, meaning for every dollar of farm income they had a similar amount invested in machinery assets.

ORM Agricultural Consulting and Communications Services managing director Philip O'Callaghan, whose business helped formulate the fact sheet, said his company had been monitoring farm cost trends for the past 20 years.

"The only cost that has gone down has been the labour cost, which includes an allowance for family labour," he said.

"So the reduction in labour has been managed through further investment in machinery to create efficiency."

Mr O'Callaghan said farmers had been upgrading to higher-breakout, trash-handling seeders and deep-banding equipment and had been switching from articulated seeding tractors to high horsepower, front-wheel-assist tractors which had a similar cost, but more versatility.

"Farmers were finding their seeding tractors had no other purpose and were only doing a couple of hundred hours a year whereas their spray tractor was doing all the work and putting in up to 1000 hours," he said.

"So in the past five or six years there has been a shift towards more versatility, high-horsepower, front-wheel-assist tractors that can then be used on things like spreaders."

The fact sheet said farmers were delaying machinery replacement until there were sufficient surplus funds in good years.

However, the trend towards financing machinery over three to five years resulted in machinery capital being a fixed overhead cost in all years, and averaged 11 per cent of farm income.

Mr O'Callaghan said the period of time that people held onto machinery depended on the scale of their operation and their attitude to maintenance.

"We find there isn't a rule that applies across industry. It is more related to investment in capital for machinery to the turn over for the business," he said.

"It is appropriate for some to upgrade their harvester every three years and keep a relatively new machine with low maintenance costs, whereas for other businesses that haven't got the same scale they might buy second-hand and retain it for up to 10 years and still have an appropriate investment in machinery.

Mr O'Callaghan said there had been a change in the way farmers were using contractors or buying their own equipment to carry out farming tasks.

"Farmers went through a cycle of using contractors as the higher-capacity, higher-value auto machines were being introduced," he said.

"Now we find there are high-capacity machines with reasonable hours on them that farmers can afford to get into.

"So contractors are being used to increase the efficiency of the operation as farms increase in scale or they are being used more in the good years.

"There are a number of operations that have dedicated contractors who do all their operations, particularly if they are short on labour."

Conservation machines

MACHINERY engineers at the CIMMYT international wheat breeding centre in Mexico are designing conservation agriculture sowing equipment for the country's subsistence and small-scale farmers to improve their productivity and sustainability.

CIMMYT machinery designer Gabriel Perez said so far they had developed 12 conservation agriculture machines ranging from small units towed behind two-wheel tractors to larger planters pulled by medium-sized tractors.

"We develop multi-use, conservation agriculture machines for different crops so farmers can prepare the land, apply fertiliser and sow seed in the same operation," he said.

"All the machines developed use the same concept. Their concept is to have a modular system and produce machines that are appropriate to every region. All the machines are meant to be adaptable to different conditions.

"The equipment is being promoted among local farmers and as an alternative to what already exists in the market. We are working with local manufacturers to build the machines and make them available."