Cost effective investment in machinery

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Key points

• The higher capital cost of machinery is offset by the efficiency gains of new technology and the reduced need for additional labour.
• Machinery operating costs, including the use of contractors, on average are one third of average farm income, and are larger than fertiliser and chemical costs combined.
• Machinery replacement can be delayed until there are sufficient surplus funds in good years. However, the trend towards financing machinery over three to five years results in machinery capital effectively being a fixed overhead cost in all years, and averages seven per cent of total farm income (but does vary from as low as five per cent to as high as 11 per cent).
• The average WA farming business has a 0.7:1 machinery to income efficiency ratio.

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GRDC Project Code ORM00017

Region West

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