Resource can help to assess machinery ‘sweet spot’
Author: Melisa Williams | Date: 24 Apr 2018
The investment made by growers in machinery purchases is second only to that made in land, and optimising this investment can impact on farm profitability.
A new booklet – initiated by the Grains Research and Development Corporation (GRDC) Kwinana West Regional Cropping Solutions Network (RCSN) group – aims to assist growers in making machinery related decisions and includes some benchmarks by which comparisons can be drawn.
Machinery Investment and Replacement Options for Growers in the Kwinana West RCSN Port Zone investigates machinery replacement and ownership strategies, and includes case studies of growers from WA’s central grainbelt.
Co-author Ben White, an agricultural engineer and research manager at Kondinin Group, said the publication included results of a survey of growers across the Kwinana West port zone asking them about their machinery inventory, value and changeover triggers.
He said machinery replacement decisions were usually driven by the number of hours used or age of the machine, the grower’s attitude to repairs and maintenance, and the business phase of the farming operation.
“The value of newer machinery can depreciate rapidly, while older machinery requires increased repairs and maintenance, and somewhere in between is a ‘sweet spot’ that varies according to grower circumstances,” Mr White said.
The GRDC booklet includes information about topics the Kwinana West RCSN group members were keen to know more about, including:
- Developing good strategies for replacement of machinery during hard times
- Opportunity cost of the capital that is tied-up in machinery
- Different ownership models (for example, leasing versus owning)
- Running machinery over a longer period
- Running two or more pieces of similar equipment.
Mr White said strategies for hard times often meant making hard decisions for machinery replacement.
“Optimising machinery investment can be varied by altering machine financing arrangements, machine retention time or employing contractors to undertake some operations,” he said.
Mr White said few of the Kwinana port zone growers surveyed primarily utilised contractors for the three primary activities of seeding (4 per cent), spraying (8 per cent) and harvesting (19 per cent).
“The exception to this was haulage, with 38 per cent of growers surveyed using trucking contractors,” he said.
Ben White, Kondinin Group
0407 941 923
Natalie Lee, Cox Inall Communications
0427 189 827
GRDC Project code: KIS00003-A
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