Farm business management: Machinery investment and costs

Published: 3 Mar 2014

front page of Farm Business Management fact sheet: Machinery Investment and Costs

Investment in technology-enhanced machinery has provided significant productivity gains for grain growers over the last 10 years. However, determining the appropriate level of machinery investment for an individual farm business can be a challenge.

 Key points

  • Investment in better machinery can offset the need for additional labour.
  • On average, farming businesses have a 1:1 machinery income efficiency ratio.
  • Machinery costs, including the use of contractors, are, on average, one third of farm income and are higher 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 being a fixed overheard cost in all years, and averages 11 per cent of farm income.

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GRDC Project Code ORM00004

Region South

Region: South