Investing in New Machinery - is it worth it?
Aug 29, 2022 Posted by Terry White
Investing in new technology - is it worth it? Delmade has curated a feature from the Australian Governments Grain Research Department that helps to answer the difficult question.
Content from: The Australian Governments GRDC
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 overhead cost in all years and averages 11 per cent of farm income.
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