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Farm Machinery Costs

Bob Sampson, Extension Communications Specialist, University of Illinois, 217-244-0225, rsampson@uiuc.edu

Machinery costs comprise a significatnt portion of total costs on Illinois grain farms, averaging 16 percent of total economic costs, according to data compiled by the University of Illinois and the Farm Business Farm Management (FBFM) Association. A U of I Extension study provides benchmarks so farmers can see how their machinery costs stack up in comparison to others.

"There is considerable variability in machinery costs across farms, with more profitable farms tending to have lower per acre machinery costs," explained Gary Schnitkey, U of I Extension farm management specialist and author of "Benchmark Machinery Values on Grain Farms." Schnitkey said the study allows a farmer to compare his or her machinery values to the benchmarks to determine whether machinery values are high or low.

"Having high or low machinery values does not necessarily indicate that a farm has a problem with machinery costs," he said. "However, having either high or low machinery values suggests that a farmer should evaluate his or her machinery practices."

Data for the benchmarks comes from farms enrolled in FBFM. To be included, a farm had to receive a majority of revenue from grain operations and had to have balance sheet data that included a fair market valuation for machinery. In addition, the farm had to receive less than $20 per operator acre from custom work. "This criterion eliminated farms that perform a large amount of custom work," he said. "A total of 1,682 farms meet the above criteria and were summarized in the study." Machinery includes all tractors, combines, planters, drills, and tillage equipment. It also includes grain hauling equipment such as grain carts and trucks. Machinery also includes pickups and other light duty trucks that are used in the farm.

The study includes tables showing the distribution of per acre machinery fair market values and distribution of per acre machinery cost values.