To improve overall profitability, it is important to continually review the high cost areas of your business and look to see if they can be improved. Machinery ownership is one high cost area which needs to be managed carefully to maximise profitability.
In 2019 we opened up a survey focusing on the costs associated with machinery ownership. The survey aimed to look at the total costs for some big-ticket items and the results will be available soon.
The survey looked at the total cost of ownership for harvesters, self-propelled sprayers, balers and air seeders. The information collected on ownership costs included depreciation, finance, insurance and repairs and maintenance, as well as operating costs including fuel and labour.
The results show that there is a wide range in costs at the per rotor hour and per hectare level. For harvesters the average cost is $258/hour, however it ranges from $68/hour to $552/hour. At a per hectare level the average cost of ownership was $51/ha ranging from $20/ha to $108/ha.
Newer machines were more expensive than older machines when compared by cost per rotor hour. However, when this cost was taken back to a per hectare basis, the difference wasn’t as significant. This isn’t surprising, as we would expect newer harvesters to do more hectares per hour than older machines.
The main driver behind these figures is how well suited the harvester is to the scale of the business. This drives the total cost of ownership through depreciation, repairs and maintenance and fuel consumption. It is important to consider the following aspects, when purchasing a harvester, so that total cost of ownership is minimised:
- What size harvester (considering class and horsepower) best suits our operation?
- How long are we expecting to keep it for and what will the depreciation be during that period?
- How can we increase operating efficiency to get the most out of every rotor hour?
- How do new harvesters compare to old harvesters on a per hour, hectare or tonne basis?
Self-propelled sprayers also showed a lot of variation averaging at $6.50/ha and ranging from $3/ha to almost $17/ha. The main driver of ownership costs in self-propelled sprayers is the depreciation cost per sprayed hectare. For example, when the depreciation cost is above $3/ha it will be difficult to achieve a total cost of less than $9/ha.
The machinery cost of ownership survey report will be released shortly and will cover off on the following:
- Average cost of ownership for harvesters, self-propelled sprayers, balers and seeders
- Differences in ownership costs and running costs for new and old machines
- Comparisons of different machinery strategies, for example 1 big harvester vs. 2 smaller harvesters
- What the difference is in total cost for a disc seeder vs a knife point
Those who participated in the survey will receive a copy of the report when it’s ready. If you didn’t enter any data and want to purchase a copy of the report then please register your interest by email or call 08 8841 4500.