Introduction

A general overview of what the Farm Machinery Economics course has to offer and links to websites that may be helpful as you go through the course.

Estimating Farm Machinery Costs

Machinery costs are not cut and dry. There are many different aspects that can often be left out of the equation. After completing this module, you will be able to configure total ownership and operating costs for your machinery, including implements and attachments. Cost factors for depreciation, taxes, labor, and repairs are all just some of the costs discussed in this module.

A machinery cost calculator uses your information to break down costs for ownership and operation and then gives the total cost of machinery. This worksheet looks at the power unit, implements, attachments, and the cost of the equipment used together. Links to websites from other universities are also available to find more information related to machinery ownership.

Sizing Farm Machinery

Does the size of your machinery match the size of your operation and its needs? Through this module you will learn how to use different costs to analyze what equipment is right and most cost effective for your operation. Also considered in the equation is information such as: acres, labor, tillage practices used, and weather to help come to a conclusion of what size machinery is necessary.

You will be given the equation for how to figure field capacity. This will come in handy when you want to project the number of field days required for an operation. An electronic worksheet is included to estimate the field capacity for various implements. At the end of this module, there is and Excel spreadsheet to estimate field days for your operation based on the information you plug into it.

Grain Harvesting Systems

This module continues on with information from the last module by focusing on equipment needs for harvesting. It begins by going over combine size and days needed versus days available for harvest based on equipment size and capacity.

Other topics discussed include transportation needs, drying, and storage costs. A drying cost spreadsheet is available to download to project the drying costs for your operation. This spreadsheet gives costs based on the type of drying system, and gives total drying costs per year, bushel, and by point.

Storage systems are also talked about and another spreadsheet to figure the costs based on the different systems is given. This spreadsheet compares commercials and on farm storage, and also breaks down the expenses by month so you get a very clear estimate of which option is better for you. References to links are on where and how to ship grain, other websites on calculating drying costs, and more.

Financing Farm Machinery

Until now, this course has focused on equipment that is already owned. Module number 5 looks at the purchase of new or used equipment for a farm and the financing options available.

Machinery is a huge purchase for your operation, and if you know the different possibilities available for financing you will get a much better deal on your purchases. After completing this module you will have a better idea of what is right for you. It looks at different options such as buying, renting, rolling over, or leasing.

Comparisons are made between each choice and you will be able to see the final costs side by side to know which is the most efficient in the long run. References and analysis software is available for more study information. The final worksheet tests your knowledge by making a decision on an example farm purchase using a machinery financing spreadsheet to compare the different options.

Custom Hiring

Sometimes it is not feasible to make the investment in machinery or spend the time to perform some or all of the field operations necessary. An option would be to custom hire someone who will provide their own machinery and time for a specified rate. Having average rates for field operations can make custom hiring arrangements easier on the farmer and the custom operator. Through this module you will be able to look at the advantages and disadvantages associated with custom hiring and make calculations to find estimated costs for custom hiring different field operations. This information can then be used in setting up contracts and determining payments.

Links to custom rate surveys from Iowa State University and other Midwestern universities are given along with websites discussing related topics such as the pros and cons along with common custom farming arrangements. A learning exercise uses spreadsheets to find rates for a sample farm. A discussion over what possibilities would work for the farm is included to explain the learning exercise. This spreadsheet can also be used to compare whether custom hiring is more feasible for you operation or if machinery ownership is a better choice.

Replacement Strategies

Unlike land, machinery is a major farm purchase that must be constantly monitored and replaced once worn out. Setting guidelines on when to replace machinery can decrease stress and help in making financial decisions for the farming operation. This module begins with the many reasons producers have for replacing equipment and possible schedules to use for replacing machinery. Beginning a system for machinery replacement can make long term planning easier.

Next it compares some alternative options for acquiring machinery. Choosing a different plan than just buying new or used at the local dealership could be a financial break for you operation. Though a break on income taxes is not a huge reason to change equipment, it can make enough of a difference that is should be taken into consideration. The different areas your taxes may be affected are shown and how different machinery choices can affect you in various ways when it comes to taxes. Examples are given for the different types of purchases so you can see which gives more tax incentives. Charts are also available to show visual explanations of the cost differences between the replacement strategies.

If after this you would like more information, links to replacement concepts, tax planning, and how to extend machinery life websites are all available.

Used Machinery

Equipment value declines the most in the first few years of ownership. Buying used equipment can help financially by avoiding this major decrease in value but not loosing the performance ability of the machinery. While used equipment can be less expensive at first, there are other costs such as maintenance to consider when comparing new versus used.

Module 8 gives advantages and disadvantages of buying used and difference sources where you can go to find used equipment. So you can be sure you are getting high quality equipment at a good value, links to websites on analyzing used equipment are given. These websites give evaluation checklists, bidding lessons for auctions, and other tips for buying used equipment.

Links to sites that give average values for used equipment are also given so you can compare the equipment prices you find to see if they are reasonable. Learning exercises have you find prices for different equipment on these websites and compare the different costs.

Joint Machinery Ownership

Another option to look at when making machinery decisions is joint ownership. You get all the use out of the machinery you need, but you only have a share of the machinery's total use along with a share of its total cost. This module explains how joint machinery ownership agreements work. Covering how to breakdown costs and usage between owners and solve issues of unequal use of the machinery. An Excel spreadsheet is available to download so you can split up the cost of ownership for your operation to see what joint machinery ownership would save you in expenses.

Some producers have gone beyond just joint ownership and have set up coops among nearby farmers for sets of equipment. This uncommon type of ownership is explained and links to studies done on these coops are included.

Other topics included are how to get started in a joint ownership venture, how to handle the situation on income taxes and common concerns that may come up and should be discussed between all parties involved. An example farm situation is given so you can go through the spreadsheet and check you work before using it on your own operation. Links to more information on how to share equipment are also included.

Transferring Ownership of Farm Machinery

Now that you know all the possible ways to buy equipment and arrangements for use, you learn how to transfer ownership in the final module of the Farm Machinery Economics course.

Learn about the different ways of transferring ownership of farm machinery so you will know which is the right choice for you. An outright sale, installment sale, gradual sale, and more possibilities are listed to ensure that you make the right decision. You will also find out about the different financial and tax consequences associated with each type of transfer. References for further study give information on two-generation farming and help for retiring and passing on equipment are listed.

Course Registration and More Information

If you are interested in registering for this course, the on-line form is available here.

The course fee is $100.00.