Pros and cons of ownership discussed

July 21, 2017

Rupanyup grower David Matthews, Simon Craig from Farm 360, and Kooloonong grower Alistair Murdoch.

Economic thresholds of owning, co-owning or contracting machinery was the topic of the discussion by a Farm 360 consultant at a recent Birchip Cropping Group event.

Speaking at the Birchip Cropping Group’s Future Farmers Expo, Simon Craig said it was important to plan before purchasing any type of farming equipment.

‘‘Each farmer should identify a relevant strategy for the next few years and plan out so they can see what they can afford each year. By doing that they are in the best position to work out what they can afford,’’ he said.

‘‘Knowing the strategic direction and vision for the future of the farm is fundamental in knowing what investments will be required — and understanding the position the business needs to be in before that investment can be justified is important,’’ Mr Craig said.

According to Mr Craig there is no specific time when machinery should be purchased.

‘‘Any time (is a good time) ... there will always be engine failures or mishaps — and generally when you least need it. The trick is to arguably put a value on reliability and good maintenance.’’

When it comes to making the decision to own, co-own or bring in a contractor, Mr Craig said it would be different for every farm.

‘‘It’s going to come down to the type of equipment, amount of area covered and the application timing window.

‘‘Quite often we get caught up in subjective figures such as fuel use, speed and efficiency ... however we rarely quantify these.

‘‘The phrase ‘it will pay for itself in two years’ is a very common justification to buy equipment,’’ he said.

‘‘There is no doubt that as farm size increases, having the equipment on hand is invaluable and should not be understated — therefore the decision of ownership will need to be specific to key machinery. (However), not enough attention is focused on depreciation, replacement of parts, and seasonal returns on the investment.’’

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