Budgeting Farm Machinery Costs

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Farm machinery costs make up a significant part of the fixed and variable costs of any farm operation. If the capital invested in a machine is to be used efficiently, that machine must be used over enough acres or for enough hours to have costs comparable to or below the same operation being done by a custom operator. This Factsheet provides a framework for calculating the total annual cost of farm machinery so that you can determine whether or not it makes economic sense for you to own a machine. The best source of information to budget farm machinery costs is your records. In the absence of farm records, calculation methods can be used to estimate the costs. The estimates discussed in this Factsheet use an economic engineering approach. The information presented is prepared as a representative guide to estimating machinery costs and is not intended to recognize or predict the costs for any one particular operation. Terms in bold are explained in more detail in the section on Machinery Cost Budgeting Terms.

Authors: 
J. R. Molenhuis
Publisher: 
Ontario Ministry of Agriculture, Food and Rural Affairs
Year: 
2001