Benchmarking figures from commercial arable farms located across the UK show that almost half of production costs with winter wheat relate to machinery and labour.

Average cost of production on Agriculture and Horticulture Development Board (AHDB) monitor farms last year stood at £127/t for winter wheat, with 28% of costs associated with machinery and 18% labour.

At an AHDB event in Downpatrick on Tuesday, Sebastian Murray from consultancy firm Strutt & Parker said that monitor farms with the lowest machinery costs were better at controlling depreciation.

In the case of Richard Orr, an AHDB monitor farmer in Co Down, Murray said that costs were controlled by buying used machinery in good condition, which would not depreciate the same as new equipment.

He also pointed out that good care and maintenance of machinery is important for controlling both depreciation and repair costs.

“We are not saying don’t buy a new tractor. If you want to buy a new Fendt every year that’s fine, as long as your business can support it,” said Harry Henderson from AHDB.

Estimate

During the meeting, local arable farmers estimated operating costs for a tractor and drill on each of their farms by calculating depreciation over intended years of ownership, fuel consumption, repair and maintenance costs and hours worked per year.

On the AHDB monitor farms, operating costs for drilling ranged from £21/ha to £63/ha between the bottom and top 25% of farmers.

With some monitor farms in England extending to several 1,000 acres, machinery operating costs can be lower due to equipment getting more work each year.

However, Sebastian Murray said that there are still examples of big farms with high machinery costs: “They have a mentality that they can afford it, but it’s actually a diseconomy of scale.”

Although the meeting focussed on the financial costs of machinery in arable enterprises, it was acknowledged that there are other important factors to consider, mainly related to our variable climate and short windows to get work completed.

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