A survey of Australian grain growers shows machinery, labour, contracting, repairs and maintenance are significant costs of production, amounting to $686 per hectare on average.
The study, led by Kondinin Group research engineer Ben White with GRDC investment, was based on a survey of 480 Australian grain growers who shared their results with farm consulting firms Agripath, Pinion Advisory and Farmanco.
Total investement per hectare varied, with growers surveyed from Australia’s southern region having the highest investment in machinery at $1044/ha, compared to growers in the northern region ($825/ha) and the western region ($575/ha).
The average area cropped by those surveyed was 3146ha, with areas cropped in the southern, northern and western regions averaging 1781ha, 2230ha and 3767ha, respectively.
Mr White says the standout observation from the study was that growers’ strategies for investment in machinery, labour, contracting, repairs and maintenance varied greatly.
“Everybody has a different attitude to risk and is at a different stage in their farming career, with decisions around expansion also influencing how much money is spent on machinery, labour, contracting, repairs and maintenance,” he says.
“We’ve included labour, contracting, repairs and maintenance in our estimate of total machinery investment because growers with a relatively low machinery inventory may be supported by high levels of labour, or higher levels of expenditure on specialist labour skill sets – for example, diesel mechanics on staff.”
Accounting for machinery, labour, contracting, repairs and maintenance, the ratio of machinery-related expenditure to gross farm income was about 0.34 to 1 on a national basis.
Mr White says an average depreciation rate of 10 per cent was applied to all plant.
“It could be argued that depreciation varies significantly from this figure as machinery ages, but an average figure was recommended by collaborating consultants and applied as an assumption for the analysis,” he says.
The survey showed:
- the national average cropping income was $2,078,752 a year;
- the average total investment in machinery was $1,853,142;
- the average total spend on contractors was $48,246 a year;
- the average total spend on fuel (net of rebate) was $114,230 a year;
- the average total spend on maintenance was $132,816 a year;
- the average total spend on labour was $134,644 a year;
- the average total full-time-equivalent labour units (including family members and casual labour) was 3.2;
- the average tractor value as a percentage of total plant is 20.7 per cent;
- the average implement value as a percentage of total plant is 15.6 per cent;
- the average spraying equipment value as a percentage of total plant is 13.2 per cent;
- the average harvesting value as a percentage of total plant is 18 per cent; and
- the average grain-handling equipment value as a percentage of total plant is 8.2 per cent.
The study also included interviews of 30 growers from across Australia whose figures were included as part of the national survey.
Each interview sought to determine the approach taken when investing in machinery and the triggers for machinery replacement.
Mr White says the 30 interviews showed, in most cases, growers try to complete mechanical repairs where they can, but for electrical repairs they called for help from specialist service personnel.
“One Western Australian grower, who farms two hours from the nearest dealer, said it cost $650 just to have the service technician visit the farm before any repairs were done,” he says.
“Consequently, this grower aims to do as many of his repairs and maintenance himself. He also aims to buy reliable and easily repaired equipment.”
A report on the research is planned with grower case studies and a decision tree to guide future machinery investment.
More information: Ben White, 0407 941 923, email@example.com