Tillage farmers riding the crest of a wave should not be tempted to buy expensive new machinery purely on the basis of one good year, Teagasc's machinery expert Dermot Forristal has warned.
With machinery accounting for almost half -- 44pc -- of production costs on tillage farms, growers should avoid locking into high machinery repayments that might be sustainable in a good year but could cripple a business in bad years.
Speaking at the Teagasc National Tillage Conference in Carlow last Thursday, Mr Forristal said machinery replacement strategies were essential for growers.
Tillage margins improved by €500/ha between 2009 and last year, excluding single farm payments, but farmers were urged to take particular care with longer-term decisions such as buying machinery, which would impact on costs for several years.
The 500 delegates were told to draw up a machinery replacement strategy to cut machinery costs without compromising harvesting capabilities.
Mr Forristal highlighted common mistakes made by tillage farmers, and allowing a single event, such as a bad harvest, to unduly impact on machinery decisions was a case in point, he said.
Buying an overly expensive combine for extra capacity after one bad harvest did not make sense, he claimed.
Production costs on tillage farms can be driven upwards by 10-40pc when over-capacity combines are not used enough.
Farmerswere inclined to over-value independence in machinery operations when alternatives, such as contractors or machinery partnerships, could be as effective and cheaper, he said.
Combine ownership was questionable on tillage farms up to 50ha and highly questionable on farms up to 100ha, he maintained.
"Growers often don't have an overall plan for machinery so when one machine breaks down, you go out and replace it with a machine that's similar, without thinking what you might need in the future," he said.
Another mistake was that farmers tried to achieve economies of scale by buying bigger machines first and then renting extra land at uneconomically high prices to achieve scale, he suggested.