Machinery 'rings' can cut tillage costs
One day last week I visited two farms, each of which had close to 140ac of winter barley cut. Yields on both were similar, averaging 3.8 t/ac but that is where the similarity ended.
One had an outfit consisting of a combine, tractors, trailers and baler which would be conservatively valued at €500,000; the other would struggle to make €100,000.
The €500,000 outfit would look lovely on YouTube, but not so great on the bank balance sheet - the difference between depreciation levels of €60,000 and €10,000!
Granted, repair maintenance and fuel are substantially lower with the fresh outfit and the operator will get to spend a lot less time on the machines than under them.
Spreading the depreciation over their respective areas of 850ac and 650ac gives annual depreciation of €70.60/ac and €15.40/ac.
While the older outfit is at or beyond capacity, the newer one must maintain or increase area in order to remain viable. The prospects for both to maintain current acreage is bleak with continuing pressure from dairy farmers for land.
I dread to think what might have happened if milk prices were better this year.
The prospect of economy of scale is a thing of the past with inflated land rental prices. Higher fixed costs from investment in improved mechanisation and harvest capacity has resulted in farmers paying uneconomic prices for land.