It always amazes me how much money it costs every year to maintain a fleet of farm tractors and machinery. I thought about that the other day when I saw a round baler with a for sale sign on it parked at the end of a farmer’s lane. Who, I thought, would buy a used baler that’s been sitting outside? And what kind of operator would leave a baler outside exposed to rain and sun?

Last winter I saw a baler and a haybine sitting at the end of a laneway with a for sale sign on it.

Of all the machines on a farm, combines and round balers are probably the most expensive to operate. The long belts on a round baler are continually going around as it makes a bale of hay. Combines have too many moving parts. When there’s a crop to harvest, farmers have to depend on it to get the crop off. Of course, combines can get plugged when big wads of crop go in. Bearings eventually wear out. Belts break.

I take very good care of my round baler. It’s a big high-capacity baler. The machine gets a daily check over when it’s being used. It never gets rained on unless I’m in a field baling and get caught in a shower. It’s always parked in a shed and is never exposed to the weather.

You have to wonder why some people just leave their equipment sitting outside. Equipment is too expensive as it is.

Machinery costs are a major factor in a farm’s profitability. According to Statistics Canada figures, those costs have gone up by 60 per cent since 1986 and can represent anywhere from 30 to 40 per cent of a cash crop farm’s total costs.

John Molenhuis, OMAF’s business analysis and cost of production expert, in an article in a farm paper, advises producers to be on top of their costs. Know what you’re paying in terms of variable costs –which change according to the number of acres cropped—and fixed costs—which don’t, he says. Compare that to other options, like purchasing a new piece of equipment, buying something used, leasing or hiring a custom operator to do the work.

Molenhuis says U.S. data indicates farming more acres can reduce machinery costs. But that only works up to a point. While per acre cost dropped off by almost $10/acre from farming 200 acres compared to 1,200, there was only a $3/acre saving when acreage increased to 2,000 acres or more.

In fact, smaller operations can sometimes have lower machinery costs than their larger neighbours. That’s because they tend to rent machinery more often or repair older pieces of equipment. That approach, he says, becomes riskier on a larger land base.

Custom work is a good option for some producers. Researchers in Kansas and Illinois have estimated that on-farm machinery costs can run up to 25 per cent higher than custom rates.

Molenhuis suggests a dual approach. Use individual farm records to calculate the variable costs like fuel, repairs and labour. These should be allocated according to the number of acres cropped and the number of passes over the field. Using those calculations, you can also break them down by crops, he says.

Fixed costs, like interest and depreciation, are a different matter. He suggests using an available worksheet. These calculation methods are based on standards set out by the American Society of Agricultural Engineering using representative figures from all over North America.

These are available from the OMAF resource. The forms take farmers through the different cost calculations, allowing them to see their own fixed costs.

Molenhuis has done these calculations using hypothetical farm situations and says generally it’s more economical to keep and repair your own machinery. Unfortunately it’s also the one that has the most risk associated with it. You weigh those savings against the number of acres you have to go over, he says.

For example, a five-day delay in harvest because you’re waiting for parts for that old combine could cost you five per cent in yield or as much as $18/acre. If you apply that to the overall cost of machinery it suddenly makes that new equipment purchase look a whole lot better.

No matter what… it pays to have good storage sheds and good equipment.