GRDC grower guide for machinery investment

GRDC has released a comprehensive guide to support informed decision making around machinery purchases.

The guide, which took two years to develop with input from farm business consultants including Kondinin Group, provides a snapshot of the machinery ownership levels of more than 450 growers nationally.

“It is helping growers compare their position when it comes to industry averages for similar farming operations,” Kondinin Group research manager Ben White said.

“Growers are typically presented with conflicting opinions when it comes to machinery purchases and the decisions around big-ticket investments can be stressful.

“This guide provides a range of tools to help growers make better informed purchasing decisions.”

Amongst the tools is a new benchmarking formula, which allows growers to calculate their machinery investment levels relative to their overall farm profit.

The Machinery Investment Ratio formula requires growers to calculate their total plant, labour, maintenance and contracting costs relative to their total gross farm income.

This ratio indicates the efficiency of owning and operating machinery.

Using this formula, GRDC research found, on average, the level of national machinery investment was 34 cents in every dollar of farm income generated (a machinery investment ratio of 0.34).

“It’s important to note there is no one size fits all strategy and growers need to determine the levels of machinery investment or a contracting approach that’s suitable for their farm business,” Mr White said.

The guide also encourages growers to maintain an up-to-date machinery value inventory.

“The cost of machinery, including used equipment, is escalating rapidly, so keeping tabs on current inventory values as machinery supply tightens will be important in the context of machinery investment ratios,” Mr White said.

The guide can be found at https://grdc.com.au/resources-and-publications/all-publications/publications/2022/machinery-investment-and-replacement-for-australian-grain-growers#msdynttrid=-9FhFcLXlfrZzk1gb6uBf2uY3Pf216mOX_GKWeqv-9w.