Charles Holt (Lincoln)

This is part of a series of articles featuring cost focus and control on our clients’ farms. At times of low commodities prices, cost control is, of course, a really important area and should be seen as a cultural way to approach farming, rather than reacting to low prices by trying to slash costs.

My early farm student jobs involved many wet days spent in the farm workshop. Tasks included repairing semi-retired machinery. These tended to come with the instruction to: “…spray it with WD40, then hit it with a hammer, and if it breaks, weld it, or tie it up with baler twine”.

That sort of thing (usually) doesn’t cut it now. Time is money, and even farm students are expensive to employ, so need to be given meaningful work that maximises their output.

The approach today to machinery maintenance and repair needs to be far more professional. Some farmers rely on running new or nearly new machines on their farm. For dairy farmers, for instance, who are frequently not that interested in machinery (and servicing it!), it can make sense. This is particularly the case for a machine relied on daily, such as the telehandler. In this case, buying a new one every five years, and financing it and taking out a service contract over its life on the farm can be the best policy. Repairs should be negligible.

But this may not be a luxury everyone can afford and indeed is not usually the right policy for all your farm kit.  

On a typical dairy farm with average cow numbers (250 head), machinery repair costs may amount to £40,000 to £50,000 per annum. For a typical 250 hectare arable/cropping farm, machinery repairs can cost as much as £25,000 to £30,000 per annum (source Farm Business Survey (FBS), Defra). Clearly these are just averages but do serve to show that this is a large item of farm expenditure – on typical farms in the FBS. Larger farms may be able to reduce costs per hectare with economies of scale, but this is not always the case.

Of course, machinery is essential on (almost) all farms, and inevitably it will break down on occasions. And sometimes it fails at a crucial and most inconvenient moment. These days, a spot of WD40 and baler twine won’t usually do the trick to get it back in action.

So good maintenance and an efficient recording system has become ever more crucial, to keep control of your kit. How should you do this? One method is to give each machine (important ones only) a separate code in your accounts system. Allocate machinery repair costs as they occur to each machine. You can then see over a year, or perhaps over five years, what each machine is costing you to keep it working. This is a very simple method of keeping good control of your kit repair costs.

It will help you decide on whether a machine needs replacing or not, at an appropriate time. Will the depreciation on a new machine be higher than the repair costs of the old machine? Is the down-time caused by a machine being old and in poor condition affecting farm performance?

Rather than buying new equipment, should you opt to have your existing kit completely renovated and/or restored? There are specialist machinery firms who do this work, and if the basic design and workability of one of your items of machinery is sound, why not consider this option? It may save a very significant amount of cash, reduce your HP commitments, your depreciation, and your machinery repair bill, too. This option is especially suitable for kit that has a lot of metal in it, not too many mechanical/electronic parts (that may now be obsolete), and that you can release from the farm for some weeks while it is being refurbished.

Whatever the answer eventually is, discussing these topics with a trusted farm advisor can pay dividends. Contact Charles Holt at charlesholt@fcgagric.com or your local FCG office to discuss this further.