5 Things to Consider with Managing Machinery and Equipment


When running a farm operation, machinery and equipment are vital to get tasks done.  Those tasks could be anything from producing crops to raising animals.  Having proper machinery and equipment management can improve the performance of your operation and increase income.   Efficient machinery management means having the right size and type of equipment ready to do the job at the right time for the least cost.  Here are some things to consider before making machinery and equipment management decisions.

   1. Machinery Cost

You need to be aware of the costs of owning and operating a particular piece of equipment in order to make the best machinery management decisions. Before purchasing equipment, determine whether the farming operation can support the purchase with cash or borrowed funds.  If so, you should seek the most satisfactory financing arrangement.

    2. Ownership Costs

Ownership costs for machinery and equipment include depreciation, interest on investment, taxes, insurance, and housing. Ownership costs are referred to as “fixed” costs because they occur whether or not an asset is used.

     3. Custom Hire

Custom hiring can be a good choice when you need high cost or specialized equipment for a short period. Many field tasks can be completed by using customer operators or having neighbors complete the tasks and paying them to do so.  This can reduce your initial capital investment, reduce the amount of equipment storage needed, and can save you on income taxes as custom hire is a direct expense and deductible.  Custom hiring can also be attractive if hiring is scarce.

     4. Capacity

It’s important to match current and future needs with the size of the piece of equipment you plan to purchase according to your crops being produced. If you’re just starting your operation a large tractor might not be needed right off the bat.  You may only need one small tractor and attachments to go with it.

     5. Financing

Many tractor and equipment businesses have a financing department within their company. They also offer financing packages to attract customers to purchase their brand of tractor or equipment.  They may offer attractive interest rates but you will still need to make the payments so be sure they fit your business and financial plan.  Be sure to compare the options they have versus your bank or credit union.


Begin your journey to purchasing that new or used piece of equipment for your operation at Fastline.com

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