With lower commodity prices and increased cropping costs, University of Minnesota ag economists are urging growers to take a closer look at their machinery investments. Yet this is an expense area where no-tillers are already doing a better job of controlling costs than growers using other tillage systems.
Joleen Hadrich says machinery expenses are a big reason why growers are taking a big hit with reduced take-home income.
In 2002, the University of Minnesota ag economist said the typical farm in the university’s farm financial database had 772 acres, produced 112 bushels of corn and 32 bushels of soybeans per acre. These farms had a gross income of $289,335.
By 2017, these farms had grown to an average of 897 acres with corn yields of 152 bushels, soybean yields of 37 bushels per acre and $842,423 in gross farm income.
But during this 15-year span, net farm income didn’t keep pace. It was $47,597 in 2002, soared to $195,438 in 2010 and dropped to $55,422 in 2017.
Back in 2002, Hadrich says these Minnesota growers had a machinery investment of $291 per acre. By 2010, this increased to $498 and to an amazing $704 per acre in machinery costs by 2017.
While farmers weren’t performing as well financially, many continued to buy equipment. As a result, many farmers are over-leveraged today.
No-Tillers Doing Better
When looking at the 2019 cropping budgets from the University of Nebraska, No-Till Farmer editors quickly saw why no-tillers are able to come out ahead when it comes to controlling machinery costs.
In analyzing direct budgeted comparisons for both dryland and irrigated corn following soybeans or with continuous corn, the no-till budgets averaged $43.04 per acre less in machinery costs and annual repair costs than with conventional tillage. The no-till budgets for soybeans averaged $10.36 less in machinery costs while there was a machinery cost savings of $48.26 per acre for no-tilling wheat.
With the need for less machinery to farm more land, no-tillers are definitely ahead of other growers when it comes to keeping cropping expenses in line. While times are tough in agriculture, you need to realize that you would be in much worse shape if you weren’t already sold on the many merits of no-tilling your ground and trimming farm production costs.