Re: 'Iron 'question

Posted by JD Seller on June 14, 2016 at 19:12:06 from (208.126.198.123):

In Reply to: 'Iron 'question posted by DeltaRed on June 14, 2016 at 16:57:35:

The real important figure is the cost per acre for equipment use. Equipment use is figured by the true cost per year of operating said equipment. That would be cost of repairs, fuel, capitol cost for the equipment.

I got to see lots of farmer's financial information when selling. The surprising thing was many smaller farmers had a MUCH higher per acre cost for equipment use then the larger farmers. Smaller livestock farmer has some of the highest because of the need for grain and hay equipment.

Steve your cost per acre is low BUT even a $300 dollar repair raises your cost per acre on 30 acres of corn $10 per acre. So for a fellow that has 1500 acres out he could spend $15,000 and still be even with your cost.

So small or large/new or used is not always the "cheapest" when looking at costs.

A very good friend farms 3500 acres of ground. He runs NEW equipment period. He only has three tractors and one combine. His cost per acre on equipment is one of the lowest I have ever seen. He has nothing setting in sheds that is not used on a lot of acres. If it does not get used on many acres it is GONE. He will either rent the item or hire it done. Looking at his equipment cost his capitol cost are high but his repair cost is low. His equipment is also worth more so the "net" capitol cost is not as high as you would think. His trade difference many times turns into a low cost per acre.

Another thing not mentioned is marketing the end product and purchasing inputs. As a general rule smaller farmers do a much WORST job selling their crops and livestock/purchasing inputs. It is many times the amount of time and effort that is invested in marketing/purchasing. The larger farms many times are grossing hundreds of dollars per acre more than the smaller farms. An extra $.40 on a 250 bushel corn crop is $100. That can be done with better marketing and volume purchasing. So spread that over several thousand acres and there is real financial difference.

Truthfully the BEST marketers and cost managers win every time. Size is secondary.

Replies:

• Re: 'Iron 'question dmiller 07:22:23 06/15/16 (0)

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