David A. Widmar
As farm incomes jumped in recent years, so did the interest in newer farm equipment. While the reasons producers update their equipment line can vary from increasing efficiency to managing taxable income, it’s important to understand how these changes may impact the underlying cost of production.
For a high-level look at changes in the machinery cost structure across agricultural operations, data from the Kansas Farm Management Association (KFMA) and the Illinois Farm Business Farm Management Association (Illinois FBFM Association) were used. Three components of machinery ownership were considered; depreciation, machinery investment, and machinery expense.