Farm equipment expenses constant despite higher prices

Canadian farm equipment prices have been increasing sharply over the past 10 years. Four-wheel-drive (4WD) tractors have increased 80% on average (from $218,047 to $392,066) in the last decade, while combines are up 81%, to $493,562. Of all equipment that has become more expensive, air drills have seen some of the highest price adjustments, increasing 125% (to $311,868).

Farm equipment as proportion of total expenses trending sideways

In 2007, farm equipment represented 9.6% of total farm expenses (using depreciation on machinery as a proxy for farm equipment expenditures). It represented only 10.2% of total expenses in 2016, after the big price jumps of the last decade.

 

And no real surprise, the Prairie Provinces have the highest proportion of equipment expense – with equipment representing more than 10% of total farm expenses in each province – due to the region’s largescale crop production. Newfoundland, Nova Scotia, and British Columbia have the lowest proportion of equipment expenses at 5.0%, 6.2%, and 6.7% respectively.

Total farm equipment expenses trending lower

Total farm equipment expenses, including fuel, repairs, and cost of ownership, have been trending lower in relation to overall farm expenses. In 1971, total equipment expenses represented nearly 30% of total farm expenses. In 2016, total equipment expenses represent only 20% of total expenses due to large reductions in fuel and repairs.

Significant changes in the technology now used in farm equipment and better pest control have resulted in improved farm management and fuel efficiency. Farmers can maximize the use of equipment and spread costs over more acres, especially with the elimination of summer fallow.

Craig Klemmer

Craig Klemmer

Principal Agricultural Economist

Craig joined FCC in 2009 as an Agricultural Economist, specializing in monitoring and analyzing the macroeconomic environment, modelling industry health, and providing industry risk analysis. Prior to FCC, he worked in the livestock branch of the Saskatchewan Ministry of Agriculture. Craig holds a Master of Agricultural Economics degree from the University of Saskatchewan.

@CraigKlemmer

Add a Comment
Add a Comment Close
characters remaining
Comment (5)
Avtar Image
norman Says … August 11, 2017 9:57 AM
Mr Klemmer from norman
Comment on machine, excuse me...farm equipment expense trend
Perhaps things have hit the limit.

I would like to see someone " analize" our 20 year sheep production and tell me what machinery expenses it would sustain.
Avtar Image
Farm Credit Canada@norman ... Reply August 11, 2017 3:07 PM
Thanks for your feedback, there is limited data on sheep machinery expenses as Statistics Canada lumps sheep production in with other animal production, which doesn't give an accurate picture of the sector.
Avtar Image
Paul Heglund Says … August 12, 2017 8:37 AM
My equipment repair costs tripled this year with a tractor transmission failure. Long term cnational average my be stable but individuals can have huge spikes.
Avtar Image
KDL Says … August 12, 2017 8:49 AM
You say "In 2016, total equipment expenses represent only 20% of total expenses due to large reductions in fuel and repairs." It seems to me that the lower percentage would be due in a larger part to the increase in seed and fertilizer costs. It would be interesting to see the actual numbers to back that up
Avtar Image
Farm Credit Canada@KDL ... Reply August 14, 2017 4:49 PM
In 2016, commercial seed costs represented 4.8% of total expenses, a slight increase from the 10 year average of 4.1%, while fertilizer costs represented 9.0% in 2016, down slightly from the 10 year average of 9.4%.

Get the latest Ag Economics posts and top ag news delivered weekly to your inbox.