Power and machinery costs used to be included in “fixed costs”, a term I have always resisted as it implies you cannot do anything about them. Nothing could be further from the truth. The Farm Consultancy Group’s Charles Holt suggests benchmarking
Power and machinery costs include machinery spares and repairs, fuel and oil, electricity, machinery licenses and insurances, contractor charges, and machinery depreciation. Different farms have different power and machinery costs structures, so clearly they can be altered (over time).
The best way to control your power and machinery costs is to compare them with other – similar – dairy farms. The comparison process itself will tell you whether your costs are high or not. If some of them are high, it could be that you use contractors extensively but, as your labour costs are low, overall the total is fine.
Again, if your spares and repairs costs are high, could it be because you have mostly old machinery, so your depreciation costs are low? You need to look at such benchmarked comparisons intelligently.
If your repair costs are high, and if you seem to spend too much time mending machines when you should be spending time on managing cows and grass, then it is time to consider buying a new machine.
Dairy farming is a busy enough occupation without having the extra stress of regular machinery breakdowns and repairs. But before you buy, do think about using a contractor, or hiring a machine when you need it. This approach is particularly useful for slurry and muck disposal equipment.
We have many clients who benchmark their data and then discuss it with other farmers in a discussion group forum. This can be an excellent way of obtaining good advice, as well as a method of seeing what other people are doing on their farms. And it is free.