University Extension Economists periodically calculate machinery costs for tractors, combines, and field equipment. The Universities of Minnesota and Nebraska have recently updated these estimates for 2005 and the publication is titled “Farm Machinery Cost Estimates for 2005 is located online at: http://www.apec.umn.edu/faculty/wlazarus/mf2005.pdf
Extension Economists William Lazarus ( University of Minnesota Extension ) and Roger Selley ( University of Nebraska Extension ) have collaborated to update these Cost Estimates. These estimates are useful for setting custom rates for machinery operations, establishing rental rates for farm machinery, and analyzing machinery costs on farms. These costs are estimated using formulas developed by the American Society of Agricultural Engineers.
Machine costs are separated into time-related and use-related categories. Use-related costs are incurred only when a machine is used. They include fuel, lubrication, use related repairs and labor. Time related costs, also often referred to as overhead costs, accrue to the owner whether or not the machine is used. Overhead includes time related economic costs: interest, insurance, personal property taxes, and housing. Depreciation will be related to use to the extent that increased annual usage shortens years of life and/or reduces salvage value. While not entirely use-related, depreciation is included along with operating expenses and labor costs in the columns labeled “use-related cost/acre”.