Friday, June 22, 2012

Farming: Capital Requirements Keep Growing

Seems to me a story which the news media never covers is the continual increase in the capital needed to farm successfully.  I go back to roughly 1950, when dad bought a John Deere tractor (model M, I think) and sold the team of horses. Turned out it meant investing in a new suite of machinery to make it work.  If the farm was marginal before, with the increased capital requirement it was even more shaky.  When you were talking making a living on the farm in that time frame, it was "go big or go under."

All that was triggered by reading this report from Illinois on the increase in the value of machinery from 2000 to 2010.  Though the study is interested in the curves, and the cost per acre curve is interesting (i.e. big acreage is more cost efficient), I'm most struck by the absolute dollar figures, from the mid 6 digits up. Oh, machinery prices also increased.

1 comment:

Walter Jeffries said...

I try really hard to resist the siren call of big iron... I have some but I try to make sure that each piece must quickly pay for itself. No welfare machines. No loafers. No toys despite my shiny new stainless steel "convertible" (hog scalder/dehairer). Even that will work hard to pay for itself in under two years.