Farm Machinery Costs: Own Lease or Custom Hire

One of the largest annual costs on South Dakota farms and ranches today is that of owning and operating machinery. Total costs associated with farm machinery have increased as farm operators have expanded their operations and substituted machines for labor. This trend does not appear to have run its course because new and larger machines are continuously being developed and adopted. Along with these changes have been corresponding increases in productivity per worker, average farm size, and total machinery investment. In many cases, increased investment in machinery has occurred at the expense of operating capital. Farmers have had to invest heavily in modern machinery without being able to expand production enough to justify the added investment. To add to the problem, rising production costs, variable farm prices, and the increasingly competitive nature of all agricultural production have combined to exert important economic pressures on farmers. These trends are causing farmers to take a closer look at the alternatives to machine ownership in order to release scarce capital for investment in other phases of the farm business where a higher return can be realized