With most industries feeling the squeeze in recent years, overheads are getting higher, and margins are getting smaller. Finding any areas to save a few extra pennies is essential in this day and age, especially on some of the more expensive items. Machinery costs are generally some of our highest overheads. From rental to upfront costs, maintenance, and fuel, they account for a huge proportion of our money. This also makes them a great point of potential savings. Here are a few ways you can cut machinery costs in the coming year.
Lease rather than buy
An operating lease enables trained and insured users to use a piece of equipment for a set amount of time with a fixed monthly payment. Once that period has lapsed, there is generally the option to give the equipment back to the owner or set up a payment plan to purchase it totally. This can be particularly advantageous in times of low revenue if you would be stretched to buy a new piece of equipment upfront. The downside is that, once the lease lapses, you have no machinery or equity to show for it.
Share with others
Within your local area, is there a significant agricultural community or a farmer’s cooperative based on shared values and good faith? It could be that pieces of machinery which are not used daily, but still essential for your farms, such as a hay baler or wood chipper, could be bought between a small group of you. This would require a contract of ownership to be drawn up to guarantee everyone’s investments are safe, but it could save you all significant amounts of money, and doesn’t tie you into any long-term equipment leases either. If you’re considering a new piece of equipment, speak to others within your community to see if there is any scope for sharing. It opens you up to the potential of larger, newer, or more expensive and efficient equipment, which could potentially give you fuel savings too.
Don’t spend over the odds on fuel
Fuel costs are unavoidable, but getting a good deal is a great way to make a saving. If you’re currently using white diesel, rather than red diesel, you’re missing a trick. Red diesel is illegal to use in domestic vehicles as there are tax exemptions which make it solely for use in agricultural or construction. There could be some serious savings available here.
New machinery is expensive, especially to purchase upfront or with a loan, so keeping machinery running for longer is a far more cost-effective way to run. Rather than wearing equipment into the ground and then replacing it, keeping it running smoothly and well-maintained will keep costs down. It might create slightly higher running costs, as maintenance and fixing can be pricey, it will keep costs down overall. It will also mean that depreciation over time becomes less important, as buying and selling new equipment is far more susceptible to this.
Keeping costs down is about making little savings here and there, and seeing the overall savings add up.