Mechanisation costs money, which means it is part of a farmer’s production and overhead outlay, and that makes managing it very important.
Mechanical resources include all the trucks, bakkies, tractors and equipment a farmer uses in his farming operations (they do not include vehicles or equipment for private use).
And just because these items are standing in a shed or lying in a workshop does not mean they are not incurring costs.
Let’s look at the basic management rules for all mechanical resources.
RULE 1: BUY WISELY
It is easy to be tempted by lower prices, especially when buying an expensive item like a tractor.
- I’m not saying don’t buy second-hand; I’m saying look carefully at what you are buying and consider all the options; new versus second-hand, guarantees, dealer service, availability of spares, etc.
- Only after you’ve considered all aspects should you make a decision.
RULE 2: FINANCE WISELY
Having enough money is a challenge for most farmers so deciding how to pay for something is very important, because it will affect your cash flow.
- For small items such as workshop tools, you should pay cash.
- If cash is a problem, larger equipment such as a planter, compressor or welder could be paid off over 3 to 6 months. Most suppliers will be happy to discuss terms with you.
- Very few capital expenditure (capex) items can – or should – be bought for cash.
- In general, farmers simply don’t have that kind of money readily available, and if they do, they should rather use it for something else.
- These capex items include bakkies, tractors and other large equipment. Before buying, consult your dealer or bank about the financing options available.
- All these options have one thing in common: they take money out of the business, whether this is a once-off payment, or paid over a few months, or paid every month for 3 to 5 years.
- This affects your cash flow, which in turn affects your ability to pay other farming expenses.
- That is why you have to consider what you can afford, how you are able pay and when, and what it will do to your cash flow.
- Note that I said what you can afford, not how much the item costs.
- The cost is important, but affordability, and getting value for money, are more important.
RULE 3: LOOK AFTER THE EQUIPMENT
You’ve spent a lot of money buying something and you want it to work for you. So, look after it.
- Make sure it is operated properly, that the operator/driver is trained and responsible, that the item is serviced as instructed by the manufacturer, and is kept clean and stored under a roof, in a shed or other suitable shelter.
- Wherever possible, try to make one person responsible for that vehicle, tractor, pump etc. This person should be trained to operate the equipment and be made responsible for keeping it clean and reporting any damages or breakages.
- A small incentive bonus for the driver, based on operating and repair costs, can be a good motivator – the lower the cost, the better the bonus.
- But what’s more important about giving that person responsibility for the machine, is that you are giving him recognition – and that is very important in the work situation.
- Remember: a clean machine is a better machine.
RULE 4: MATCH THE MACHINE TO THE JOB
Before buying any machine a farmer should consider the following very carefully:
Do I really need it? Can I not get another year out of the machine I already have? Will it add value to farming operations and improve efficiency? Will it reduce overall costs? Will it speed things up?
What job(s) must it do? Let me look at my operations again; perhaps I can find another way of doing things with the equipment I already have. Will it only do one job or can I use it for several jobs?
For how long will I use it – one season per year, six months per year, or all year round? The more I can use a machine the lower the operating cost will be.
RULE 5: CONSIDER ALTERNATIVES
Because a farmer always strives to maximise on his investments, he needs to think about alternatives to buying expensive equipment.
- Buying may not be the answer – perhaps using contractors to do the work would be a better option.
- It is common practice among maize farmers, for instance, to hire contractors at reaping time.
- Overseas contract work even includes picking and packing on fruit farms.
- There are many options.
- I once knew a farmer – a successful one, too – who did not own a tractor.
- All his mechanical work was done by a contractor.
- It can be done, but look at it very carefully before making a decision.
- Another option is for a group of farmers to share one machine.
- This can work if the arrangement is carefully worked out, strictly controlled and everybody plays their part.
RULE 6: WATCH THE COSTS
Any piece of equipment costs money to operate, so keeping a sharp eye on costs is very important.
The following can help:
- Make sure the driver/operator is trained and responsible.
- Follow the maker’s instructions for servicing and maintenance.
- Keep written records (log books and in the office), of everything to do with that machine.
- Check the records at least once a month – more often, if necessary.
- When you pick up a problem, e.g. high fuel consumption, attend to it.
- The longer you leave a potential problem the worse it gets and the more expensive it becomes to fix.
- Keep basic tools, lubricants and a range of essential spare parts in the workshop for servicing and running repairs.
- The dealer can advise you on this.
- When you have to buy spares or make repairs, beware of buying “cheap”; it can often end up costing you more than if you had spent a little more money in the first place and done the job properly.
RULE 7: BEWARE OF DOWN TIME
A machine standing idle is costing you money; one that is working is making money. It’s as simple as that.
- No matter what you do, that machine is costing you money every day – so the obvious course of action is to make sure you are using it to its fullest capacity.
- When something breaks it is important to get it working again as soon as possible.
- There could be problems such as a lack of money, or that you can’t get spares quickly, but the principle remains the same – get that machine going as soon as possible.
- Buying and managing mechanical resources is a very important part of any farming operation.
- Done right it contributes to the efficiency and profits of the farm.
- Neglected, it costs money and reduces profits.
- Managing mechanical resources well doesn’t only apply to large-scale farmers; it applies to every farmer, even if all he owns is one bakkie.
- The principles apply, no matter the size of the operation.
- This article was written by Michael Cordes and first appeared in Farming SA.