Per Unit Costs to Own and Operate Farm Machinery

With increasingly thin margins and new technologies, it is important that farm managers know their cost of field operations on a per unit basis (e.g., acre, ton, bale). Accurate per unit costs give confidence when constructing enterprise budgets and evaluating new technologies, such as no-till. Custom rates are often used as a proxy for per unit costs; however, this research, using entropy and jackknife estimation procedures, found that custom rates understate total ownership and operating costs by approximately 25% for an average Kansas farm. Estimates from these models are then used to benchmark actual costs against expected cost.

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Journal Article
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Published in:
Journal of Agricultural and Applied Economics, Volume 37, Number 1
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JEL Codes:
Q10; Q12; C51; C60

 Record created 2017-04-01, last modified 2018-01-22

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