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What is the Right Equipment Size?

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April 26th, 2012

I was riding on the tractor on Wednesday with Chris Barron, my fellow columnist for Top Producer magazine, and we had a good discussion about how farming is different from other “manufacturing” operations when it comes to the right equipment size.

In most manufacturing operations, the weather plays no role in the production process.  The equipment is housed inside of building and other than a tornado or hurricane, the weather does not effect the ultimate production for the day.

However, during planting and harvesting, the weather can have a dramatic effect on the production process.  There is a small window to get planting done and if the weather is not cooperating, not having the right sized equipment can prevent you from getting your crop planted.  Conversely, having too much equipment can be costly if you never need to use it if the weather cooperates.

There is no perfect answer to this question.  If you decide to err on the less expensive smaller side, there may be years when you will not get the crop fully planted or have to switch to an another crop.  However, the reduction in equipment cost may offset this.  If you err on the high side, you will always be able to get the crop in, but your overall equipment cost may make your operation less profitable compared to other leaner farmers.

I think my tractor riding is done for the trip since the farmer client I meet in Illinois today just finished planting last night.  Tomorrow I am in our Stevens Point office for a meeting then fly home on Saturday.  My wife has already told me we are going for a motorcycle ride on Sunday (so I think everybody knows what I am doing on Sunday).

Paul Neiffer

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation.

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