Farm machinery syndicates

Abstract

Current economic conditions are forcing a number of farmers to re-appraise their programmes of machinery replacement. Historically plant has been a significant component of Total Farm Capital on many New Zealand farms, particularly those involved with cropping. Recent substantial increases in the purchasing price of all items of farm machinery have meant that normal depreciation reserves are no longer capable of financing the replacement of major items of plant. The small farmer particularly is faced with this problem, and due to low usage rates and consequent high overhead costs, many large items of agricultural equipment are beyond his resources. In addition, wage inflation has encouraged the substitution of capital for labour.

An existing alternative to the purchase of machinery is the use of contract services, but farmers find this a costly alternative for some types of operation. Additionally where timeliness is important, they may be reluctant to rely heavily on outside operators.

A second alternative which is gaining popularity overseas is machinery syndication. Where the purchase and sole use of a large machine is clearly uneconomic for individuals a group of farmers combining to purchase the same machine may derive the benefit of a new and technologically advanced machine at acceptable costs.