ONLINE COURSE - 5 Sessions

Managing Investment Costs of Machinery

In recent years, machinery costs creeped up and now rank among the biggest cost items on farms. They often fluctuate significantly even between farms in the same region because farmers have a wide range of options in managing their machinery portfolios. In past years with high commodity prices and good margins, it was relatively easy to finance machinery, wants sometimes surpassed needs, and detailed financial analysis was only sparsely performed.

As the outlook for commodity markets is currently less optimistic, many farmers are rethinking their equipment strategy to reduce cost and debt service commitments as well as to preserve working capital, so they can take advantage of the opportunities ahead.

It is with this goal in mind that we have developed a course to assist farmers in making decisions about machinery investment.

Objective of the Course

The major objective is to give farmers the tools needed to construct and implement the optimum machinery management strategy for their farms, based on sound management decisions. A machinery management strategy includes how much equipment to have, how to choose the most favorable equipment option, whether it is owned and financed or leased, rented, and for how long it is held.

This program is planned as an interactive online workshop. Participants will receive an investment spreadsheet to document informed investment decisions.

Course Outline:

Defining Equipment Strategy: What Does it Entail?

Replacements
Additions
New technology
What is the optimal machinery strategy
Some guidelines

Financial Principles, Concepts and Tools

Equipment cost: buy vs. finance vs. lease vs. rent vs. custom
Financing Principles

The Time Value of Money Concept

Explanation of the concept
Choosing the discount rate
The Excel model

Explanation of Spreadsheet

Presentation of machinery spreadsheet: Case studies and individual "cases"
Group exercise: Case studies
Group exercise: Addressing participants' living cases

Program Instructors

AME instructors are internationally renowned experts in agricultural management, and are drawn from both industry and academia. This approach ensures a sound theoretical basis for the program, combined with “hands on” practical experience in the application of ideas.