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Per Unit Costs to Own and Operate Farm Machinery

Published online by Cambridge University Press:  28 April 2005

Aaron J. Beaton ,
Kevin C. Dhuyvetter ,
Terry L. Kastens  and
Jeffery R. Williams
Aaron J. Beaton
Affiliation:
Department of Agricultural Economics, Kansas State University, Manhattan, KS
Kevin C. Dhuyvetter
Affiliation:
Department of Agricultural Economics, Kansas State University, Manhattan, KS
Terry L. Kastens
Affiliation:
Department of Agricultural Economics, Kansas State University, Manhattan, KS
Jeffery R. Williams
Affiliation:
Department of Agricultural Economics, Kansas State University, Manhattan, KS
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Abstract

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.

Keywords

benchmarkcustom ratescustom workentropyjackknifemachinery costsQ10Q12C51C60
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 37 , Issue 1 , April 2005 , pp. 131 - 144
Copyright
Copyright © Southern Agricultural Economics Association 2005

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