ONLINE COURSE

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.

Larry Martin Principal & Lead Instructor Agri-Food Management Excellence

Dr. Joerg Zimmermann GlobalAgAdvisors Ltd.