Farm input costs: how machinery choices can protect margin

The cost picture in 2026

USDA's Economic Research Service updated its farm income forecast on 3 September 2026. It expects US net farm income of $158.4 billion in 2026, down 2.6% on 2025 in nominal terms and 5.5% after inflation. Total production expenses are forecast at $492.8 billion, up $21.2 billion or 4.5%. Within that, fuel and oil spending is forecast to rise by 28.8% and fertiliser, lime and soil conditioners by 15.3%, while pesticide spending is expected to fall by 6.6%. Farm sector debt is forecast to reach $605.1 billion, up 4.6%.

UK farms face their own mix of pressures, including input prices, the transition away from direct payments in England and the rules and timing of support schemes. The details differ, but the machinery question is the same on both sides of the Atlantic: which machines earn their keep, and which quietly drain cash through depreciation, finance and repairs.

How to cost a machine properly

Iowa State University's Ag Decision Maker file A3-29, 'Estimating Farm Machinery Costs' (revised March 2026), is a clear, free method that works in any currency. It splits cost into two parts.

Ownership costs happen whether the machine moves or not: depreciation, interest on the money tied up, taxes where they apply, insurance and housing. Operating costs rise with use: repairs and maintenance, fuel, lubrication and labour. The guide suggests using an economic life of 10 to 12 years for most machines and 15 years for tractors unless you know you will trade sooner, and it notes that good machinery management can reduce costs by as much as $50 per acre.

• Fuel: average diesel use of about 0.044 gallons per hour per maximum PTO horsepower (0.060 for petrol engines).
• Lubrication: about 15% of fuel cost.
• Labour: operator wage multiplied by 1.1 to 1.2, because labour hours run 10 to 20% above field time.
• Taxes, insurance and housing: about 1% of the machine's average value where property tax is not significant.
• Repairs: taken from ASABE tables of accumulated repair cost as a share of list price, which rise steeply with hours.

A worked example: the 300 hp tractor

The Iowa State example takes a 300 PTO hp diesel tractor with a list price of $400,000, bought for $350,000, kept for 12 years and used 400 hours a year. After 12 years it is expected to retain about 28% of list value, or $112,000, so depreciation totals $238,000. At a 4% real interest rate the capital recovery cost is $29,946 a year. Adding $2,310 for taxes, insurance and housing gives $32,256 a year, or $80.64 per hour.

Operating costs add $6.67 an hour for repairs, $44.88 for fuel (13.2 gallons an hour at $3.40), $6.73 for lubrication and $27.50 for labour. The total is about $166.42 per hour. Pair it with a used 30 ft chisel plough and the combined cost comes to roughly $266 an hour, or about $17.76 per acre at 15 acres an hour.

The lesson is in the ownership line. Halve the annual hours to 200 and the ownership cost per hour roughly doubles, while fuel per hour stays the same. A machine that sits in the shed is not free; it is costing you depreciation and interest every day.

Where machinery genuinely cuts input spend

With fuel and fertiliser forecast to rise sharply, the most valuable machinery features are those that reduce how much of each input you use. The biggest wins are usually unglamorous.

• Guidance and section control on sprayers and spreaders, which remove overlap on headlands and irregular fields.
• Variable-rate control, retrofitted where possible, so fertiliser follows crop need rather than a flat rate.
• Correct tractor-implement matching: an oversized tractor on a small implement burns fuel for nothing, while an undersized one works slowly and wears faster.
• Tyre pressure and ballast set for the job; central tyre inflation lets you drop pressure in the field and raise it for the road.
• Fewer passes, for example by combining cultivation and drilling, or moving to direct drilling where soils allow.
• Onboard weighing on trailers and spreaders, so you know what actually went on.

Own, hire, share or contract?

Ownership makes sense when a machine is used heavily and timeliness matters, such as a drill or combine that must be ready the moment the weather allows. For machines used only a few days a year, the high ownership cost per hour usually favours a contractor, a hire agreement or a shared machine. Iowa State's Ag Decision Maker publishes separate guides on custom hire, leasing and joint ownership that use the same cost method.

To compare fairly, calculate your own cost per hectare using the method above and set it against local contractor rates. Remember to value the timeliness risk: a contractor who arrives a week late at drilling can cost more in yield than the fee saved. Equally, value the capital released: money not tied up in a rarely used machine can pay down debt or fund something that works harder.

Cutting cost on the machines you already own

Buying new is not the only lever. Most of these steps cost little and protect the resale value that makes up so much of ownership cost.

• Keep a repair log per machine; it is the best evidence for when to trade and the best predictor of future repair bills.
• Follow service intervals, especially for engine oil, filters and hydraulic oil, and record them for resale.
• Store machines under cover; housing is one of the smaller ownership costs and it slows weathering and electrical faults.
• Check for open recalls and service bulletins on the FarmFleets recalls page before faults become failures.
• Review fuel use per hectare by job; a sudden rise often points to blunt wearing parts, wrong ballast or low tyre pressure on the road.

Using spec data in the decision

The cost method depends on a few machine facts: rated PTO power for the fuel estimate, working width and speed for field capacity, and weight for ballast and soil loading. You can find these for tractors on the FarmFleets tractor category page, check them against your implements, and use the compare tool to see how two candidate tractors differ before you run the numbers.

Sources

Sources checked 2026-09-25

• USDA ERS, Highlights from the Farm Income Forecast (updated 3 September 2026) — checked 2026-09-25
• USDA ERS, Farm Sector Income Forecast: production expenses — checked 2026-09-25
• Iowa State University Extension, Estimating Farm Machinery Costs (Ag Decision Maker A3-29, revised March 2026) — checked 2026-09-25

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