111 EAAE-IAAE Seminar Small Farms: decline or persistence. University of Kent, Canterbury, UK. 26 th -27 th June 2009

Transcription

1 111 EAAE-IAAE Seminar Small Farms: decline or persistence University of Kent, Canterbury, UK 26 th -27 th June 2009 Do Machinery Costs Put Small Farms at a Competitive Disadvantage? Results of a Survey in Switzerland Gregor Albisser Vögeli and Dominique Gärtner Agroscope Reckenholz-Tänikon Research Station ART Tänikon, CH-8356 Ettenhausen, Switzerland gregor.albisser@art.admin.ch Tel. +41 (0) Copyright 2009 by Gregor Albisser Vögeli and Dominique Gärtner. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. Abstract Small farms in Switzerland with twenty or fewer hectares of farmland have higher machinery costs, and are consequently at a competitive disadvantage. These farms invest more money per hectare in machines and vehicles, as well as spending more on repair and maintenance. Surprisingly, the utilisation per vehicle is not lower on small farms, nor are the vehicles older. To increase this utilisation time, both small and larger farms share vehicles and machinery with neighbouring farms equally often. Keywords: Machinery costs, production costs, machinery sharing - 1 -

2 1 INTRODUCTION 1.1 Farm size in Switzerland Traditionally, farms in Switzerland are very small compared to those in France or Germany. Most Swiss farms are run by the owner himself and his family. Over the past decade, liberalisation of the agricultural commodities markets has put increased pressure on farmers to improve their competitiveness. In order to earn an adequate household income, more and more owners of small farms are now working part-time or full-time outside of their farms. Since the purchase or lease of farmland remains expensive, however, the size of farms is increasingly only slowly, as shown in Table 1. Table 1: Farm size and number of farms in Switzerland Year Difference per year Farmland ha 46,911 26,913 20, % -1.6% ha 31,630 24,984 20, % -1.2% ha 13,590 17,433 18, % 0.4% > 50 ha 684 1,207 1, % 3.0% All farms 92,815 70,537 61, % -0.9% Average farmland ha ha ha 3.2 % 0.9% Source: FSO 2009 In 2007, the average farm size in Switzerland was hectares. Farms of under 20 hectares are often given up when the owners retire, however. 1.2 Machinery costs Machinery costs play a very important role in the analysis of production costs and competitiveness in agriculture (Lips and Ammann 2007). Because they account for the highest percentage of crop-production costs and are easily controlled by the decisions made by farmers (SGPV 2004), machinery costs have been identified as the biggest source of potential savings in crop production in Switzerland. On the other hand, on small farms there is less machinery utilisation to which fixed costs can be allocated. This results in higher machinery costs than for larger farms. There are several strategies for reducing these costs, however. Farmers can rent or share with their neighbours machines which are very expensive or seldom used, or they can hire a contractor to perform the work. Small farms can cut costs by buying used machines. In this way, they benefit from cheaper purchase costs, which result in lower fixed costs. Finally, low utilisation of machinery on small farms results in use over a longer period of time, which reduces write-offs

3 2 METHOD 2.1 Survey In autumn 2008 we conducted a survey on machine use and its associated costs. The results of this survey will be included in our machine-cost calculations, and will place them on a new empirical basis (Albisser et al. 2008). The questionnaire was sent to 2000 randomly chosen crop or dairy farmers, who were questioned as to their motor vehicles and other frequently used machinery for crop or forage production. In addition to the variables required for the indemnity calculations, the farmers provided us with further information such as their age, farm succession status, animal-housing system and number of hectares under cultivation. 2.2 Classification In order to analyse the differences in farm size, we divided the survey into a smallfarm group and a large farm group. Table 1 shows that the number of farms with 20 or fewer hectares of farmland i.e. those belonging to the small farms category is decreasing. The rest of the survey represents larger farms with over 20 hectares of farmland. Farmers with under 10 hectares of farmland are not included in the survey. Most farmers in this category work full-time outside of the farm, subsidising the cost of their machinery with the income thereby earned. Many such farmers are very well equipped, having invested heavily in mechanisation to save working time on the farm. 3 DATA A total of 351 farmers completed our questionnaire, providing us with a dataset containing 2953 agricultural machines. For all these machines we were supplied with data concerning: Age (year of construction) Year of purchase Purchase price Utilisation (in total, and for the last three years) Cost of repairs (for the last three years) Maintenance costs (per year) Current accounting value Shared utilisation between farms (per year) In addition, we obtained up-to-date information on the farmers and their farms: Farm manager s age Utilised agricultural area (UAA) of farm Quantity of milk produced - 3 -

4 4 RESULTS The average farm size in the survey was hectares. Figure 1 shows a histogram with the utilised agricultural area (UAA). The average farm size in Switzerland is smaller than this (17.17 hectares) Frequency Häufigkeit Mean = Standard Dev. = N = 338 Mittelwert =29.09 Std.-Abw. = N = Utilised agricultural area (UAA) Figure 1: Frequency of the utilised agricultural area in the survey All statistical values for all farms as well as for each group are listed in Table 2. This table also reports the results of the Kruskal-Wallis test. The results indicate that small farms have fewer machines in total, but a higher number of machines per UAA. Consequently, the purchase prices and accounting values per UAA of all machines are higher on small farms. Looking at motorised vehicles only, the effects are the same for all machines. Larger farms account for almost half the utilisation hours per hectare UAA. The overall repair and maintenance costs per year and UAA for their vehicles are therefore lower. Perhaps surprisingly, small farms have newer vehicles, resulting in shorter utilisation periods. By contrast, there is no significant difference in utilisation time per vehicle between small and larger farms, although small farms share their vehicles with neighbouring farms for more hours per year

5 Table 2: Results for small and larger farms Variable Unit Farm Type Chi- Pro- All Small Larger squared bability Farms studied Number % Utilised agricultural area (UAA) ha Farm manager s age Years Milk yield per UAA kg Machines (total) Number Machines per UAA Number Purchase price of all machines per CHF UAA Current accounting value of all CHF machines per UAA Vehicles (total) Number Vehicles per UAA Number Vehicle utilisation per UAA (total) Hours Utilisation per vehicle and year Hours Age of vehicles Years Purchase price of all vehicles per CHF UAA Current accounting value of all CHF vehicles per UAA Vehicle repair and maintenance CHF costs per year and UAA (total) Vehicle engine power kw Shared utilisation of vehicles between farms per year (total) Hours CONCLUSIONS The results of our study strongly indicate that small farms are at a competitive disadvantage owing to higher machinery costs. Small farms invest more money in machinery per hectare of farmland, as well as having higher repair and maintenance costs per hectare. Moreover, larger farms utilised their vehicles half the time per hectare of small farms to cultivate their land. Contrary to our initial assumptions, vehicles on small farms are used for a very similar number of hours per year to those on larger farms, and the vehicles of farmers with 20 hectares or less of farmland are not older. On the other hand, many farmers share or rent their vehicles regardless of the number of hectares they farm

6 References Albisser, G., Ammann, H., Gazzarin, Ch. (2008): Maschinenkosten 2009, ART- Bericht Nr. 702, Agroscope Reckenholz-Tänikon, ART, 8356 Ettenhausen FSO (2009): Encyclopedia. Swiss Federal Statistical Office (FSO). [May 2009] Lips, M. and Ammann, H. (2007): Kostenvergleich im Ackerbau zwischen der Schweiz und Baden-Württemberg. ART-Bericht Nr. 687, Agroscope Reckenholz-Tänikon, ART, 8356 Ettenhausen. SGPV (2004): Getreide Arbeitsdokument, Schweizerischer Getreideproduzentenverband, 1. Juli 2004, Châtonnaye. [October 2008] - 6 -