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Repair and Maintenance Costs for Agricultural Machines

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  • Lips, Markus
  • Burose, Frank

Abstract

The paper presents an approach for deriving repair and maintenance factors intended to indicate the accumulated repair and maintenance costs for agricultural machines. In a two-stage approach, an annual ‘repair and maintenance cost’ function is estimated and afterwards aggregated for the machine’s estimated service life. Based on cross-sectional data, the approach is applied for tractors, ploughs, mowers and self-loading trailers in Switzerland, covering a wide range of agricultural mechanisation. The results of our study show that, in line with the literature, an additional year in service increases annual repair and maintenance costs for all machine types under consideration. Furthermore, annual utilisation strongly influences repair and maintenance costs, a fact which, to our knowledge, has so far not been taken account of in the literature. For all analysed machines, increasing annual utilisation leads to a disproportionately low increase in repair and maintenance costs, revealing the existence of an economy-of-scale effect. Assuming that the machine’s estimated service life (also called estimated useful life) is completely exploited, the accumulated repair and maintenance costs depend strongly on the machine’s annual utilisation. Accordingly, in order to minimise accumulated repair and maintenance costs, high annual utilisation coupled with a short length of service life is beneficial.

Suggested Citation

  • Lips, Markus & Burose, Frank, 2012. "Repair and Maintenance Costs for Agricultural Machines," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 1(3), pages 1-7.
    • Handle: RePEc:ags:ijameu:149750
    DOI: 10.22004/ag.econ.149750
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    File URL: https://ageconsearch.umn.edu/record/149750/files/40-Lips.pdf
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    References listed on IDEAS

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    1. Troy J. Dumler & Robert O. Burton & Terry L. Kastens, 2003. "Predicting Farm Tractor Values through Alternative Depreciation Methods," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(2), pages 506-522.
    2. Jing Wu & Gregory M. Perry, 2004. "Estimating Farm Equipment Depreciation: Which Functional Form Is Best?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 483-491.
    3. Troy J. Dumler & Robert O. Burton & Terry L. Kastens, 2003. "Predicting Farm Tractor Values through Alternative Depreciation Methods," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(2), pages 506-522.
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    Cited by:

    1. Hamzeh Soltanali & Mehdi Khojastehpour & Siamak Kheybari, 2023. "Evaluating the critical success factors for maintenance management in agro-industries using multi-criteria decision-making techniques," Operations Management Research, Springer, vol. 16(2), pages 949-968, June.
    2. Markus Lips, 2017. "Length of Operational Life and Its Impact on Life-Cycle Costs of a Tractor in Switzerland," Agriculture, MDPI, vol. 7(8), pages 1-9, August.

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    Keywords

    Farm Management; Labor and Human Capital;

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