PER UNIT COSTS TO OWN AND OPERATE FARM MACHINERY

of 1,188, 188 and 3,818 respectively. The financial data for the respective farms was obtained
from Kansas Management, Analysis and Research 105 (KMAR), which compiles financial and
production data for the KFMA members. The total crop machinery cost (tcmc) for each farm
was determined by the sum of the crop share of: machinery repairs, gas, fuel, oil, farm auto
expense, depreciation, machine hire, machinery insurance, machinery shelter, opportunity
interest on crop machinery investment, and crop machinery labor. The crop machinery labor
cost includes only crop machinery labor (time dedicated to machinery operation, maintenance,
repairs, and management), as compared to total crop labor cost that would include crop
machinery labor as well as time spent managing the crop enterprises (i.e., marketing, crop
scouting, complying with government programs, etc.).

To better depict how the costs of the farms in this research compare to custom rates, a
ratio R was developed to compare state-wide custom rates to a farm’s total crop machinery costs.
To calculate R, Ki was calculated to be the “expected total crop machinery costs” for farm i, had
all operations been performed at state-wide average custom rates, and is defined as
(6)    K_i=∑[τ ji^αj ]^,

j

where αj is the state average KAS custom rate for operation j and γji is the number of units of
operation j performed on farm i. As such, R is defined as

tcmc_i

R_i =----

i Ki

A ratio less than one, equal to one, and greater than one would indicate a farm has crop
machinery costs less than, equal to, or greater than the state-wide average Kansas custom rates
for the respective operations performed on that farm. Across all farms, the ratio R had an
average, minimum, maximum, and standard deviation of 1.31, 0.55, 2.47 and 0.40, respectively.

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