These figures will immediately indicate an opportunity for the furtherance of economic agriculture. With so much capital invested in equipment, the American farmer would certainly be a very bad business man indeed if he did not take some means of protecting this equipment to reduce depreciation and to increase its length of life. The question has sometimes been asked, does it pay to house farm machinery? Is it not a better practice not to give any special care to the machinery but use it as long as it will run without care then buy newer and more up-to-date equipment?
The situation bears some consideration. According to Census figures, the average investment per farm in farm machinery is almost exactly $200. This, however, is the case when every sort of farm is included, and since the Census Bureau’s definition of a farm is extremely liberal it would not be practical for our purposes. A fair estimate of the average value of farm machinery on a farm is $1,000. No reliable figures are available to indicate the rate of depreciation of farm machinery; one farmer will take excellent care of his binder and it may do service for twenty or twenty-five years, while another farmer will leave his binder in the middle of the field where the last stalk of grain was cut, and it would be surprising if his machine could operate satisfactorily for more than five seasons. To take ten years as the average life of farm machinery is certainly to be considered conservative.
Most farm machines are well and substantially constructed and will render satisfactory and efficient service with slight repairs for a much longer term of years than the average which has just been given. It is entirely safe to assume that the average length of efficient service can be increased to fifteen years providing proper care is given. It is almost equally safe to assume that the average life of uncared-for machinery will not be much more than five years.
The farmer who has a thousand dollars worth of machinery to which he gives no care and attention will then have an annual reduction in value of $200, besides his interest charge of $60 on his investment or a total debit of $260. The farmer who properly houses his machinery will have an annual deduction of $66.66 for depreciation and the same interest charge of $60. He will have, in addition, an annual charge of $25 for interest and depreciation on his building if it cost $250, or a total of $151.66, which is $108.34 less than that of his improvident neighbor. The careful farmer then may consider that he has in his implement house an investment representing over $1,800 as shown by the saving it brings him; as a simple implement shed can be built for $250, a net profit of an interest-paying $1,550 remains. Putting the problem in another way, on many farms the savings on machinery will pay for a shed in two or three years.