With farm machinery expenses at an all-time high, farmers might need to take a closer look at the numbers before purchasing machinery.

A recent analysis by the University of Illinois farmdoc team showed prices of new ag equipment increased by more than 20% from 2021 to 2023 due to several factors, including supply chain challenges from the COVID-19 pandemic, a continued rise in inflation, labor shortages and reduced output due to concerns about lower demand for machinery considering lower grain farm incomes.

Machine related costs have also been on the rise. Illinois Farm Business Farm Management data shows central Illinois farms growing corn on high-productivity farmland saw a 25% rise in machinery related costs from 2021 to 2024. That includes depreciation (up $18 per acre), fuel and oil (up $4 per acre), repairs (up $7 per acre) and machine hire (up $6 per acre).

An analysis by Agricultural Economic Insights looked at the financing side of equipment purchases. The total interest expense over the life of a loan for the first half of 2025 was $154 for every $1,000 spent, which is the highest since data became available in 1977.

While interest rates have not reached the highs of 18% seen in the 1980s, the duration of loans has increased significantly, from an 11-month average in 1981 to 45 months in 2025.

“Higher interest rates force a tradeoff between an aggressively short repayment period (which results in high payments) and more affordable payments (which result in more payments made and higher total expense),” the Ag Economics Insights author wrote. “For now, it appears the farm economy is on extended repayment schedules. As a result, producers financing machinery in 2025 will make more payments and incur record-high interest expenses over the life of the loan.”

Given the significant increases in costs, farmers might need to reassess machinery management strategies. The farmdoc analysis suggested crunching the numbers on combines first.

“On most farms, combines represent the single largest machinery investment, and harvest costs often equal more than 50% of total machinery-related costs,” the authors wrote. “Per-acre combine costs are directly related to the number of acres harvested with each combine.”

U of I data suggests significant cost disadvantages for those harvesting fewer than 3,000 acres with a combine. For farms with more than 3,000 acres, combining more acres can result in lower costs.

The authors said farms with fewer than 3,000 acres could form a partnership and own a combine jointly, while some farms with fewer acres may consider having acres custom-harvested to cut some costs.

There are ways to minimize expenses with other machinery as well.

“The number of relatively new tractors a farm owns will significantly impact costs. For example, farms that have two tractors that are less than 10 years old will have an advantage over a similarly sized farm with three tractors,” authors of the farmdoc analysis noted.

The amount of tillage equipment and number of planters also influences cost.

“Many farmers now have two planters, allowing them to plant soybeans and corn simultaneously. Yield advantages may come from simultaneous planting, but the costs of owning two planters have increased in recent years. Re-evaluating the advisability of owning two planters may be warranted,” according to farmdoc.

This story was distributed through a cooperative project between Illinois Farm Bureau and the Illinois Press Association. For more food and farming news, visit FarmWeekNow.com.