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Depreciation Patterns for Agricultural Machinery

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  • Timothy L. Cross
  • Gregory M. Perry

Abstract

A flexible functional form model is used to estimate remaining-value equations for eleven major types of farm machinery. Data used in estimation were obtained from ten years of machinery auctions. Remaining values were found to be influenced by machinery condition, use, manufacturer, and age. Macroeconomic variables were significant explanatory variables for most types of machinery. Estimated depreciation patterns varied by machinery type, demonstrating the need for updated machinery-specific remaining-value equations. Reduced-form equations are presented for use in applied economic analysis.

Suggested Citation

  • Timothy L. Cross & Gregory M. Perry, 1995. "Depreciation Patterns for Agricultural Machinery," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 194-204.
    • Handle: RePEc:oup:ajagec:v:77:y:1995:i:1:p:194-204.
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    File URL: http://hdl.handle.net/10.2307/1243901
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    Cited by:

    1. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2024. "Enhancing Predictive Accuracy in European Agricultural Tractor Residual Value Estimation: A Double Square Root Regression Reappraisal," Agriculture, MDPI, vol. 14(5), pages 1-19, April.
    2. Tozer, Peter R., 2005. "Depreciation Rates for Australian Tractors and Headers - Is Machinery Depreciation a Fixed or Variable Cost?," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137951, Australian Agricultural and Resource Economics Society.
    3. Jens Rommel & Meike Weltin, 2021. "Is There a Cult of Statistical Significance in Agricultural Economics?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(3), pages 1176-1191, September.
    4. Lazarus, William F. & Selley, Roger A., 2002. "Suggested Procedures For Estimating Farm Machinery Costs," Staff Papers 14072, University of Minnesota, Department of Applied Economics.
    5. Beaton, Aaron J. & Dhuyvetter, Kevin C. & Kastens, Terry L. & Williams, Jeffery R., 2005. "Per Unit Costs to Own and Operate Farm Machinery," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(1), pages 1-14, April.
    6. Paul Gallagher & Mark Dikeman & John Fritz & Eric Wailes & Wayne Gauthier & Hosein Shapouri, 2003. "Supply and Social Cost Estimates for Biomass from Crop Residues in the United States," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(4), pages 335-358, April.
    7. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2023. "Agricultural Tractor Retail and Wholesale Residual Value Forecasting Model in Western Europe," Agriculture, MDPI, vol. 13(10), pages 1-21, October.
    8. Yang, Dennis Tao & Zhu, Xiaodong, 2013. "Modernization of agriculture and long-term growth," Journal of Monetary Economics, Elsevier, vol. 60(3), pages 367-382.
    9. Suhao Wei & Yangxiao Lu, 2022. "Why China’s AMS Market Is Difficult to Develop Sustainably: Evidence from the North China Plain," Sustainability, MDPI, vol. 15(1), pages 1-16, December.
    10. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2023. "Agricultural Combine Remaining Value Forecasting Methodology and Model (and Derived Tool)," Agriculture, MDPI, vol. 13(4), pages 1-15, April.
    11. Unknown, 1998. "References/Literature Cited," Commodity Costs and Returns Estimation Handbook,, Iowa State University.
    12. Ward, Barry, 2017. "Pr - Economic Depreciation: Evidence Of Change From High Margin To Low Margin Periods," 21st Congress, Edinburgh, Scotland, July 2-7, 2017 345785, International Farm Management Association.
    13. Lin Gan & Takahashi Yoshifumi & Nomura Hisako & Yabe Mitsuyasu, 2024. "The short‐ and long‐term impacts of overinvestments on the profitability of agri‐food processing firms in China," Agribusiness, John Wiley & Sons, Ltd., vol. 40(1), pages 227-247, January.
    14. Dumler, Troy J. & Burton, Robert O., Jr. & Kastens, Terry L., 2000. "Use Of Alternative Depreciation Methods To Estimate Farm Tractor Values," 2000 Annual meeting, July 30-August 2, Tampa, FL 21800, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2023. "A New Method and Model for the Estimation of Residual Value of Agricultural Tractors," Agriculture, MDPI, vol. 13(2), pages 1-20, February.
    16. Zou, Baoling & Mishra, Ashok K., 2024. "Modernizing Smallholder Agriculture and Achieving Food Security: An Exploration in Machinery Services and Labor Reallocation in China," IZA Discussion Papers 17008, Institute of Labor Economics (IZA).
    17. Ivan Herranz-Matey & Luis Ruiz-Garcia, 2024. "New Agricultural Tractor Manufacturer’s Suggested Retail Price (MSRP) Model in Europe," Agriculture, MDPI, vol. 14(3), pages 1-21, February.
    18. 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.
    19. Luis Ruiz-Garcia & Patricia Sanchez-Guerrero, 2022. "A Decision Support Tool for Buying Farm Tractors, Based on Predictive Analytics," Agriculture, MDPI, vol. 12(3), pages 1-26, February.
    20. Andersen, Matthew A. & Alston, Julian M. & Pardey, Philip G., 2009. "Capital Service Flows: Concepts and Comparisons of Alternative Measures in U.S. Agriculture," Staff Papers 50098, University of Minnesota, Department of Applied Economics.
    21. Gallagher, Paul W. & Dikeman, Mark & Fritz, John & Wailes, Eric & Gauthier, Wayne & Shapouri, Hosein, 2003. "Supply and Social Cost Estimates for Biomass from Crop Residues in the United States," ISU General Staff Papers 200304010800001493, Iowa State University, Department of Economics.
    22. Watkins, K. Bradley & Hill, Jason L. & Anders, Merle M. & Windham, Tony E., 2006. "Whole-Farm Evaluation of No-Till Profitability in Rice Production using Mixed Integer Programming," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(3), pages 1-17, December.
    23. Dumler, Troy J. & Burton, Robert O., Jr. & Kastens, Terry L., 1998. "Implications Of Alternative Farm Tractor Depreciation Methods," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20913, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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