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Machinery-Sharing Contractual Issues and Impacts on Cash Flows of Agribusinesses

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  • Wolfley, Jared L.
  • Mjelde, James W.
  • Klinefelter, Danny A.
  • Salin, Victoria

Abstract

Contractual arrangements for joint machinery ownership between independent agribusi- nesses are explored. A two-farm economic simulation model of locations in Texas, Colorado, and Montana is developed to provide insight associated with sharing combines. Important variables include combine size (efficiency), yield losses resulting from untimely access to equipment, the penalty structure for untimely delivery, and cost-sharing and depreciation deductions claimed between producers. Combine sharing is risk-reducing in most cases. The gains to both parties are lowest when harvesting periods overlap. While the value of sharing is positive under many scenarios, benefits from sharing are small relative to total farm revenue.

Suggested Citation

  • Wolfley, Jared L. & Mjelde, James W. & Klinefelter, Danny A. & Salin, Victoria, 2011. "Machinery-Sharing Contractual Issues and Impacts on Cash Flows of Agribusinesses," Reports 285218, Texas A&M University, Agribusiness, Food, and Consumer Economics Research Center.
    • Handle: RePEc:ags:tamagr:285218
    DOI: 10.22004/ag.econ.285218
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    References listed on IDEAS

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    1. Foreman, Linda F., 2006. "Characteristics and Production Costs of U.S. Corn Farms, 2001," Economic Information Bulletin 7205, United States Department of Agriculture, Economic Research Service.
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    1. Feil, J.-H. & Anastassiadis, F. & Mußhoff, O. & Kasten, P., 2016. "Analysing Farmers’ Preferences fo Collaborative Arrangements: An Experimental Approach," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 51, March.
    2. Simon Cornée & Madeg Le Guernic & Damien Rousselière, 2020. "Governing Common-Property Assets: Theory and Evidence from Agriculture," Journal of Business Ethics, Springer, vol. 166(4), pages 691-710, November.

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