Age of machinery and equipment in the Czech agriculture

Abstract

Th e paper deals with the estimation and analysis of the average age and the age structure of machinery and equipment in agriculture. Th e development of the average age of machinery and equipment could be used as an indicator of the modernisation process and the picture of investment support in the industry. For the purposes of the analysis, the offi cial model of the perpetual inventory method is transformed into the Markov chain model. Th e analysis shows signifi cant differences in the institutional sectors. Th e average age of machinery and the age distribution depicts the situation in agriculture and it indicates the lower competitiveness of small farmers. Th e paper contains the prognosis of development of the average age of machinery and equipment in the case of permanent investment on the level of the current year. Th e international comparison shows that the average age of machinery and equipment in the Czech Republic is close to the level of developed countries. However, the estimated development shows a decreasing average age of the machinery and equipment.

The Analysis of the Age Structure of Regional Fixed Capital in the Agriculture

“…Since even a constant age below the stationary age requires an exponential growth of investment in constant prices, a fully developed industry with growth limits will reach a state fluctuating around the stationary structure and age. In international comparison (Krejčí et al, 2015), the age of fixed capital in United States of America and Commonwealth of Australia show a significantly smoother progression. Such development could be assumed in a developed industry.…”

“…Figure 2 shows the development of the average age of machinery in Czech NUTS 3 regions. Similarly to Krejčí et al (2015) the graph contains a simple extrapolation of age development which keeps the investment at the current level (the average ratio of regional investment for 2013 and 5-year moving average of gross fixed capital formation from the year 2014 to 2020). The average age of machinery in the whole Czech Republic in the period of 2000-2013 was 8.29 years and it decreased by 1.06 years during that period.…”

“…However, the age of fixed capital does not represent a common part of official statistics (Harper, 2008). As the national accounts statistics (the Czech Statistical Office, 2015b) publish mainly indicators that express the value of flows and stock, Krejčí et al (2015) estimate the age of fixed capital in agriculture and compare it with available international data on the age of capital. This research shows that the average age of fixed capital in the Czech Republic reaches a similar level as in the USA and Australia.…”

“…Considering the most significant types of assets, machinery and equipment, non-residential buildings and cultivated biological resources represented 97.87% of gross fixed capital stock in Czech agriculture in 2013 (the Czech Statistical Office, 2015b). The age of cultivated assets does not directly relate to modernization and aging of buildings does not necessarily represent obsolescence (for the age of the whole fixed capital stock in Czech agriculture see (Krejčí et al, 2015)).…”

“…For the description of the structure, many characteristics may be used. Most applicable are the average age of capital, the median of the capital age or any other quantiles(Krejčí et al, 2015). Fluctuation of those characteristics in time depends on a short-term excess or a deficiency of new investment.…”