First, they reduce the profitability of all forms of agricultural investment, including land improvements, irrigation, animals, and buildings. Second, they may cause farmers to allocate whatever investment funds are available away from mechanical inputs. This trend will be stronger the more expensive and long-lived the mechanical inputs are and the easier it is to produce other forms of capital (such as land improvements) by hand.
Japan, in particular, has developed many machines for small farms and plots. For certain operations, mechanization spreads to small farms when machinery can be rented rather than bought. For a rental market to be established, the optimal farm size for owning a machine must be bigger than that of numerous small farms. In addition, it is easier to establish rental markets for operations that do not need to be done on all farms at the same time: threshing and milling are examples.