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Prairie Farmer - March 2007

Simplify Economics of Farm Machinery

Garrett Stoerger
Department of Agricultural and Consumer Economics
University of Illinois at Urbana-Champaign

With spring just around the corner, you will soon be venturing to the fields, hoping for a great year. With commodity prices lingering at levels that could result in record returns, many of you are looking to - or have already - expanded your operations. Yet, do you know whether you have enough machinery to get the job done?

That's a simple yes or no question, right? Maybe not. How much further can you push your equipment before breakdowns become too costly? Is picking up additional acreage, raising more corn and yet not making any additions to your equipment line feasible? Equipment that's too old or too small can haunt you come harvest time.

To help farmers make difficult machinery decisions, members of the farmdoc team at the University of Illinois have developed a FAST program. With it, you can do everything from calculate the per-acre cost of your combine to figure out how likely you are to finish planting corn by the end of April (barring weather questions, of course).

The inner workings

The Machinery Economics spreadsheet has a variety of sections, including those for computing workday probabilities, tillage/planting costs, combine costs and harvest efficiency.

The workday probabilities section calculates the chance that an operator will be able to complete fieldwork by an established date based on the current equipment available. You can also analyze five different fieldwork operations: planter, drill, planter/drill, combine and other. Once you've defined your equipment size, hours worked per day and total acreage to be completed, you can then use the spreadsheet to figure the probability of completing that work.

You can also use the tool to figure the cost per acre of running tractors, implements and combines of various sizes and capacities. While it is not too difficult to calculate input costs for any one year, machinery costs can become more complicated when you begin figuring fuel, labor, repairs, depreciation and salvage value.

The Machinery Economics tool does nearly all of the work for you, after you input your individual information. It offers a lot of flexibility, with programming for more than 75 different implements, 17 tractor types and four combine sizes. And it's a lot easier to operate than you may think. Suggested default values include items such as new list prices, field efficiency and speed of operation for each of the different items.

Compare combine costs

The combine cost calculator features a sensitivity analysis of average per-acre costs to total acres harvested. This allows users to compare their present per-acre combine costs to those with different-sized operations, or simply to see how their cost structure would be affected if they were to acquire or lose acreage.

And if you're struggling with whether your operation could benefit from a larger-capacity truck, struggle no longer. You can simply plug in data from your operation to determine efficiency of your combine, grain cart and trucks. You can also tally shortcomings in grain-hauling output, as well as make side-by-side comparisons of operations with or without grain carts.

Bottom line: The Machinery Economics tool takes a lot of the guesswork out of the tough machinery questions farmers face today.

Stoerger is FAST Tools Coordinator with University of Illinois Extension .