December 17, 2001
FEFO 0124
NEW SPREADSHEET TOOL FOR MACHINERY
ECONOMICS
A new Microsoft
Excel spreadsheet has been developed to provide economic information
on machinery issues commonly faced by farmers. The spreadsheet
will 1) calculate the probabilities of being able to complete
machinery operations between beginning and ending dates, 2) calculate
the costs of tillage and planting operations, and 3) calculate
the cost of combining. The spreadsheet is named Machinery Economics
and is part of the FAST decision aids available for download
at farmdoc (see http://www.farmdoc.uiuc.edu/finance/business.html).
Probability
of completing field operations
The "work"
sheet of Machinery Economics will calculate the probability
of being able to complete field operations between a beginning
and ending date. Information in this sheet is particularly useful
for farmers expanding their land base and are considering whether
their current equipment complements will complete field work in
a timely manner.
As illustrated
in the box below, users of Machinery Economics select a
beginning and ending date, a location, and a machine. The example
is for a farmer in central Illinois examining the probabilities
of being able to complete planting between April 15th and May
15th.
Machinery
Economics has three default locations: northern, central,
and southern Illinois. For each location, weather data are used
to calculate the probability of performing field work on different
days of the year. These probabilities vary across Illinois. Machinery
Economics has five machine selections: planter, drill, planter/drill,
combine, and other.
Based on
the above input, Machinery Economics calculates the total
number of days between the beginning and end date, the average
number of work days, and a distribution of work days.
The above
output is based on the central Illinois, planting example. Between
April 15th and May 15th there are 31 days. On average, there are
9 days in which field operations can be performed (i.e. average
work days is 9). Work days obviously will vary from year to year.
Estimates suggest that there will be less than 6 days in which
field operations can be performed in 10 percent of the years,
between 7 and 12 days in 76 percent of the years, and between
13 and 18 days in 14 percent of the years (see box above).
Next, users
of Machinery Economics enter information concerning the
machine's size, hours of work per day, and acres to cover. Exact
questions asked will vary depending on the machine that is selected.
The following box shows input for a planter.
The planter
described in the above box has 24 rows that are 30 inches apart.
The planter will be operated 12 hours per day, will be driven
6 miles per hour, and will have a 70 percent field efficiency
(i.e., while the planter is in the field it will be running 6
miles per hour 70 percent of the time). The planter will cover
1,600 acres.
This planter
covers 30.5 acre in one hour and 366.5 acres in a 12 hour day
(see box below). It will take 4.4 days to plant 1,600 acres. There
is a 98 percent chance of planting the 1,600 acres between April
15th and May 15th, the dates entered in the first input box. The
average ending date of the planting will be April 28th.
Machinery
Economics also gives the probabilities of completing the work
given different sized planters. There is a 7 percent chance of
covering 1,600 acres between April 15th and May 15th with an 8
row planter, 52 percent chance with a 12 row planter, and 80 percent
chance with a 16 row planter (see bottom of the above output box).
These probabilities
will change given input changes: reducing hours work from 12 hours
to 10 hours reduces the probability of planting 1,600 acres with
a 24 row planter from 98 percent down to 95 percent, reducing
speed from 6 miles per hour down to 5 miles per hour reduces the
probability from 98 percent to 95 percent, and reducing field
efficiency from 70 percent to 65 percent also reduces the probability
to 95 percent.
Probability
and cost information
The above
probability information can be combined with cost information
available from the Machinery Economics spreadsheet to examine
tradeoffs between different sized machines. Larger machines will
generally increase the probability of completing field work but
will also cost more than smaller machines.
This spreadsheet
is part of the FAST spreadsheets available at farmdoc
(http://www.farmdoc.uiuc.edu/finance/business.html).
Issued by:Dale
Lattz, Department of
Agricultural and Consumer Economics
