Farm Machinery Ag Decision Maker Selection File A3-28 utting together an ideal machinery system long run; machinery that is too small may result in is not easy. Equipment that works best one lower crop yields or reduced quality. year may not work well the next because of P Ownership Costs changes in weather conditions or crop production practices. Improvements in design may make older Machinery ownership costs include charges for de- equipment obsolete. And the number of acres be- preciation, interest on investment, property taxes, ing farmed or the amount of labor available may insurance and machinery housing. These costs change. increase in direct proportion to machinery invest- ment and size. Because many of these variables are unpredictable, the goal of the good machinery manager should be Operating Costs to have a system that is flexible enough to adapt Operating costs include fuel, lubricants and repairs. to a broad range of weather and crop conditions Operating costs per acre change very little as ma- while minimizing long-run costs and production chinery size is increased or decreased. Using larger risks. To meet these goals several fundamental machinery consumes more fuel and lubricants per questions must be answered. hour, but this is essentially offset by the fact that more acres are covered per hour. Much the same is Machine Performance true of repair costs. Thus, operating costs are of mi- First, each piece of machinery must perform reli- nor importance when deciding what size machinery ably under a variety of field conditions or it is a is best suited to a certain farming operation. poor investment regardless of its cost. A detailed procedure for estimating machinery Tillage implements should prepare a satisfactory ownership and operating costs can be found in seedbed while conserving moisture, destroying AgDM Information File A3-29, Estimating Farm early weed growth and minimizing erosion poten- Machinery Costs (PM 710). tial. Planters and seeders should provide consistent seed placement and population as well as properly Labor Cost apply pesticides and fertilizers. Harvesting equip- As machinery capacity increases, the number of ment must harvest clean, undamaged grain while hours required to complete field operations over minimizing field losses. a given area naturally declines. Estimates of time requirements for completing machinery operations The performance of a machine often depends are found in AgDM Information File A3-24, on the skill of the operator, or on weather and Estimating the Field Capacity of Farm Machines soil conditions. Nevertheless, differences among (PM 696). machines can be evaluated through field trials, research reports and personal experience. If hourly or part-time hired labor operates ma- chinery, it is appropriate to use the wage rate paid, Machinery Costs plus the cost of any other benefits which may be Once a particular type of tillage, planting, weed provided, as the labor cost. If the farmer-owner or control, or harvesting machine has been selected, a hired worker who is paid a fixed wage operates the question of how to minimize machinery costs machinery, then it is proper to value labor at its must be answered. Machinery that is too large for opportunity cost, or the estimated return it could a particular farming situation will cause machinery earn if it were used elsewhere in the farm business, ownership costs to be unnecessarily high over the such as in livestock enterprises. PM 952 Revised April 2015 Page 2 Farm Machinery Selection Timeliness Costs Number of Crop Acres In many cases, crop yields and quality are affected As more crop acres are farmed, larger-scale ma- by the dates of planting and harvesting. This chinery is needed to ensure that planting and represents a “hidden” cost associated with farm harvesting can be completed in a timely fashion. machinery, but an important one nevertheless. The An alternative is to acquire a second unit of some value of these yield losses is commonly referred to machines, if an additional tractor and operator are as “timeliness costs.” available. Total Machinery Costs Labor Supply Figure 1 illustrates the effect that changes in ma- The number of acres that can be completed each chinery size have on each type of cost in a typical day is the most critical measure of machinery ca- situation. For very small machinery (relative to pacity; more than machine width or acres complet- crop acres), a slight increase in machinery size ed per hour. Increasing the labor supply by hiring can lower timeliness and labor costs significantly, extra operators or by working longer hours during enough to more than offset the higher fixed costs. critical periods may be a relatively inexpensive way However, as machinery size continues to increase, of stretching machinery capacity. In addition, the the timeliness cost savings diminish, and even- cost of additional labor only needs to be incurred tually total costs begin to rise. One objective of in those years in which it is actually used, while machinery selection, then, is to select machinery the cost of investing in larger machinery becomes in the size range where total machinery costs are “locked in” as soon as the investment is made. lowest. On the other hand, extra labor may not always be available when needed, and working long hours Figure 1. Effect of increasing machinery over several days can present a safety hazard. size on machinery costs. Machinery Tillage Practices Cost per Acre The number of field days needed before planting is $90 completed depends partly on the number of sepa- $80 Total costs rate operations completed on each acre. Reduc- $70 ing the number of tillage practices performed or $60 Minimum cost performing more than one practice in the same trip $50 point effectively decreases the amount of machinery ca- $40 pacity needed to complete field operations on time. $30 Of course, machinery cost savings from reduced $20 tillage must be compared to possible increased $10 Labor costs chemical costs and effects on yields. Timeliness costs $0 Machinery Size Crop Mix Diversification of crops tends to spread out the Factors That Affect the Size of periods when timely completion of field operations Machinery Needed is critical. For example, yield reductions due to Machinery recommendations must be based on the late planting begin later for soybeans than for corn. characteristics of each individual farm. The follow- Harvesting can also be completed over a longer ing factors influence machinery selection, and are time period. Thus, growing more than one or two discussed in order of importance. crops reduces the machinery capacity needed for a given number of crop acres. However, it may also require purchasing additional types of machinery, especially for harvesting. Farm Machinery Selection Page 3 Weather available during the growing season, and this influ- Weather patterns determine the number of days ences the rate of crop development. suitable for fieldwork in a given time period each year. Although actual weather conditions cannot Figure 2. Estimated corn yield as percent of be predicted far enough in advance to be used as maximum, by planting date. an aid to machinery selection, past weather records 100% can be used as a guide. AgDM Information File A3- 95% 25, Fieldwork Days in Iowa (PM 1874) lists the 90% number of suitable field days expected for different 85% periods of the year in each of the nine crop report- 80% ing districts in Iowa. As a rule of thumb, weather 75% is suitable for field work about 60 percent of the 70% time in the spring and about 75 percent of the time 65% in the fall. This does not take into account time off 60% for holidays, Sundays or other occasions. Machin- 55% ery selection should be based on long-run weather 50% patterns even though it results in excess machinery 1-May 11-May 21-May 31-May 10-Jun 20-Jun capacity in some years and insufficient capacity in Source: Iowa State University, Corn Planting Guide, PM 1885 other years. Risk Management How early to start planting requires consider- Fluctuations in the number and occurrence of able judgment. Ideal conditions would be a soil suitable field days from year to year cause timeli- temperature of 50°F (10°C) or above at planting ness costs to vary even when the machinery set, depth and a favorable five-day weather forecast. In number of crop acres and labor supply do not most of Iowa, if soil conditions and temperatures change. Investing in larger machinery can reduce are favorable, starting to plant during the last ten the variability of net machinery costs by ensuring days of April should be advantageous. In May, the that crops are planted and harvested on time even major consideration should be the condition of the in years in which there are few good working days. seedbed. Machinery fixed costs would be higher with larger There is some risk with early planting. Replanting machinery, but they would not fluctuate as long as may occasionally be required, but the long-term the machinery set did not change. Farmers with benefits far outweigh this cost. An added benefit high fixed cash flow needs, such as land mortgage from early-planted corn is lower grain moisture payments, may be willing to pay more (in higher levels at harvest and reduced drying costs. fixed machinery costs) than other operators for the “insurance” of not suffering substantial yield losses Most of the same things can be said about plant- due to late planting and harvesting in certain years. ing soybean varieties. The ideal time for planting adapted soybean varieties is between May 1 and Planting and Harvesting Dates May 15. Yields can be expected to decline in most Long-term studies indicate that corn yields typi- years if planting occurs after May 20, as Figure 3 cally start to decline significantly when planting shows.