IL6
t£76
)L,5
Rev. 1976
no.
c.5
'»* »3*
Bi
®
i
University of
Illinois Library
at
Urbana-Charnpaign
ACE S
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f&K
>
no,
FILE
COPY
-
-
W\
Ml'MFORD HALL
(OS5
3
FARM MACHINERY
ECONOMIC DECISIONS
By
R. B.
Schwart
UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN
COLLEGE OF AGRICULTURE COOPERATIVE EXTENSION SERVICE
CIRCULAR 1065 REVISED
CONTENTS
COSTS OF USING FARM MACHINERY
3
Ownership Costs
3
Operating Costs
4
Intangible Costs
5
CAPACITY OF FARM MACHINERY
6
PREDICTING COSTS OF USING FARM MACHINERY
7
When
to
Trade Machinery
9
Buying Used Machinery
10
Custom Hire of Machinery
11
Sharing Machinery Costs
12
Leasing Farm Machinery
14
FITTING
MACHINERY TO THE FARM
17
BACKGROUND MATERIALS
18
To supplement
this circular, six worksheets have been prepared for use by farmers who
wish to determine machinery costs and potential results of making economic decisions about
farm machinery. The following worksheets are now available:
— What Size Machinery for Your
Farm
No. 2 — Cost of Using New Machinery
No. 3 — When
Trade Machinery
No.
No. 4
No. 5
No. 6
1
?
— Purchasing Used Machinery
— Sharing Machinery Costs
— Figuring Custom and Machine
Rental Rates
to
This circular was prepared by R. B. Schwart, Extension Economist,
Farm Management
i
The
Illinois
Cooperative Extension Service provides equal opportunities
in
programs and employment.
——
.
Urbana,
July,
Illinois
Issued in furtherance of Cooperative Extension Work, Acts of
U.S.
Department of Agriculture.
JOHN
Extension Service, University of
B.
May
8
and June 30,
CLAAR,
Illinois at
Director,
1976
1914, in cooperation with the
Cooperative
Urbana-Champaign.
8M— 12-72— 23755
4M— 7-76— 34523— MN
FARM MACHINERY ECONOMIC DECISIONS
The average size of farms in Illinois increased about
20 percent between 1961 and 1970. During the same
period, the wholesale price index of machinery in the
United States increased about 30 percent and the inin farming increased
ventory value of machinery used
about 55 percent. Between 1961 and 1970, the costs of
fuel,
lubricants,
and machinery repairs per acre of
University of Nebraska. Repair costs summarized
Tables 3 and 3a are computed on
evaluation of this cost
more than 30
Timeliness
These changes, plus the continual technological changes in equipment and production methods, are making farmers more conscious of
machinery investments.
This circular provides basic information needed to
determine costs and methods for computing costs and
making economic decisions. Illustrations of these
methods are also provided.
The
first
part of the circular deals with the costs of
using farm machinery. Ownership costs (depreciation,
interest,
Table
insurance,
and housing) are summarized
in
2.
The
variable costs include fuel,
oil,
lubricants, re-
and lubricant costs are estimated using maximum power takeoff horsepower
(p.t.o.h.p.) and factors based on tractor tests at the
pairs,
and
labor. Fuel, oil,
in
hours of use.
Labor costs are figured at $5.00 per hour with actual
man-hours equal to 110 percent of field machine hours.
Intangible costs include lack of reliability and failure
to get things done when most timely. Since the loss of
time from breakdowns is highly random in nature, the
corn and soybeans in east-central Illinois have increased
percent.
total
left to the individual
is
farmer.
acknowledged by the use of Table
is
which indicates the time available for
operations in central
The second
field
Illinois.
part
amount of work
specific
5
of
the
circular
deals
with
the
that can be accomplished by selected
machines. Table 4 gives the basic data necessary for
computing the capacity of machines.
The
third part of the circular outlines the procedure
and operating .costs for mabuying used machinery, custom hire of machinery, joint ownership of
machinery, and leasing machinery.
The last part of the circular deals with fitting machinery to the farm. Tables 15 and 16 suggest complements of machines for one- to four-man grain and
hog farms.
for figuring ownership
chinery,
when
to trade machinery,
COSTS OF USING FARM MACHINERY
An
understanding of costs will help the farmer to
answer many questions about machinery use.
chinery costs may be classified as ownership
operating costs, and intangible costs. Ownership
amount of
Macosts,
costs,
which do not vary with the
depreciation, interest on investment, insurance, taxes,
and housing. Operating costs, which vary with the
amount of use, include fuel, oil and grease, repairs,
and operating supplies such as baling wire and twine.
A group of costs, such as truck licenses and labor, may
use,
include
be either ownership or operating costs. Such costs are
present
the
if
the
amount of
machine is used, but do not vary with
use. Other costs, which may be called
intangible costs, are related to the reliability of the
machinery and
pleted with
to timeliness of getting operations
minimum economic
com-
depreciation
tax
purposes are
the
straight-line
method, the declining-balance method, and the sum-ofdigits method. The Farmer's Income Tax Guide, published yearly
by the Internal Revenue Service, ex-
plains these methods.
The straight-line method is used in this circular
compute average depreciation costs. The formula is:
Purchase price
Number
— salvage value
of years of use
on investment
is
the
annual
interest
charge on the unrecovered cost of machinery. The
Ownership Costs
is
the decline in value resulting from
wear, obsolescence, rust, and corrosion.
counting point of view, depreciation
From an
is
recovery of a prepaid cost over the use
machinery.
used here
in-
8 percent of the remaining
value of machinery at the beginning of each year.
terest rate
Depreciation
to
The salvage value is based on the "as-is" price used
by machinery dealers (Table 1). The "as-is" price reflects the high loss in machinery value in the early
years of use and often indicates a higher salvage value
in later years than is used for income tax purposes.
Interest
loss.
for
The most common methods
ac-
the
annual
life
of the
of calculating
is
Many
farmers do not think of interest as a cost unless
borrow money to purchase a machine. Even
though the money is not borrowed, interest charges
they
should be considered because these funds could be
vested elsewhere and earn an income.
in-
—
Remaining "As-Is" Values of Farm Machines
1.
as a Percent of the Manufacturer's List Price"
Table
c
b.p.
~Iractor
,
.
Age
8
—
2.
Accumulated Total Ownership Cost of Farm
Machinery as a Percent of Manufacturer's List Price"
Table
_.
c
b.p.
r combine,
Baler.
ucombine,
K
blower,
,
swather,
forage
*
,
wagon and
harve erf
sprayer
0ther
_ ,•
machines
Age
'
swather
Tractor
100.0
56.6
50.1
44.4
39.3
34.7
30.7
27.2
24.1
21.3
18.9
16.7
14.8
100.0
62.6
57.6
53.0
48.7
44.8
41.2
37.9
34.9
32.1
29.5
27.2
25.0
23.0
21.2
19.5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
49.6
43.9
38.8
34.4
30.4
26.9
23.8
21.1
18.6
16.5
14.6
12.9
11.4
10.1
9.0
13.1
11.6
10.2
harvester,
s.p.
47.4
58.7
69.0
78.6
87.4
95.5
102.9
109.7
116.0
121.8
127.0
132.0
136.5
140.6
144.4
1
2
Machinery Data"
in
Agricultural
3
4
5
6
7
8
9
10
11
12
13
14
15
Engi-
Insurance must be included as a cost of operation.
Liability coverage should be included because tractors
and other machinery may be involved in accidents resulting in liability claims. There may also be losses as
a result of fire or high winds.
The common
rate
is
sprayer
60.4
71.1
80.6
88.9
96.3
102.8
108.6
113.7
118.3
122.3
125.8
129.0
131.8
134.2
136.3
53.4
65.6
76.3
85.8
94.3
101.8
108.4
114.2
119.4
123.9
128.0
131.6
134.8
137.6
140.1
Based on depreciation schedule from Table
insurance at V2 percent, and housing
remaining value at the beginning of each year.
»
* Based on "Agricultural
neers Yearbook, 1971.
.-..,
Other
ma chmes
Percent
Years
100.0
53.1
47.0
41.6
36.8
32.6
28.8
25.5
22.6
20.0
17.7
15.6
13.8
12.3
10.8
9.6
100.0
'
,
blower,
'
box
Percent
Years
,
f
Wag
s.p.
New
Baler,
.
.,
102.3
108.5
113.9
118.8
123.1
127.0
130.3
133.2
135.9
138.2
Interest
1.
8 percent,
56.9
68.3
78.4
87.4
95.3
at
XV2
figured at
is
percent of the
on the size of the unit, the type of fuel being used,
and the nature of the job being performed.
Average annual fuel requirements have been used
in most of the calculations to determine machinery
operating costs. However, in determining the cost of
$5 per $1,000 valuation or 0.5 percent of the remaining
particular operations, the fuel requirements should be
value of machinery at the beginning of each year.
computed on the
Taxes
are normally considered as a cost of using
machinery. However, taxes are not included as a cost
in calculations in this circular
because the
lature has abolished property taxes
Housing
cost even
if
repair costs
of
machinery
housing
may
may
is
Illinois legis-
on farm machinery.
should be included as a
Some machinerymuch as 20 percent
not provided.
be increased as
machinery is not
properly housed. Some reports indicate that housing
may increase the life of the machine by as much as
10 percent, which in turn may be reflected in the tradein value. Housing costs are a function of the square
while others
footage
These
not be increased
required
costs
will
to
if
house the individual machines.
average about
1.5
percent of
the
University of Nebraska tractor
mated as follows:
Gasoline
=
LP
gas
=
0.06
=
Diesel fuel
0.072
was
esti-
are approximated
Thus
and
fuel
lubricating costs per hour are estimated as follows:
=
0.069 X max. p.t.o.h.p. X fuel cost
Diesel fuel and lubricants
0.0504 X max. p.t.o.h.p. X fuel cost
LP gas and lubricants 0.0828 X max. p.t.o.h.p. X fuel cost
Gasoline and lubricants
=
=
Repair costs are
difficult to appraise.
Some
repairs
are needed because of deterioration, rust, and acci-
equivalent to a pole shed with about a 25-percent in-
shop area.
Table 2
oil filters
15 percent of the total fuel costs.
amount of
service
data,
X maximum p.t.o.h.p.
X maximum p.t.o.h.p.
X maximum p.t.o.h.p.
Costs of lubricants and
at
test
0.0438
dental breakage.
for a
power required. Average an-
nual fuel consumption in gallons per hour, based on
remaining value of machinery at the beginning of each
year. This charge will cover the cost of housing
crease in space allowance to provide
actual
spark plugs,
Some
etc.)
are
repair costs
directly
(tires,
associated
batteries,
with
use. Costs of other repairs, such as
the
major
overhauls, increase as the machine becomes older with
a fixed amount of use. Although these costs cannot be
accumulated ownership costs as a percent of the manufacturer's list price of the machine
when it was new.
lists
predicted for a particular machine in a particular year,
suggested values, expressed as a percent of the
price of the
new machine,
of machines in Tables 3 and 3a.
Operating Costs
Fuel and lubricant costs are directly related to the
amount of use and to the level of power output. The
amount of fuel used per hour by a power unit depends
may be computed
list
repair costs
Annual repair
costs
as follows:
manufacturer's
Aver, annual
list
are given for different types
price
X
accumulated repair costs
for expected use life
(Tables 3 or 3a)
number of years of use
Labor costs
vary with the
are difficult to evaluate because they
skill
and the alternative uses of
labor,
has been
made
Intangible Costs
of the operator, the availability of
labor.
No
in this circular to estimate the
Reliability of machinery concerns most farm oper-
attempt
They
ators.
marginal
are concerned with repair costs and also
with the loss of time resulting from breakdown.
wage rates
have been assumed. Actual man-hours of work are
usually more than actual field machine time. The actual
value of labor for particular jobs. Average
summary
of a study conducted by D. R.
•
The
less
than an even chance of getting through
cost associated with
—
Accumulated Repair Costs as a Percent of
Table 3.
8
the Manufacturer's List Price for Farm Machinery
Hours
tools,
of use
mounted
sprayer
equip-
equip-
Hours
ment
ment
of use
1.8
4.5
11.1
18.7
27.2
1.4
3.7
8.2
21.6
9.8
25.9
45.7
68.3
93.4
120.4
38.0
56.9
36.4
46.2
56.4
77.2
100.3
67.1
78.2
89.7
101.5
113.6
120.0
100
200
600
1,000
probability being 75 percent or greater each year for
Repair costs
the larger farms.
2-
4-
wheel
wheel
•
While there seems
to be
some
relation of break-
incidence to the use and age of the machine, the
survey data indicate that breakdowns are highly ran-
.1
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
it.
The complex harvesting machine systems are
more prone to operation-stopping breakdowns with the
Percent
1.2
3.1
that has a timeliness
tractors
Percent
.7
breakdown
•
down
50
100
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,500
so low that
is
each season. The average midwest corn and soybean
farmer has
Seeding Fertilizer
farm machines
reliability of
.1
.3
.2
1.3
1.1
2.9
8.2
15.0
23.1
32.3
42.3
53.5
65.3
77.9
91.3
105.3
120.0
2.4
6.8
12.5
19.3
26.9
35.4
dom
in nature.
appears that a mathematical evaluation of
It
ability is
almost impossible. In the
Based on "Agricultural Machinery Data"
Agricultural
in
farmer's subjective evaluation of reliability will influ-
ence his decision relative to his individual machines.
44.6
54.4
65.0
Timeliness
is
the measure of ability to perform a
job at a time that gives
76.1
87.8
100.0
of product.
Engi-
work
neers Yearbook, 1971.
Table
3a.
reli-
final analysis, the
The
optimum
quality
and quantity
costs are in terms of reduction in
yields or in sale value as a result of not
a
—
farmers must expect and plan for operation stoppages
the season without a
Farm
A
of the
Department of Agricultural Engineering, University
of Illinois at Urbana-Champaign, indicates that
man-hours range from about 102 to 180 percent of
field machine time. Most of the examples used in this
circular include 110 percent of machine time as actual
man-hours used.
Tillage
Hunt
at the
optimum
— Accumulated Repair Costs as a Percent of the Manufacturer's List
performing
period. Generally, the penalty
Farm Machinery*
Price for
P.t.o. forage
S.p. combine,
tt
forage
harvester,
rotary cutter,
pickup truck b
s.p.
Mower
r
p
i
harvester,
blower, corn
i
'
.
K'
picker, flail
harvester, s.p.
sprayer, farm
p
'
,
'
'
Hay
Baler with
conditioner,
s.d. rake,
engine, manure
spreader, frontend loader,
feed truck
swather,
feed
wagon
truck
Percent
50
100
200
400
600
800
1.0
2.4
6.0
14.8
25.1
36.4
48.7
61.7
75.4
89.7
104.5
120.0
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,500
a
b
.4
.6
.5
.3
.4
.9
1.5
.9
1.1
.7
2.4
6.4
11.2
16.8
23.0
29.6
36.7
44.3
52.3
60.6
4.0
1.2
3.2
....
....
....
....
....
....
2.9
7.7
13.6
20.6
27.8
35.9
44.5
53.7
63.3
73.4
83.9
94.8
100.3
1.8
27.8
38.0
49.1
60.9
73.4
86.6
100.3
2.3
6.2
10.9
16.3
22.2
28.7
10.5
18.6
8.4
14.9
22.2
30.4
39.2
48.6
58.6
69.1
80.1
....
....
....
Based on "Agricultural Machinery Data" in Agricultural Engineers Yearbook, 1971.
repair-cost study in 1966 by the Department of Agricultural Engineering at the University of
A
combine
to be about 45 percent of the data
given in this
table.
35.6
42.9
50.6
58.6
67.0
75.7
80.0
Illinois indicated
.3
4.7
8.2
12.3
16.8
21.7
26.9
32.4
38.2
44.3
50.7
57.2
60.6
repair costs for a self-propelled
costs are greatest with the seeding operation
No
crops considered in this circular.
on farm
general formulas
How-
have been designed for determining penalties.
ever, in this circular timeliness
is
acknowledged by the
use of Table 5 which shows the time available for specific field
operations in central
Illinois.
CAPACITY OF FARM MACHINERY
The amount of work accomplished by a machine is
determined by the size of the machine, the speed of the
machine, the field efficiency, the time available to do
amount and quality of labor, the type
and condition of the soil, and the breakdown time.
The amount of work that a machine will accomplish
may be computed by using the following formula:
the work, the
width of
machine
X
(m.p.h.)
efficiency
X
(percent)
generally not as critical
if
4,
with a
little
to be
made
care a farmer can
tively high degree of accuracy.
The
size of machine needed to accomplish work on
farm is a function of the time available and the
machine capacity. The most critical time in grain crop
production is the date of seeding. Thus farmers should
gear their total operation to take advantage of optimum
the
of harvest of grain crops often
Illinois.
in these estimates
The
task
machine needed
size of
may be computed by
to accomplish a given
work
acres of field
Size of machine
(width in inches)
speed
(m.p.h.)
The
Illinois.
using the following formula:
to be
done
X
efficiency
X
100
hours
field
X
available
(Table 5)
(Table 4)
estimate the potential of his machinery with a rela-
Time
shows estimated time
they are to be used in southern or northern
100
Thus, using Table
seeding dates.
may have
Adjustments
(Table 4)
(acres per hour)
is
for field operations in east-central
available
field
speed
(inches)
Machine capacity
influences the yields, but this
as the date of planting. Table 5
major power units or tractors
maximum power demands of the accompanying equipment. The size of the
tractor needed is determined mainly by the size of
the heavy tillage tools.
is
selection of the
generally determined by the
Worksheet No.
1,
"What
Size Machinery for
Your
Farm?" provides
mate the
copy of
a procedure for the farmer to estimachinery he needs for his farm. A
worksheet can be obtained from your
size of
this
extension adviser.
—
Estimated Range in Field Efficiency
Table 4.
and Operating Speed of Field Machines"
Field efficiency
1*
Machine
:
Range Typical
Table
5.
—
Estimated Time Available for Specified
1
Field Operations, Central Illinois
Speed
Range
Minimum days
;
Typical
P
Percent
Moldboard plow
Chisel plow
Disk
Row
crop cultivator
Rotary hoe
Field cultivator
Fertilizer spreader
Sprayer
Grain drill
Corn planter
Combine
Combine
p. t.o
s.p
Corn picker
Mower or hay
conditioner
Rake
Baler
Forage harvester
..
.
70-90
70-90
70-90
70-90
70-90
70-90
60-75
50-80
65-85
50-85
65-85
65-80
60-80
60-85
70-85
60-85
50-75
79
79
83
76
84
80
70
60
72
69
66
70
62
81
76
74
70
.-.
M.p.h.
3.5-6
3.5-6
3-6
1.5-5
5-10
3-8
3-5
3-5
2.5-6
3-6
2-4
2-4
2-4
4-6
4-5
2-5
2-A
Operation
4.5
4.0
5.0
4.5
9.0
4.0
5.0
5
Spring plow
Disk
,
,
dar
days
23
30
.
4.5
4.5
3.0
3.0
2.5
5.0
5.0
4.0
3.0
"Based on "Agricultural Machinery Data" in Agricultural Engineers Yearbook, 1971, and on Hunt, 1). R., Selection of Farm Machinery,
University of Illinois at Urbana-Champaign Cooperative Extension Service Circular 876.
h Field efficiency is the percentage of the theoretical field work accomplished after deducting for losses resulting from failure to use the
full width of the machine, turning and idle travel at the ends, clogging,
adjusting seed or fertilizer, unloading harvested crops, machine adjustments and minor repairs, lubrication, and other minor interruptions.
Plant corn
Plant soybeans
17
Hoe corn
Hoe soybeans
12
9
Cultivate corn
24
19
Cult, soybeans
11
Combine oats
Combine beans
Combine corn
34
Fall plow
23
Competing
8
Calendar
£ tion
d
overlap
Spring chop
Disk
Plant corn
Spring plow
Disk
Hoe corn
Plant soybeans
Cultivate corn
Cultivate corn
Hoe soybeans
Cult, soybeans
Cultivate corn
8
12
Half
11
13.3
8.3
6
17
18.6
11.6
10.5
6.5
5.3
3.3
7.2
5.2
3.3
2.6
15.3
12.6
5.2
8.4
22.2
10.6
10.6
5.2
8.4
22.2
4.3
6
17
11
11
2
9
9
6
6
..
chop
:
Competing operation overlap
None
..
Fall
~ available''
23
8.6
« Based on R. S. Van Arsdall, Labor Requirements, Machinery Investments, and Annual Costs for the Production of Selected Field Crops
in Illinois, 1965. University of Illinois at Urbana-Champaign Department
of Agricultural Economics AE-4112.
b Based on the minimum number of good days available during a
specific calendar period, assuming a 90-percent confidence level and excluding Sundays.
:
PREDICTING COSTS OF USING FARM MACHINERY
lated total ownership costs from Table 2, and the accumulated repair costs from Table 3.
For example, a farmer purchases a combine with a
4-row, 38-inch corn head with a manufacturer's list
price of $37,600. The machine is rated at 105 p.t.o.h.p.
The farmer harvests about 600 acres of corn per year
and plans to keep the combine for 8 years. The computation of the cost of using this machinery is shown
as an example in Form 1. This form is also a part of
Determining the cost per year, cost per hour, or
farm machinery is basic to most
decisions about the use of such machinery. The fol-
cost per acre of using
lowing information must be known to determine the
cost per year or cost per hour:
• Manufacturer's
ator's
list
price (m.l.p.)
and actual oper-
purchase price.
• Size of the machine, p.t.o.h.p. of the
power
unit,
and operating width of the machine.
Worksheet No. 2, "Cost of Using New Machinery."
To work out costs of using your own machine, obtain
a copy of this form from your extension adviser.
When a tractor is used to provide power for another
machine, the total tractor costs are computed on a perhour basis including costs of ownership, repairs, and
• Estimate of annual hours or acres of use.
• Cost per gallon of fuel.
•
Hourly
cost of labor.
The annual
hourly
total costs or the
can
total costs
be computed using the above information, the accumu-
Form
t
TT
.
c
,
1.
— Computation
=
==
152
width
of Total
—
(in.)
1.
Units of work per hour
2.
Hours per year =
3.
Total hours of use
4.
Total ownership costs (Table 2) for years of use
5.
Total repair costs for 1,504
1,504
,
600
=
acres covered 4-
188
hours of use
X
, ,
(line 2)
units per hour (line 1)
=
188
X
=
1,504
=
114.2
%
_
41^
01
=
155.8
%
years of use
.
.8.
(line 3)
percent (Tables 3 or 3a) 1
44.3
3 or 3a)
6.
Total ownership and repair costs as a percent of manufacturer's
7.
Total ownership and repair costs
8.
Annual ownership and repair
costs
=
$ 58,581
(line 7) -r
9.
Hourly ownership and repair costs
=
$ 58,581
(line 7)
=
field efficiency (Table 4)
0.70
X =====
=
u\ri
number of hours (Tables
1,600
—
(m.p.h)
speed
*
3
3.2
hours per year
_total hours of use
X
Ownership and Operating Costs of Machinery
$ 37,600
(m.l.p.)
X
list
155.8
price
(4+5)
percent
(line 6)
8
years of use
1,504
hours of use
=
$ 58,581
=
$
=
$ 38.95
7,323
I
¥
(line 3)
w
gasoline]
1.069 for
.0504 for diesel [
.0828 for LP gasj
$.00
X
X
$0-40
price per gallon
LI
11.
Labor cost per hour
12.
Cost per hour of using accompanying machinery 2
=
$
=
$ 530
=
$
2.12
,
*
13.
Total costs per hour
(9+10+11 + 12)
14.
Total costs per acre
=
$46.57
(line 13) 4-
3.2
acres per hour (line 1)
=
$ 46.57
=
$ 14.55
1
To compute the repair costs for the hours used if not equal to the hours of use in Tables 3 or 3a, go to the next larger number
of hours in the table. This figure becomes the denominator. Enter the percent of repair costs and the actual hours of use as the
numerator.
To figure the cost of an accompanying machine, use another copy of this worksheet and then enter the result
that worksheet on line 12 of this worksheet.
2
from
line 13 of
the per-hour costs of the accompanying
Then
fuel.
machine are computed in a similar manner. The perhour tractor costs are combined with the per-hour costs
of the accompanying machine and the labor costs are
combined with the per-hour machine costs to get the
total cost per hour. This figure is divided by acres per
hour worked by the machine to get the per-acre cost
of using the machine.
152
in.
X
3 m.p.h.
X
is
the approximate cost per acre of using the combine
from Table
as estimated
:
:
=
=
=
—
for Selected
H 3urs
for Selected
Hours
of
Hours
2
.
5
of
Annual Use
annual use
50
2.2936
1.2994
1.0728
9049
1.1620
.6690
.5590
.4780
.4260
.3890
.
.
.
7
.
8
9
10
.
.
.
11
12
100
125
.6000
.3600
.3093
.2725
.2496
.2338
.2220
.2135
.2066
.2008
.1962
.1922
.4888
.3180
.2616
.2338
.2170
.2057
.1977
.1916
.1871
.1834
.1807
.1783
75
.
.
.
7962
.7187
.
.
6589
.6105
.5707
.5372
.
5080
.4823
.3611
.3388
.3205
.3052
.2914
.2805
.7867
.4920
.3911
.3393
.3067
.2838
.2667
.2532
.2424
.2335
.2259
.2193
Note: 2.2936 percent equals 0.022936 of the
150
list
4157
2607
2307
2090
1964
1882
1826
1785
price.
—
of annual use
400
.
6
Annual Use
300
200
600
800
Table 6c.
Per-Hour Ownership and Repair Costs as a
Percent of the Manufacturer's List Price of Tillage
Equipment and Corn Heads for Selected Hours
of
Annual Use
Percent
Years
1
2
3
4
5
6
...
7
8
9
10
11
12
13
14
15
.0812
.0521
.0422
.0372
.0341
.0320
.0304
.0292
.0282
.0274
.0267
.0261
.0256
.0251
.0247
.1203
.0760
.0607
.0528
.0478
.0443
.0416
.0394
.0377
.0362
.0349
.0338
.0328
.0319
.0311
.1596
.1001
.0794
.0687
.0618
.0569
.0532
.0502
.0477
.0456
.0437
.0421
.0407
.0394
.0382
2385
1485
1172
0983
0903
0828
.0769
0722
0683
0650
0620
0595
0572
0550
0531
.0619
.0403
.0332
.0325
.0276
.0262
.0252
.0245
.0239
.0234
.0230
.0227
.0224
.0222
.0220
Hours
list
50
75
100
7760
4760
3716
3087
2813
2560
2331
2210
2083
1975
1884
1800
5870
3415
2867
2463
2202
2017
1839
1764
1.1520
6560
5567
4595
4040
3663
3366
3125
2927
2758
2613
2483
1
2
3
4
5
6
7
8
9
150
1673
1595
1529
1470
Propelled Combines for Selected Hours
of
H 3urs
of
300
list
2150
1375
1224
1113
1047
1003
0971
0948
price.
—
Per-Hour Ownership and Repair Costs as a
Table 6d.
Percent of the Manufacturer's List Price of Forage
Annual Use
Equipment
for Selected
Hours
annual use
Age
.3070
.1873
.1618
.1433
.1317
.1238
.1178
.1131
.1094
.1064
.1039
.1016
.4000
.2380
.2029
.1768
.1605
.1490
.1403
.1334
.1278
.1232
.1193
.1158
Note: 1.1520 percent equals 0.011520 of the
—
Per-Hour Ownership and Repair Costs as a
Table 6a.
Percent of the Manufacturer's List Price of Self-
200
Percent
Years
11
12
price.
annual use
of
Age
10
Note: 0.2385 equals 0.002385 of the
Hours
of
of
Annual Use
annual use
Age
50
100
150
1.0760
6650
.5430
.3400
.2687
.2305
.2060
.1883
.1747
.1638
.1547
.1469
.1402
.1343
.3673
.2330
.1862
.1617
.1461
.1351
.1267
.1198
.1143
.1096
.1056
.1022
200
250
300
.2790
.1800
.1458
.1283
.1173
.1095
.1038
.0991
.0954
.0923
2268
1486
1922
1280
1068
0962
Percent
Years
1
.
.
2
.
.
3
.
.
.
.
.5193
.4410
.
.
.
.
.
.
.
.
.
.
.
10
.
.
11
.
.
12
..
8
9
of
Percent
.
2.12
5.50
$44.88
25
Years
1
4
—
7
Hours
a-
Age
$37.26
Per-Hour Ownership and Repair Costs as a
Table 6.
Percent of the Manufacturer's List Price of Tractors
6
6a.
Table 6b.
Per-Hour Ownership and Repair Costs as
Percent of the Manufacturer's List Price of Seeding
3
Ownership and repair costs 0.000991 X $37,600
105 X 0.0504 X $0.40
Diesel and lubricants
Labor cost
Total combine costs per hour
5
then $14.03 ($44.88-^-3.2)
100
6, 6a, 6b, 6c,
a year for 8 years are as follows:
4
.70
,
(
Equipment
and 6d show the per-hour ownership and repair costs of farm machinery for selected
hours of annual use. For example, data from Table 6a
show that the costs for a 105 p.t.o.h.p., 4-row combine
with a list price of $37,600 that will be used 200 hours
Tables
farmer can combine 3.2 acres per hour
the
If
.
3904
.3537
.3249
.3145
.2920
.2652
.2507
.2380
Note: 1.0760 percent equals 0.010760 of the
50
75
1221
1088
1002
0949
0906
0874
0899
0856
0825
2
3
4
5
6
7
8
9
10
11
12
list
price.
200
.3927
.2299
.1944
.1683
.1521
.1403
.1317
.1248
.1194
.1148
.1110
.1075
.2990
.1788
.1533
.1350
.1231
.1152
.1094
.1048
.1012
.0983
.0959
.0938
300
Percent
Years
1
150
100
1.1460
6491
5360
4515
3972
3583
3280
3040
2842
2672
2527
2398
.7680
.4687
.3636
.3087
.2728
.2476
.2282
.2128
.1999
.1889
.1798
.1714
5800
3335
2787
2378
2116
1932
1791
1681
1587
1509
1444
1385
Note: 1.1460 percent equals 0.01146 of the
list
price.
1553
1410
1138
1028
0963
0920
0891
0870
When to Trade Machinery?
Machinery," can be obtained
The machinery costs shown in Tables 6, 6a, 6b, 6c,
and 6d continue to decline each year suggesting that,
from the cost standpoint alone, the farmer should use a
machine for the suggested life given in the table. Although there is some relation of breakdown incidence to
use and age of the machine, breakdowns are highly
random in nature. Thus the decision about when to
trade machinery is a very subjective matter. The farmer
must decide what values he will place on reliability or
cost of down time, reduced efficiency, prestige of owning
a new machine, added labor costs, and the cost of a
major overhaul in deciding whether or not to trade.
These values, rather than a strict economic analysis,
will generally
From
chinery
is
adviser so that you can
your own particular
when
new machine. The
how
2 illustrates
machine relative
ma-
purchase of a
steps in filling out the
Form
2.
— Computation
1.
form are
of Future
Manufacturer's
list
price Old
:
2, a
Use Costs
to
price of $37,600.
He
New
2.
Current value of old machine (Table
Machine
;
New machine $
37,600
3.
Current value of new machine
4.
"As-is" value at end of period (Table
5.
Loss
6.
Cash expenditures and
7.
WPP?. * ??97
—
1)
.
.
.
WP??. X
.
°-?fh.
&.499*
0241
4)
2
*
$_4J38__
$
9,062
$
1,188
$
25,064
$
1250
$
3,500
Future repairs
c.
Finance charges on cash difference
xxxxxxxx
d.
Less adjusted investment credit 2
xxxxxxxx
Other considerations 3
1
34,126
b.
(5
+ 6+7)
$
3,000
$
8,930
(8-5-9)
Future repairs for new machine may be estimated by using Tables 3 or 3a.
Investment credit received on new machine less investment credit payed back on old machine.
Includes added labor costs, reduced efficiency, prestige, time lost from breakdowns, etc.
xxxxxxxx
$
15,600"
$
3,760
$
36,904
$
4,613
2
in period
Cost per year
xxxxxxxx
credits
.'
Years
28,600
$
Overhaul
9.
$
xxxxxxxx
a.
Total costs for period
New machine
5,526
$
.
+ 2)
value (current value
in capital
8.
10.
(1
xxxxxxxx
1)
new one
new
can purchase the
Old machine
difference paid for
con-
4-38"
new machine
Cash
is
in his 6-year-old
Determine Trade for
18,000
1.
farmer
Enter the type of machine, its size, and the list
and the new machines. These prices
Size:
machine $
Form
prices of the old
Combine and corn head
Machine:
situation.
combine and paying a cash difference of $28,600. He uses a combine
about 188 hours a year on 600 acres of corn. He plans
to keep a combine for 8 years but the old combine
needs an overhaul that will cost about $1,250. The
farmer also estimates that future repair costs for the
old combine will be about $3,500 if he keeps it for
2 more years. He also assumes that he will lose
about $2.50 per acre harvest loss by continuing to use
the old combine. Should the farmer trade for the new
combine? Form 2 is used to help answer this question
and is completed as follows:
compute the
to
to the
list
machine by trading
greater than the expected annual total cost of the
costs of the old
these calculations for
sidering the trade of an old combine for a
with a
the annual cost of the old equipment
new equipment. Form
make
In the example shown in
determine the time to trade.
the economic standpoint, the time to trade
is
3, "When to Trade
from your extension
described below. Worksheet No.
$
4,465
are used in estimating the "as-is" values and repair
than the costs per year of the
costs.
example shown
Enter the cash difference paid for the new machine on line 1.
should not be traded at this time.
2.
Enter the current value of the old machine on
3.
This
line 2.
is
the "as-is" value calculated
from Table
line
new machine,
if
you decide
this practice
new
Enter the loss
on
line 5.
This
is
in capital value for
and on
each machine
the difference between the current
shown
estimate repairs needed for future use. For the
Finance charges for the new machine
is
of the used machine
markup on
cent
machine and
An
on line 7,
include the value of higher labor costs, reduced efficiency, time lost because of breakdowns on the old
machine, and the prestige of owning a newer machine.
12. Enter the total costs for the period on line 8.
This figure is the sum of lines 5, 6, and 7.
costs
9.
The number
fore
it is
the
the
be-
disposed of.
Enter the cost per year on line 10. This figure
found by dividing line 8 by line 9 for the respective
machine. For the old machine, it is the average cost
for added years of use. For the new machine, it is the
average cost for the useful life of the machine.
14.
If
these estimates are
realistic,
the "as-is" value for the age of the
analysis
was made of the ownership and repair
(tractors used
From
this analysis, if the
good condition and technological improvements are not a question, then one can justify the purchase of a used tractor for use of up to 15 years or
7,200 hours of total use, whichever comes first.
Combines, if they are in good condition and if technological improvements are not a question, can be purchased second-hand and used for up to 2,000 hours of
is
in
total use.
is
when
no more than a 25-per-
the machine appears to have no
if
price to the second owner.
of years in the period for the old
the
is
600 hours annually and combines used 300 hours annually before purchase by the second owner) with a
25-percent markup on the "as-is" value as the purchase
period on line
number of remaining years that
will be used. For the new machine, it is
expected number of years that the machine is used
is
there
for used tractors and combines
tractor
machine
machine
if
to 15 percent of the "as-is" value.
to be entered
in the
considered, the same factors
(reliability, efficiency, prestige)
deficiencies other than
paid back on the old machine.
Enter the number of years
is
major
normal wear and obsolescence.
The dealer's sales and handling markup may range
from 15 to 25 percent and the reconditioning costs from
Adjustment for investment credit for the new
machine, to be entered on line 6d, is based on the undepreciated value of the old machine plus the cash difference paid for the new machine less investment credit
13.
be saved by larger
or by purchasing good
cluded, then an economic analysis will favor purchase
to be en-
borrowed).
Other considerations,
may
new machinery
will influence the decision. If these factors are not in-
10.
11.
indicate that the loss in value at the
If used machinery
mentioned previously
new
tered on line 6c are estimated for the cash difference
money
farm machinery
used machinery.
3a.
paid (if
1
"as-is" values of
50 percent. Part of this loss
machine, repairs can be estimated by using Tables
9.
used ma-
year for machinery ranges from 37 to
first
discounts on
Enter estimated costs of future repairs for both
line 6b. For the old machine, it is best to
and
Table
end of the
machines on
3
in
line 4.
line 6a.
8.
ability to evaluate the
their mechanical ability to maintain
The remaining
Enter the cost of overhauling the old machine on
7.
depends on their
chinery.
value of each machine and the "as-is" value of each
machine as shown on
the major share
condition of the used machine, on the dealer's markup,
machine.
6.
In the
Only for machines that have very heavy annual use do repair costs
approach the proportion that depreciation makes up of
total costs. Many farmers buy used machinery as a
means of reducing cash outflows of capital and depreciation and interest costs. Whether they gain or not by
enter the value at
the end of the period that you plan to keep the
make up
Depreciation and interest
Enter the "as-is" values at the end of the period
For the old machine, enter
not to trade. For the
new machine.
appears that machines
it
of the costs of using farm machinery.
for each machine on line 4.
the value at the end of the use period
2,
Buying Used Machinery
Enter the current value of the new machine on
5. This is the sum of lines 1 and 2.
5.
Form
1
for the age of the old machine at time of trade.
4.
in
The
cost of second-hand machines can be
with the cost of
compared
new machines by using Form
average per-hour costs calculated on
this
3.
The
form for a
used machine can be compared with the average perhour costs of a new machine by using Tables 6, 6a, 6b,
one should trade
the costs per year of the old machine are greater
6c, or 6d.
10
The average per-hour
costs for
new machines
Form
3.
— Computation
of
Ownership and Repair Costs for Used Machinery
Tractor
Machine:.
Size
Repair costs (use Tables 3 or 3a to determine percent of
<!?0
initial list price)
3,600
X
0.231
1.
When
disposed of by second owner
i>999
2,400 X 0.082
2.
When
purchased by second owner
.'999
3.
Hours used by second owner
4.
Net
—
(1
2 to
_3 ,600
hours;
2QJL
-%
400
hours;
9.8
-%
2
,
.-^OO
2)
cost to second owner: $ 12> 000
Ownership costs (use Table
p.t.o.h.p.
:
(m.l.p.) 1
X
determine percent of
±1
percent (1
— 2) =
$ 1J20
initial list price)
5.
When
disposed of by second owner
£
years of age;
109.7
-%
6.
When
purchased by second owner
7.
years of age;
78.6
-%
7.
Years used by second owner
8.
Net
9.
Markup 2 on
(5
—
6)
cost to second owner: $ 12> 000
$ 7J00
"as-is" value
pnrrh^P
(m.l.p.) 1
X -MA
percent (5
6)
=
1.10 s
=
;
.
$12IL
when purchased by second owner:
price
-
$ 5
>
m
"as-is" value (Table l) 3
X
OR
.percent
-
markup 4
X $-
."as-is" value (Table l)
$ 1602
3
10.
Other considerations6
11.
Total ownership and repair costs (4
12.
Average annual costs (11-^7)
$
1 > 66
13.
Average per-hour costs (11-4-3)
$
§JJ£
1
Manufacturer's
2
Markup
$.
+ 8 + 9 + 10)
$6J 654_
L
list price of machine when new.
includes dealer's markup plus reconditioning costs.
Calculate the "as-is" value by multiplying the manufacturer's list price of the machine when new by the appropriate percentage according to the age of the machine as shown in Table 1.
4
This markup will probably be between 15 and 25 percent.
5
This adjustment compensates for interest, insurance, and housing costs.
"This includes cost of down time, reduced efficiency, prestige, added labor costs, etc., for total remaining use.
3
are computed by multiplying the
the
new machine by
years of
initial
list
small or if the operator has more acres than he can
work with his own equipment.
To compare custom hire with ownership costs, use
Form 1 (Worksheet No. 2) and compute costs per acre
as if you owned the machine. This figure can then be
compared with the custom rate per acre. Any losses
price of
the appropriate percentage for the
and hours of use given in one of the
4, "Purchasing Used Machinery," includes a copy of this form so that you can
make calculations for your particular machine and
situation. The worksheet can be obtained from your
tables.
life
Worksheet No.
anticipated because of lack of timeliness or inefficiency
extension adviser.
of custom operation can be added to the custom rate.
Custom Hire of Machinery
Many farmers hire custom
for the use of machines.
Custom
rates are rates charged
These
by machine operators
rates
may
or
may
not
other
have any relationship to the costs of using machines.
farmers to do their fieldwork or harvest their crops for
them. This practice can be justified if acreages are
In order to develop machine hire rates based on ma-
operators
or
chine costs,
11
Form 4 and Table
7
may
be used.
Sharing Machinery Costs
Many
The
farmers do not have the size of farm opera-
ownership of some of the larger machines, usually harvesting equipment. They need an
Form
num e/
years
of use
1
oft use
list
5
5
5
Corn head
Grain head
Moldboard plow
Disk
Mower
Conditioner
Hay rake
Wagon
Forage harvester
baler
Forage blower
Note: 0.036 percent equals 0.00036 of the
list
5,
tegrity of the other parties. If this
joint
price
2.
There must be a definite understanding of how
made and what will be included as re-
pair costs.
The
costs of repair parts,
dealer or factory serviceman, should include the labor
is
designated to
make
all
major
each operator makes minor repairs, then replacement
parts and the labor for removal of old parts and installation of
price
of
new
parts should be included.
Machine Hire Rate or Rental Rate
Size
3.
Purchase price of machine
31,000
4.
Ownership and repair
.001
5.
Hourly ownership and repair
6.
Fuel and lubrication cost per hour 1
7.
Total machine cost per hour (5
8.
Total time machine
9.
Total machine cost per hour
cost (Table 7)
Implement
$
.»
33.12
100
10.56
X number
Labor cost per hour on job (wage
11.
Total costs per hour on job for operation (9
12.
Units of work per hour on job (acres, 2 bushels, tons, bales)
13.
Total cost per unit of work (11 -^ 12)
14.
Adjustment for risk, time for moving from
and profit margin [line 13 X (10 to 25%)]
rate
+
$-
-%
.%
33.12
(7X8)
10.
.
+
$ _5J0_
of workers)
* 49.18
10)
-1A
.
inches
25%
rate
rate
job, other overhead,
i 3.84
$JJi
19.21
$ 16.91
069 for gasoline
0504 for diesel
0823 for LP gas
X
Units
$1531
Estimated machine hire rate per unit of operation
in
43.68
$ 10-56
10%
width
t?
r
2.12
6)
X
Total
6,600
.0016
-%
31.00
(3X4)
used on job (percent)
p.t.o.h.p.
repairs, then his labor
cost should be included as part of the repair cost. If
2.
105
spark plugs,
cost of the serviceman. If one of the operating partners
Machine
15.
filters,
and similar maintenance items are legitimate operating expenses. Major repairs, requiring a
grease,
oil,
1
is
not the case, then
ownership should not be undertaken.
Pother unit
(tractor or selfpropelled unit)
+
is
the in-
repairs will be
Form 4. — Computation
cost
procedure to work,
this
Each party involved must not question
1.
.036
.100
.160
.208
.160
.160
.201
.160
.172
.151
.151
.133
.151
.143
.151
150
100
100
100
100
100
100
100
100
100
100
100
100
10
10
10
10
10
10
10
10
10
10
10
Chisel plow
Planter
Hay
400
250
10
Tractor....
Basic combine
Work-
however, there must be a clear understanding among
the parties about the following points:
Cost of owner-
of
also available separately as
is
provides a means to calculate an equitable
annual settlement. In order for
ship and repair
per hour, as a
percent of the
annual hours
c
which
5,
sheet No.
—
Assumed
is to share ownership costs according
degree of ownership and to share operating ex-
penses in proportion to the amount of annual use.
Amount of Assumed Use and Assumed
7.
Ownership and Repair Costs Per Hour, as a Percent of the List Price, Used in Estimating Costs
for Machine Hire Rates
Assumed
number of
of sharing ownership and operating costs.
best solution
to the
tion to justify
Table
way
equitable
$0.40
-m.p.h. speed
acres per hour.
12
X
price per gallon.
field efficiency
X
.01
=
•
.
,
Form 5. — Annual
Machine;
Settlement for Use of Jointly
Combine, corn head, grain head
Size;
Purchase price: $ 41,200
Ownership
2.
Annual ownership
3.
Annual machine
purchase price
>
cost:
47,051
$
service cost:
X
Annual machine
1142
ownership cost
$AM1
+
service cost per acre:
4-38", 16'
£_
percent (Table 2)
(line 1) 4-
years
6.
$2,000
$
7,881
+
Acres covered
7.
Machine
Expenses paid: ownership
=
ft
Sffll
7,881
$ 13, 135
d
Smith
Jones
100
50
50
600
200
400
$ 7,881
service costs
X
(4
8.
$
b
a
Total
6.
=
>
(6a)
Owner
Share of ownership (percent)
$ 47 051
=
_600_
(3)
5.
=
(9a)
(2)
4.
P-t-°-h-P->
Years of use:
cost: $ 41 200
1.
—
Owned Machines
$5,254
$2,627
6a)
(4
X
6b)
(4
$200
1
X
6c)
(4
X
6d)
$200
,
(b+c+d)
Expenses paid: operating 2
9.
$ 1200
S 2,000
.
(b+c+d)
Expenses paid:
10.
$2,200
total
(8a
Net
12.
Dividend by ownership
service cost
(8b
$ 5 681
_
+ J_£fi°l
+
-
(7-10)
11.
$1,400
+ 9a)
>
-
13.
Adjustment
14.
Customwork payment
(11
12)
$1,827
$2,840.50
(12
(11)
+ 9b)
X
(8c
_
$3,854
+
$2,840-50
5b)
(12
+ $1,013.50
3
+ 9c)
X
(8d
+ 9d)
(12
X
+
5c)
5d)
$1,013.50
.
(14a
X
(14a
5b)
X
5c)
(14a
X
Sd)
Ownership costs include insurance and housing costs. If each owner carries liability and fire insurance, then no insurance cost
entered.
*Operatirig costs include repair costs. Labor and fuel costs should be assumed by each owner; these costs should not be included as a part of this settlement agreement.
3
Final settlement is made by the operator with the negative balance paying this balance to the operator with the positive balance.
4
(labor cost of operator
custom rate X acres custom harvested
fuel cost
repair cost).
Custom payment
is
—
=
3.
A
decision
ownership costs
must be made about how the average
will be determined.
ners must agree on a
minimum
The operating
time, operator's time for harvesting,
for labor
part-
machine
will be used. A schedule of ownership costs must be
agreed upon and used. Table 2 can be used for this
purpose. These costs should be shared according to
their respective ownership shares. The operator housing the machine should be credited for the value of the
housing
4.
life that
the
6.
costs for fuel
and labor for running the ma-
machine
all
5.
The hourly wage
lished.
This
is
in
Form
7.
the time, he should
oil
changes and lubrication, should be
A
up
set
A
log-
predetermined schedule for the use of the ma-
the operators should alternate their right to be
use the machine.
must be
done.
chine should be established. For example, each year
5.
rate to be used
is
that each operator uses the machine.
be reimbursed by the other partners. These reimburse-
ments are not included
custom work
schedule for maintenance of the machine, in-
book should be used so that each user can show that
he completed the tasks at the proper time. To help in
this, a tachometer (hour-meter) can be included as
part of the equipment on the implement. If this is not
possible, then the logbook must list the amount of time
the period he uses the machine. If one operator-partner
selected to run the
if
and the charge
following the manufacturer's operation manual.
chine should be assumed by each operating partner for
is
A
cluding
costs.
The
+
+
estab-
in
13
to
proportion to the acres each has to harvest exclud-
ing breakdown and inclement weather.
the rate used for the operator's repair
first
The machine should then be shared
If, in
the
exam-
shown in Form 5, farmer B (Smith) started first,
he would use the machine for 3 days and then deliver
the machine to farmer C (Jones). Jones would use the
machine for 3 days and then return it to Smith. This
rotation would continue until the harvest of both
farmers was completed. To lessen travel time between
pie
minimum
operators, a
operator
operators
amount of use
larger
joint
11.
12.
and the other
and
and
4.
10.
the net service costs
is
ple
is
line 11.
the adjustment figures for line 13.
is
involved in this example,
not used.
actually changing hands in this
exam-
the $800 that Smith pays for repairs, the $1,200
for repairs, and the $1,013.50 that
that Jones pays
Jones pays Smith as the
ownership, the liquidation can be accom-
on
the figures for line 12.
The only cash
would get a proportionately
If this procedure
final settlement.
used, the cost per acre will be
is
equal for the parties involved regardless of share of
machine
If both parties agree to sell the
to
an
ownership or the acres harvested by each party. The
outside interest, the highest offer shall be accepted.
party with the larger acreage
per acre should be a
buy the machine,
pay the other party or parties
If each of the parties wishes to
b.
lines 7
No customwork payment
in the rotation pattern.
the highest bidder shall
lines 3
Compute
Compute
Compute
so line 14
plished in one of the following ways:
a.
Complete
Complete
10.
If either party desires to liquidate his interest in
8.
the
or
9.
of 2 or 3 days use might be
smallest operator
for the
established
8.
little
may
less
other party. However, he must
feel
that his cost
than the cost to the
remember
that,
by go-
for his or their interest in the machine.
ing into this arrangement, his costs are less than they
one party wishes to sell to a third party, the
other partner or partners must agree to the sale.
himself.
c.
would have been
If
one party wishes to
sell
9. If custom work is to be done, it must be with the
agreement of the operators owning the machine. The
operator doing the
work should pay
for fuel
repair costs and be reimbursed for his labor.
custom charge (custom rate
X
less the costs of fuel, repairs,
vided
among
the
Leasing Farm Machinery
and for
The
The cash
total
owning partners according
The annual
10.
settlement should be
example shown
in
Form
to their
made following
5.
Form
5
is
purchase.
The operating
usually assumes
use.
3.
and the anticipated years of
Complete lines 1 and 2.
Complete lines 5 and 6.
4.
Jones enters the cost of housing on
1.
price,
2.
Smith enters
a procedure for obtaining the
little
less.
The farmer
leasee
responsibility for maintenance,
By
using these methods, the farmer obtains control
completed as
of the machinery with only an annual leasing fee and
the purchase
payment. The two methods are compared below with
the cost of buying the machine as a credit purchase
with one-fourth down and three annual payments.
not required to
The
criterion
buy machinery
line 8c.
on line 9b.
6. Jones enters his costs for repairs paid on line 9c.
7. Add the figures on 9b and 9c. This total is entered
in the appropriate place on line 3.
5.
is
except in cases of negligence.
is
its size,
lease
use of a machine for a year or
follows:
Enter the type of machine,
farm machinery
Farmers have been considering several
alternative methods of obtaining control of equipment.
These methods include purchase, custom hire, financial
lease, and operating lease.
The financial lease is a procedure whereby a farmer
obtains use of a machine for one year or more and
normally assumes the responsibility of maintenance,
taxes, and insurance, and often has the option to
For example, farmers Smith and Jones purchase a
combine for $41,200 and plan to keep it for 8 years.
Jones has space so he will store the machine for $200
per year. They agree to use the schedule of ownership
costs given in Table 2. They also establish an hourly
wage rate of $5.00 for machine operation and repair
time. Each operator will pay for fuel for his own operation and operate the machine himself. No joint bank
account will be established.
for
expenditure.
di-
share of ownership.
the
capital expenditure
has become a sizeable amount of the total annual cash
acres custom harvested)
and labor should be
he had purchased the machine
If you want to use this procedure, obtain a copy of
Worksheet No. 5, "Sharing Machinery Costs," which
includes a copy of Form 5 for you to use. The worksheet can be obtained from your extension adviser.
and the other party
wishes to buy, each party shall appoint an appraiser
and these appraisers shall select an additional appraiser.
Their appraisal shall be binding on the machine owners.
If
d.
if
is
net cash outflow.
his costs for repairs paid
make
large cash outlays for a
down
for deciding whether to lease or to
the use of the "present value" of the
The concept
of present value
is
based
on the time preference for money. A given sum of
money available today is always preferred to an equal
amount at some future date.
14
For example,
if
salvage (usually based on Table 1)
a farmer can earn a 10-percent an-
nual return on his investment in his business, an invest-
ment of $621
will
grow
the machine
traded or sold (Table 9). Table 9 illustrates the pur-
is
shown
to $1,000 in 5 years, as
when
chase of a $10,000 tractor with 25 percent of the pur-
down payment and
below. Figures have been rounded off to the nearest
chase price as
dollar.
principal payments with interest at 8 percent. Depre-
Amount at
Interest
Amount at
beginning
of year
return
annually
end of
Year
X
X
X
X
X
$621
$683
$751
$826
$909
1
2
3
4
5
10%
10%
10%
10%
10%
$83
$91
=
+ $826 =
+ $909 =
Thus, $1,000 that would be received
worth only $621
at present value.
discount a given
sum
of
money
The
The
is
751
vested capital elsewhere in his business.
Costs that the farmer assumes from both leasing and
owning are eliminated from the comparison. Normally,
fuel and labor costs are excluded from calculations
because these costs are assumed by the farmer whether
he owns or leases. In an operating lease the farmer
does not pay repair costs for the leased machine, but
he pays the repair costs on the owned machine. There-
$1,000
years
is
factors used to
at four different dis-
count rates are given in Table 8 (note that
cent for 5 years the factor
683
826
$ 909
in 5
at
10 per-
0.620921).
net cash outflow for each year on purchased
machinery
is
the
sum
was computed by the double-declining method
for 6 years, depreciated to salvage value. The farmer
assumes that he will be in the 25-percent income tax
bracket and that he could earn 10 percent on his in-
period
= $62 + $621 = $
= $68 + $683 = $
= $75 + $751 =$
=
ciation
fore the repair costs are included in the computation
of the principal paid, the interest
of present value of net cash outflow for the
and the annual repairs, if included, less the tax
credit on the preceding year's expenses for depreciation, interest, and repairs. (A tax credit is the reduction in taxes resulting from deductible cash expenses
and depreciation.) A credit is given the last year for
paid,
8.
will include annual lease payments less the tax credit
on the preceding year's lease payment (Table 10).
The
present value
is
determined for the respective
net cash outflows of leasing and
A
10.
owning
comparison of the
Factors for Varying Rates of
Interest to Compute Present Values
using Tables 9 and 10 indicates that
1
2
3
4
5
6
7
8
9
10
Table
9.
1.00000
90909
.
20
15
.82645
.75132
.68301
.62092
.56447
.51316
.46651
.42410
.38554
1
00000
.86957
.75614
.65752
.51775
.49718
.43233
.37594
.32690
.28426
.24719
.
1
.
00000
.83333
0- .99
1-1.99
2-2.99
3-3.99
4-4.99
5-5.99
6-6.99
By
69444
.57870
e
cost
of
owning
is
$5,915
pres-
compared with
similar computations, break-even percentages for
return on
investment)
can be developed. Table
10
shows that, for a 6-year lease at a 25-percent tax rate
and a 10-percent discount rate, each 1 percent of the
purchase price for leasing gives a present value of
$370.20 annually ($7,404
-f-
20). This
amount of
pres-
Credit Purchase of $10,000 Farm Tractor
Credit and 10-Percent Discount Rate
(2)
63 '
^ars
percent
$2,500
2,500
2,500
2,500
$
600
400
200
(3)
De P recia "
tion »
$3,330
2,220
350
(4)
(5)
^Itlf"
Net cash
percent*
$
832
705
188
50
outflowC
$2,500
2,268
2,195
2,512
- 50
.(6)
Discount
rate at
10 percent
.00000
90909
.82645
.75132
.68301
62092
.56447
.
(7)
Present
value d
$2,500
2,062
1,814
1,887
- 34
.
-4,100 e
-4,100
$5,325
Double-declining balance method of computing depreciation was used to take advantage of higher tax credit in early years.
Column 4
(column 2
column 3) of preceding year X 25-percent tax rate.
Column
Column
The
various income tax rates and discount rates (rates of
.48225
.40188
.33490
.27908
.23257
.19381
.16151
Total
c
more favor-
.
Loan
P a >- ment
veaf
Y
b
is
$7,404 for leasing.
(1)
d
present
is
— Present Value of Net Cash Outflow for
ar
a
it
for 6 years at 20 percent of purchase price.
it
ent-value
With Assumed 25-Percent Tax
Ca
total
in
able to purchase a tractor for 6 years' use than to lease
Discount factor
1.00000
95238
90703
86384
82270
78353
74622
71068
67684
64461
61391
shown
more
The example compared by
favorable for the farmer.
Interest rate (percent)
10
as
values of owning and leasing indicates which
— Discount
Year
owned
machine. The net cash outflow for leased machinery
Tables 9 and
Table
three equal annual
S
7
=
= column
= column
1
5
+
+ column
X
column
2
—
column
4.
6.
Salvage value at end of 6 years of use estimated from data in Table
1.
15
-2,314
$5,915
Table
10.
— Present Value of Net Cash Outflow for Leasing a $10,000 Farm Tractor Annually at 20 Percent
(Farm Operator Pays Repair Costs on Leased Tractor)
of the Purchase Price
< 2)
1}
Calendar
*~
alen ° ar
<
Tax
Lease
payment
'
0- .99
1-1.99
2-2.99
3-3.99
4-4.99
5-5.99
6-6.99
25 percent 8
$2,000
2,000
2,000
2,000
2,000
2,000
»
c
500
500
500
500
500
500
(5)-
outflow b
at 10 percent
Present
value
Column
Column
Column
2
3
5
= column of preceding
= column — column 2.
= column 3 X column
$2,000
1,364
1,240
1,127
1,024
.
1
year
X
931
282
.
-
$7,404
25-percent tax rate.
1
4.
—
Percent of New Cost of Equipment Where
Table 11.
Cost of Owning Equals the Cost of Leasing Equipment
by Selected Methods for Selected Years of Lease at
Selected Discount Rates and at 25-Percent and 50-Percent Income Tax Rates
divided into the present value of owning a tractor for
same number of years and
break-even percent ($5,915
The break-even
-r-
rates will
$370.20
=
equal the
16 percent).
percent of the purchase price of
machinery equates the present value of leasing with
the present value of owning machinery. Table 11 shows
the break-even percent for selected
number of years
25-percent income
tax rate
50-percent income
tax rate
Discount rate
Discount rate
(percent)
(percent)
of
income tax rates, and selected discount
rates.
in the example above, the 16-percent
break-even figure is found for tractors for 6 years' use
with a 25-percent tax rate and a 10-percent discount
rate. If a machine can be leased at no more than these
use,
1.00000
90909
.82645
.75132
.68301
62092
.56447
$9,000
ent value for each percent of purchase price for leasing
the
(4)
Discount rate
$2,000
1,500
1,500
1,500
1,500
1,500
- 500
$
Total
b
3)
Net cash
^
credit at
selected
percentages of the cost of a
new machine,
Farm operator pays repair costs
8 years' use
Tractors
Other machines
Tractors....
Other machines
Tractors
Other machines
15
machinery
12.2
13.2
14.4
15.2
16.3
16.9
12.8
13.7
15.5
16.0
17.9
18.2
14.1
15.5
16.0
17.1
17.6
18.4
14.6
15.9
18.8
17.6
18.8
19.3
21.6
23.3
22.3
23.9
23.0
24.3
21.1
24.0
22.3
24.8
23.3
25.5
Farm operator does not pay repair costs
arrangement for financial leasing. If the farmer plans
to keep the tractor for 8 years, what can he afford to
pay annually on a lease to equal the cost of the credit
purchase of the tractor if he is in the 25-percent income tax bracket? Using Table 11, we find that at
of leased
machinery
3 years' use
26.4
27.9
Tractors
Other machines
26.7
28.3
27.8
27.7
27.3
28.6
29.2
29.0
28.1
28.5
Note: Repair costs included in this analysis are for 1,000 hours
annual use for tractors, 300 hours for combines, 200 hours for tillage
tools, and 100 hours for seeding equipment.
a 5-percent discount rate: 12.2 percent X $9,000 =
$1,098 annual lease payment to equal purchase price;
$9,000
of leased
10
5
3 years' use
As another example, a farmer has an opportunity to
buy a new tractor for $9,000. The dealer also has an
X
15
6 years' use
then a
farmer can justify leasing machinery rather than owning the equipment.
at a 10-percent discount rate: 14.4 percent
10
5
Thus,
break-even figure
=
is
more than 30 percent of
the pur-
chase price.
"Figuring Custom and Machine
$1,296 annual lease payment to equal purchase price;
at a 15-percent discount rate: 16.3 percent X $9,000 =
Rental Rates," provides a form that you can use
$1,467 annual lease payment to equal purchase price.
compare
According to Table 11, 8 years' use will permit an
average amount of use without undue repair costs or
a high probability of breakdown. Six years' use will
permit heavy annual use of the machinery without un-
can obtain a copy of
Worksheet No.
price. If
is
decide
No
is
more advantageous to lease or to own.
has been made in this circular to study the
if it is
effort
dealer's cost of leasing machinery. It
what
traded annually, the break-
is difficult
to say
actual price the dealer should consider as the
actual cost to him,
more than 50 percent of the purchase
rental rates are compared with the costs of
that
this
Leasing arrangements vary from dealer to dealer.
attempt has been made in this circular to analyze
these leases. A farmer can look at an individual lease,
determine his annual lease cost, and by using Table 11
is
owning a tractor
and for leasing. You
worksheet from your exten-
for custom hire
No
low and to reduce the probability of breakdown to a
minimum. If rental rates are compared with the costs
even figure
to
sion adviser.
due repair costs or a high probability of breakdown.
Three years' use will permit the farmer to maintain
relatively new machinery in order to keep repair costs
of owning a tractor that
rates
6,
what the repair
what margin of
profit
he needs, and
The
dealer should
costs will be to him.
also consider risk as a cost of leasing machinery.
traded every other year, the
16
FITTING
About 40
MACHINERY TO THE FARM
machinery cost of
producing one acre of corn is allocated to combining
and about 35 to 40 percent is allocated to plowing and
disking. Because of these costs, fitting the harvesting
machinery and the tractors to the farm is of major
importance. Furthermore, the planting, cultivating, and
combining equipment must be compatible.
Time, acreage, labor, and capital are the factors that
influence the decisions as to the size of machines needed
for a farm operation. For each planting or harvest
season, list all the operations and the number of acres
covered by each operation. Table 12 indicates the number of favorable days available for field work, either
the average number or the number 5 out of 6 years.
With days available, labor, and acres, the size of ma-
Table
12.
to
45 percent of the
chines can be approximated by using Worksheet No.
field
less.
The exception would be when
must be added.
If
a second machine
the largest compatible planter
Period
days
days before adding a second planter. If the largest
compatible combine is used, then the time can be 25 or
26 working days before adding a second combine.
The
selection of the size of tractors
to the
is
closely related
power requirements; for example, the large
tractors will be sized to complete the
(moldboard or
chisel
March 30-April 12
April 13-April 26
April 27-May 10
May 11-May
May 25-June
14
14
14
14
24
7
June 8-June 21
June22-July 5
August 30-September 12
September 13-September 26
September 27-October 10
October 11-October 24
October 25-November 7
November 8-November 21
November 22-December 6
Average number of favorable days
Northern
Central
and eastern
5.9
6.9
7.9
4.1
7.9
9.2
8.6
10.2
9.7
10.8
11.9
10.2
10.7
11.5
10.4
10.3
6.5
14
14
14
14
14
14
14
14
14
14
is
used, then the time can be extended to 9 or 10 working
primary
7.5
9.1
9.5
10.0
11.3
9.6
9.4
10.8
10.5
10.0
7.5
tillage
plowing) in the time available.
— Calendar Days Favorable for Field Work by Selected Periods and Selected Regions of
Total
calendar
1.
Table 13 suggests that the corn planter be large enough
to complete planting in about 6 working days or less.
Table 14 suggests that the corn combine be large
enough to complete harvest in 15 to 18 working days or
Number
of favorable days available
5 out of 6 years
Northern
Southern
Illinois'1
Central
Southern
and eastern
2.0
3.6
1.7
3.0
6.4
7.8
8.0
9.4
9.6
10.8
5.0
5.1
6.2
5.4
8.2
6.5
8.6
9.3
6.6
6.7
8.8
6.4
7.9
5.9
12.1
10.8
10.3
10.6
10.6
8.6
4.8
3.9
1.0
2.4
4.2
4.'-
6.5
6.4
7.1
9.8
7.2
7.9
4
men
10.0
8
row
7.2
8.1
3.7
1,119
548
a Source: Unpublished data from
the Illinois Cooperative Crop Reporting Service; computation of statistical measure of dispersion o
the average by R. A. Hinton, Department of Agricultural Economics, University of Illinois at Urbana-Champaign.
Table
13.
— Cost per Acre of Planting Corn for Selected Acreages and Sizes of Plant
Size of planter
6-38"
4-38'
Acres per hour
Planter cost
Tractor and labor cost per hour b
7.3
11.0
14.6
8.7
$4,590
$10.71
$7,120
$1 1 66
$8,970
$12 87
$5,830
$11.66
$4.55
$5.71
4 25
3.60
3.16
3.09
3.25
3.42
3.49
3.55
3.61
3.70
$6.59
4.81
3.90
3.42
3.05
2.79
2.81
2.92
3.09
3.19
3.24
3.25
3.34
3.38
$5.21
.
3 63
.
.
400
500
600
3.44
700
800
900
4J11
3.' 71
3.86
4.21
1,000
1,100
1,200
1,300
1,400
1,500
"Assumptions: Field
is
6-30"
.
losses are 1 bushel per day after IS calendar days starting the last week in April, and
priced at $2.50 per bushel.
$0.40 per gallon; labor cost
$5.00 per hour. Assumes that all tractors are used 400 hour
b Diesel fuel cost
—
2
?2
'2
2
1
Acres harvested annually
200
300
Corn
8-38"
—
17
1
1
4.10
2
3.50
2
3.49
3.67
a work period that will permit
3.78 extra
machine was added when3.92 Investments, and Annual Costs
4 .00 Agricultural Economics AE-4112.
4.00
Urbana-Champaign Agricultural
Table
14.
— Cost per Acre of Combining Corn for Selected Acreages and Sizes of Combines
Combine
cost
Acres harvested annually
200
300
400
500
600
700
800
900
2-38'
3-38'
4-38'
6-38'
4-30'
1.6
$25,800
2.4
$31,500
3.2
$3 7 600
4.8
$44,100
$24.27
22.31
21.32
21.95
$25.16
19.43
17.66
17.35
17.32
$29.23
22.23
19.82
19.59
19.19
19.28
19.87
$31.16
22.42
\
$30.38
21.52
17.18
$27.72
20.56
17.07
15.88
14.83
13.26
12.30
12.15
12.12
12.13
12.40
12.27
14.31
15.82
15.35
15.59
16.09
17.41
17.97
1,000
1,100
1,200
'
combine
Size of
Acres per hour
3
6-30'
8-30'
2.5
3 8
$37,500
$43,600
5.0
$46,100
18.35
16.12
15.26
14.71
14.76
15.03
15.24
15.09
15.63
$31.56
22.28
17.64
15.27
13.52
12.50
12.19
12.05
12.28
13.03
12.79
* Cost per acre includes machinery ownership, repairs, fuel, labor, and harvesting loss. Harvesting losses are based on V. \V. Davis, Losses in Choosing a Corn Harvesting Method. University of Illinois at Urbana-Champaign, Department of Agricultural Economics AERR-63.
b Input data used in calculations include: corn yield
100 bushels per acre, corn price
$2.50 per bushel, diesel fuel
$0.40 per gallon, and labor
$5.00 per hour.
Other
will
is
—
—
—
be as large as the power unit
tillage tools will
handle
—
trated in Tables 15
and
On
16.
grain farms, economies
of scale are observed for each level of
efficiently.
One means of reducing machinery size requirements
to work multiple shifts if the added labor is available
and the job permits such activity.
Complements of machines and equipment are
the
maximum
crop acres.
On
manpower
for
livestock farms, about the
same complement of machinery is needed on one-man
farms as on two-man farms. An additional tractor and
tillage
illus-
implements are needed for three-man farms.
t
w.
BACKGROUND MATERIALS
ratt.
percen
-ral
r
Cash-Grain and Hog Farms.
A. Elder. University of Illinois
at Urbana-Champaign College of Agriculture Agricultural
Machinery Management Data. American Society
Economies of Size of
R. N.
Engineers 1971 Agricultural Engineers
ing the 6,ook. St. Joseph, Mi.
As'' an? wn *n 9 an ^ Operating Farm Machinery. Wendell
Oklahoma State University College of Agriculture
buy a nevi ve Extension Service mimeo. 1971.
arrangeme^ erf Machine Rental Rates Used on Illinois
1
1
^' A Linton. University of Illinois at
to keen the
^
tampaign College of Agriculture Cooperative
gricultural
Van
Illinois
Arsdall and
W.
_
^
Experiment Station Bulletin 733. 1969.
Equipment Reliability: Indiana and Illinois Data. D. R. Hunt.
American Society of Agricultural Engineers Winter Meeting, 1970, Paper No. 70-644. 1970.
Labor Requirements, Machinery Investments, and Annual Costs
for the Production of Selected Field Crops in Illinois, 1965.
R. N. Van Arsdall and W. A. Elder. University of Illinois
at Urbana-Champaign Department of Agricultural Economics AE-4112.
Leasing Versus Cash Purchase Versus Credit Purchases of
'
'
pay annuall£ervice
Circular 1070. 1973.
Costs for Farm Tractors and Field Ma«~»~ K^-,Ri crie y- Purdue University Cooperative Extentax Dra^
purchase of
™m^
come
a
'age
im
Egl
j -percent
di-erations
$1,098 annual
at a 10-Dercent
$1,296 annual
Choosing
in
a
Corn
Harvesting
Depreciable Assets.
Davis. University of Illinois at Urbanaartment ot Agricultural Economics AERRr>
AET 7-70.
Selection of
nois at
\^c hinery
Choice in Corn Production. J. T.
at a 15-percent disCagley. University of Illinois College of
$1 467 annual lease ^ ^
1
1
According to
Exp6 " 0160 *
\
a high probability ol
permit heavy annual l
due repair costs or a
Three years' use will \
relatively new machiner)
low and to reduce the p.
minimum.
If rental rates
of owning a tractor that
even figure
is
.
is
more than
5
price. If rental rates are co
owning a
tractor that
is
A. Hopkins. University of
Illinois at
1970.
Farm Machinery.
D. R. Hunt. University of
trac
18
Illi-
Urbana-Champaign College of Agriculture Coop-
erative Extension Service Circular 876. 1963.
Station Bulletin 729.
Tai.
average amount of
J.
Urbana-Champaign Department of Agricultural Economics
Y-
Table
15.
— Estimated
of Crops
Number of Primary Machines Needed to Handle the Maximum Acreage
Produced on One- to Four-Man Cash-Grain Farms, Illinois, 1970*
Regular labor force and
Type and
machinery
size of
Maximum
cropland acres
1
man
8 row
620
760
equipment
men
3
men
row
8 row
8
row
1,185
1,468
2,139
2
6 row
size of
6
2,399
Litters of hogs
147
Tractor, 50 p.t.o.h.p
Tractor, 90, 110 p.t.o.h.p
Stock chopper, 3, 4 row
Plow, 5-14, 7-14
Disk, 19, 28 foot
Harrow,
14 x 7
Wagon
Combine
85, 100 p.t.o.h.p
Grain platform, 14, 20 foot
Corn head, 3, 4 row
Hay rake
Hay
2
2
2
3
1
3
3
3
1
2
2
1
4, 5 section
drill,
1
1
Planter, 6, 8 row
Cultivator, 6, 8 row
Rotary hoe, 3, 4 row
Sprayer, 8 row
Fertilizer spreader, 10, 30 foot
Mower, 7 foot
Grain
2
2
2
1
conditioner
2
2
2
1
2
2
2
3
3
1
2
2
1
3
2
1
2
2
1
1
1
2
4
4
1
2
2
1
2
2
1
2
2
1
1
1
1
1
1
a Capacity of machines for specific
operations is based on a combination of size, operating speed, field efficiency, and a work period that will permit
a sufficient number of good work days to get the job done at a 90-percent level of confidence. Based on these factors, an extra machine was added whenever theoretical capacity was exceeded by more than 10 percent. See R, N. Van Arsdall, Labor Requirements, Machinery Investments, and Annual Costs
for the Production of Selected Field Crops in Illinois, 1965. University of Illinois at Urbana-Champaign Department of Agricultural Economics AE-4112.
Source: R. N. Van Arsdall, Economies of Size of Illinois Cash-Grain and Hog Farms. University of Illinois at Urbana-Champaign Agricultural
Experiment Station Bulletin 733.
Table
16.
— Estimated Number of Primary Machines
of Crops Produced
on One-
to
Needed
to
Handle the
Four-Man Hog Farms,
Regular labor force and
Type and
size of
machinery
1
6 row
Maximum
cropland acres
Litters of hogs
Tractor, 50 p.t.o.h.p
Tractor, 90, 110 p.t.o.h.p
Stock chopper, 3, 4 row
Plow, 5-14, 7-14
Disk, 19, 28 foot
Harrow, 4, 5 section
Planter, 6, 8 row
Cultivator, 6, 8 row
Rotary hoe, 3, 4 row
Sprayer, 8 row
Fertilizer spreader, 10, 30 foot
Mower,
Grain
7 foot
drill,
290
142
row
311
152
6 row
546
268
8
row
587
288
equipment
men
3
men
4
8
row
8 row-
855
419
1,119
548
1
1
1
1
1
1
1
1
1
1
1
2
Combine,
1
85, 100 p.t.o.h.p
Grain platform, 14, 20 foot
Hay
Hay
8
size of
men
1
14x7
3,
2
Acreage
1
Wagon
Corn head,
man
Maximum
Illinois, 1970*
4 row
rake
conditioner
1
1
1
1
a
Capacity of machines for specific operations is based on a combination of size, operating speed, field efficiency, and a work period that will permit
a sufficient number of good work days to get the job done at a 90-percent level of confidence. Based on these factors, an extra machine was added whenever theoretical capacity was exceeded by more than 10 percent. See R. N. Van Arsdall, Labor Requirements, Machinery Investments, and Annual Costs
for the Production of Selected Field Crops in Illinois, 1965. University of Illinois at Urbana-Champaign Department of Agricultural Economics AE-4112.
Source: R. N. Van Arsdall, Economies of Size of Illinois Cash-Grain and Hog Farms. University of Illinois at Urbana-Champaign Agricultural
Experiment Station Bulletin 733.
19
mm
1
h
1
fa'