Farm machinery costs in relation to machinery and farm size

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CARD Reports CARD Reports and Working Papers
6-1978
Farm machinery costs in relation to machinery and
farm size
Center for Agricultural and Rural Development, Iowa State University
Craig V. Fulton
Iowa State University
Earl O. Heady
Iowa State University
George E. Ayres
Iowa State University
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Recommended Citation
Center for Agricultural and Rural Development, Iowa State University; Fulton, Craig V.; Heady, Earl O.; and Ayres, George E., "Farm
machinery costs in relation to machinery and farm size" (1978).CARD Reports. 82.
http://lib.dr.iastate.edu/card_reports/82
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Farm Machinery Costs
in Relation to
Machinery and Farm Size
CARD Report 80
THE CENTER FOR
AGRICULTURE AND RURAL DEVELOPMENT
IOWA STATE UNIVERSITY, AMES, IOWA 50011
FARM MACHINERY COSTS IN RELATION
TO MACHINERY AND FARM SIZE
by
Craig V. Fulton, Earl 0. Heady,
and George E. Ayres
Center for Agriculture and Rural Development
Iowa State University
Ames, Iowa
CARD Report 80
June 1978
ii
PREFACE
This study examined farm machinery costs in relation to machinery
and farm size in central Iowa. The objectives of the study were:
(a) to calculate costs for individual machines for constant and varying
economic conditions; (b) to determine machinery combination costs, value
of yield losses, and combined costs for two different restrictions on
the number of suitable field days.
Total costs per hour were calculated for utility model gasoline
and diesel tractors, standard, and 4-wheel-drive (4WD) tractors. Costs
per acre were calculated for different sizes of moldboard plows, disk
harrows, rotary hoes, row-crop cultivators, planters, combined with
corn heads, gravity-flow wagons, and trailer-type sprayers.
Total machinery costs are affected by changes in economic condi
tions. The following economic conditions were varied: (a) interest
rates, (b) fuel prices, (c) wage rates, (d) length of ownership period,
and (e) marginal income tax rates. The economic conditions or
variables were varied individually with the noneconomic variables held
constant to determine their effect on total machinery costs.
Machinery combination cost curves were derived for both narrow
row and wide row equipment. Narrow row machinery combinations consisted
of 6-, 8-, and 12-30 inch row planting and tillage equipment and 3-,
4-, and 6-30 inch harvesting equipment. Wide row machinery combinations
consisted of 4-, 6-, and 8-38 inch row planting and tillage equipment
iii
and 2-, 3-, and 4-38 inch row harvesting equipment. The combined
costs included the total costs for each of these combinations plus the
value of yield losses. These combined costs were calculated for the
average number of suitable field days and the average minus one stan
dard deviation number of field days. The one standard deviation was
used to obtain a range in the number of suitable field days. The
standard deviation was used because the underlying distribution for the
suitable field day data was unknown.
iv
TABLE OF CONTENTS
Page
INTRODUCTION 1
OBJECTIVES 3
METHODS OF ANALYSIS 6
Depreciation 6
Interest on Investment 7
Sales and Property Taxes 9
Insurance 9
Housing 9
Repairs and Maintenance 9
Fuel 11
Engine Oil and Filters 12
Labor 12
Tax Deductions 13
Cost Adjustments for Yield Losses from Untimely
Field Operations 15
Days suitable for field work 15
Timeliness and crop yields 18
Machinery combinations 20
RESULTS AND DISCUSSION 23
Tractors 23
Tillage equipment 24
v
Page
Planting equipment 34
Harvesting equipment 34
Farm Machinery Costs Under Varying Economic Conditions 37
Variable interest rates 37
Variable fuel prices 41
Variable wage rates 48
Variable ownership periods and marginal tax rates 55
Machinery Combination Costs, Value of Yield Losses, ·
and Combined Costs 57
Average number of suitable field days 59
Average minus one standard deviation, number of
suitable field days 65
SUMMARY AND CONCLUSIONS 70
LITERATURE CITED 71
APPENDIX 80
vi
LIST OF FIGURES
Figure page
1 Cost per hour for utility model gasoline tractors 25
2 Cost per hour for utility model diesel tractors 26
3 Cost per hour for diesel tractors 27
4 Cost per acre for moldboard plows 29
5 Cost per acre for disk harrows 31
6 Cost per acre for rotary hoes 32
7 Cost per acre for row crop cultivators 33
8 Cost per acre for planting corn with planters 35
9 Cost per acre for harvesting corn with combines 36
10 Cost per hour for a 50 PTO horsepower diesel
tractor at four interest rate levels 38
11 Cost per hour for a 100 PTO horsepower diesel
tractor at four interest rate levels 39
12 Cost per hour for a 180 horsepower 4WD tractor
at four interest rate levels 40
13 Cost per acre for a 3-16" moldboard plow at four
interest rate levels 42
14 Cost per acre for a 5-16" moldboard plow at four
interest rate levels 43
15 Cost per acre for an 8-16" moldboard plow at four
interest rate levels 44
16 Cost per hour for a 50 PTO horsepower diesel
tractor at five fuel price levels 45
vii
Figure page
17 Cost per hour for a 100 PTO horsepower diesel
tractor at five fuel price levels 46
18 Cost per hour for a 180 PTO horsepower 4WD tractor
at five fuel price levels 47
19 Cost per acre for an 8-16" moldboard plow at five
fuel price levels 49
20 Cost per hour for a 180 PTO horsepower 4WD tractor
at four wage rates 51
21 Cost per acre for a 3-16" moldboard plow at four
wage rates 52
22 Cost per acre for a 5-16" moldboard plow at four
wage rates 53
23 Cost per acre for an 8-16" moldboard plow at four
wage rates 54
24 Cost per hour for a 180 PTO horsepower 4WD tractor
for three ownership periods, with and without
tax deductions at 29 percent marginal income tax
rate 56
25 Cost per hour for a 180 PTO horsepower 4WD tractor
for three ownership periods, with and without
tax deductions at a 39 percent marginal income
tax rate 58
26 Machinery combination costs per acre, with and with-
out yield losses, for wide-row machinery combinations,
with corn at $2.00 per bushel, and average number
of suitable field days 60
27 Machinery combination costs per acre, with and with
out yield losses, for narrow-row machinery com
binations, with corn at $2.00 per bushel, and
average number of suitable field days 63
28 Machinery combination costs per acre, with and with
out yield losses, for wide-row machinery combina
tions, with corn at $2.00 per bushel, and average,
minus one standard deviation, number of suitable
field days 66
viii
Figure page
29 Machinery combination costs per acre, with and with
out yield losses, for narrow-row machinery com
binations, with corn at $2.00 per bushel, and
average, minus one standard deviation, number
of suitable field days 68