xt7qft8dh93g https://exploreuk.uky.edu/dips/xt7qft8dh93g/data/mets.xml Kentucky Agricultural Experiment Station. journals kaes_circulars_004_558 English Lexington : The Service, 1913-1958. Contact the Special Collections Research Center for information regarding rights and use of this collection. Kentucky Agricultural Experiment Station Circular (Kentucky Agricultural Experiment Station) n. 558 text Circular (Kentucky Agricultural Experiment Station) n. 558 2014 true xt7qft8dh93g section xt7qft8dh93g griculturc
COSTS
A 5
. By JOE E. ELJQLJA, GEORGE B. BYERS, cmd
» HARALD R. JENSEN ,
J
I CIRCULAR 558 I
(FILING CODE 7) 4
UNIVERSITY OF KENTUCKY _
I AGRICULTURAL EXPERIMENT STATION
LEXINGTON
10M#6‘5f J
coNTzNTs I
Page
Introduction .............................................................................................. 3 _
Relation of Unit Costs to Annual Use .................................................... 4 y<
_ Yi
Comparative Costs of Custom Hiring and Individually Owned j a1
Machines in Harvesting Corn and Small Grains ...................... 5 m
Complete Costs of Owning All Machinery and Performing a Com- 1 CT
plete Harvesting Operation for Corn and Small Grains .......... 9 I gl
e
1-row cornpicker ..................................................... , ............................ 10
2-row cornpicker .................................................................................. 11 ~
in
Effect of using an elevator for unloading on costs of gx
harvesting corn .............................................................................. 12 ‘ Tl
Harvesting small grains ...................................................................... 13 1 C0
Ways of Reducing Per Acre Costs of Owning Machinery for
Corn and Small Grains ................................................................ 13 ` V8!
Supplementing ownership by doing custom work for others ........ 13 UF
]oint ownership .................................................................................... 14 ‘ ism
Exchange of privately owned machines .......................................... 14 ha]
Better work organization .................................................................... 15 All
hip
ave
Th.
` ing
t nisl
p req
· tior
con
( Corn and Small Gram Harvesting Costs
‘ By Joe E. Fuqua, George B. Byers, and Harald R. Jensen
Page _
..... 3 i
Do you know your costs of harvesting corn and small grains? Can
_____ 4 . you get the job done cheaper? What are some alternatives to owning
. your own equipment that may reduce the cost of harvesting? The
z answers to these questions are very important to farmers in this .
1 mechanized age.
`llll 5 1 Harvesting costs make up a large part of the cost of producing ‘
n_ . crops. The amount of profit from a crop and from the farm is affected
9 ( by the size of these harvesting costs. Whether a crop is profitable may
1 ''``` ` depend on how efficient you are in harvesting.
. ..... 10 Most modern harvesting machines have a large purchase price.
H _ Large initial cost results in large fixed costs in the form of depreciation,
`''''` i interest on investment, housing, taxes, and insurance. Spreading these
. fixed costs over more acres, tons, or days annually reduces unit costs. y
...... 12 1 The acreage of crops on many Kentucky farms is so small that fixed (
1 costs per unit of owning harvesting machines are high.
‘‘‘‘‘‘ 13 This publication provides farmers with information on; (1) the I
_ effect of the amount of annual use on machinery costs; (2) compara- ,
tive costs of custom hiring and individually owned machines in har- 1
······ 13 - vesting corn and small grains; (3) costs of complete harvesting opera- l
'____ _ 13 _ tions for corn and small grains; and (4) ways of reducing unit costs {
of owning harvesting machinery for com and small grains. Such in-
····-· 14 ` formation should assist you in planning and making decisions in your 1
_____ 14 ¥ harvesting operations.
l · This report is part of a larger study of harvesting machinery costs. l
r -····· 15 All machinery costs are based on the 1957 price level. Cost of custom K
I hire is based on 1955 figures. The performance rates of machines are
i average accomplishments in a 10-hour day by farmers in a survey. _
The machinery combinations and labor requirements used in compar-
ing costs of owning with costs of custom hire are those usually fur- 1
nished by custom operators. The machinery combinations and labor I
requirements used in calculating costs for complete harvesting opera-
V tions are the ones most generally used by farmers in the survey. Such
r combinations are not examples of the most efficient or economical.
1 3
4 .
RELATION OF UNIT COSTS TO ANNUAL USE I
Total unit costs for machinery consist of two major components, S
overhead costs (fixed costs) and operating costs (variable costs). Op-
erating costs vary directly with the number of units (days, acres, tons,
etc.) a machine is used} Hence, regardless of the number of units a
machine is used, operating costs per unit are approximately the same.
Total overhead costs of a machine remain the same regardless of
the number of units (how much) a machine is used. However, the _
overhead costs per unit vary inversely with the number of units a `
machine is used. As units of use are increased, the overhead costs per
unit decrease. The decrease is very rapid in the lower ranges of use
and levels oil as annual use increases. Total costs per unit of a machine
also decrease as the annual use increases since total unit costs consist
of both overhead and operating costs.2
As an example illustrating economies in greater annual use of ma- _
chinery, a 2-plow tractor has annual overhead costs of approximately
$300.3 If the tractor is used only one day, the overhead costs equal
$300 per day. As annual use increases, the overhead costs per day de-
crease in the following manner: 10 days’ annual use equals $30 over-
head costs per day; 25 days—$12 per day; 50 days—$8 per day, etc.
If the tractor is used 200 days per year, overhead costs are $1.50 per
day (Fig. 1).
A larger part of the total unit costs in the lower ranges of annual
use is overhead costs. Three—fourths of total costs per day for a 2-plow _
tractor used 25 days annually are overhead costs (overhead costs : .
$12 and operating costs = $4.)* However, less than one-fourth of
total costs per day for a tractor used 250 days annually is overhead
costs (overhead costs : $1.20 and operating costs = $4).
A look at the nature of cost curves for overhead, operating, and
total costs shows the importance of amount of annual use in relation p
to costs per unit (Fig. 1). Decisions to purchase machinery should ·
always include serious consideration of the amount of work to be dome COI
with the machines. (1
1 Essentially this is correct; however, there are possible situations where vari- O thi?
able costs will not be the same for each unit. Some of these situations may be ton
caused by economies in increased buying of fuel and accessories, increased fuel Of
consumption due to almost constant use, and variation in unit repairs. ` `
2 This assumes that farm machines are not used to the point where variable · dol
unit costs increase. E lab.
3 Overhead costs on 2-plow tractors based on the 1957 prices are $29591 cus
per year. For convenience of discussion, overhead costs have been rounded to $300
4 Operating costs for 2-plow tractors based on 1957 prices are $4.27 per dur- OW]
For convenience of discussion, operating costs are rounded to $4. Operating c0Sl5 that
include fuel, repairs, oil, and grease but labor is not included.
5
I 6 I
onents, `
). op. EE
is, tons, j O I4
units a g
2 same. O I 2
lless of _ ZF TONEL
ief, the I Q ` Ldosrs
units a ( O: I 0
nsts per UJ
of use E; ·
iachine ? g 8
coms A T;. \FIXED
. 3 6 (ovam·i£A¤)
of ma- U) umr cosrs
imately I-
S l g 4 •··•U•UIIIIl|II OOOOOIOIIDOOIIOOIIl|•llIO||lII··|·•••
day dg- I O `\ VARIABLE
.0 OVW S ;.. (oPERAT¤Ne)
’ 4 ··· 2 umr cosrs ·
ay, etc. g - i
..50 per 3
l O ‘ i I
annual _ 0 50 I00 I50 200 250
ZFIOW ANNUAL USE (days) I
:os s =
mth Of ~ Fig. I.- Relation of Unit Costs to Annual Use for a 2-Plow Tractor. I
verhead » (
I COMPARATIVE COSTS OF CUSTOM HIRING AND I
ng, and 3 INDIVIDUALLY OWNED MACHINES IN HARVESTING
relation CORN AND SMALL GRAINS I
Bshgggi ‘I A choice between custom hiring and owning machinery involves
6 ( consideration of several factors. Most important of these factors are: (
_ (1) cost of owning machinery and performing services equivalent to I
jcre wi. ; the usual services performed by the custom operator; (2) cost of cus-
s méiyflzi t0In hiring; (3) number of acres to be harvested annually; (4) price I
age U _ of labor; (5) availability of custom machines to insure timeliness of ‘
zvariable _ doing the farm job; (6) alternative opportunities for using capital,
$99% = labor, and machinery on the farm; and (7) quality of work done by
3 {Ohm A Custom hired machines. The conditions affecting a choice between
iperdiy. j Owfling machinery and custom hiring vary so greatly among farms
ting COSIS . that each farmer should evaluate all these conditions as they pertain
6 .
to his farm. However, some factors (the first four listed above) can
be computed and presented in a general way to serve as guides for 1
the individual farmer, as follows:
To compare the cost of owning machinery with the cost of custom -·
hiking, the services performed should be on an equivalent basis. The A
custom operator usually furnishes only a part of the machinery and
labor and performs only part of the harvesting operation. Moreover,
farmers own some of the same machines (tractors for example) that
are furnished by the custom operator; the only costs eliminated on
these machines when work is custom hired are the variable or operat- 1
ing costs. Therefore, only those costs which can be eliminated by '
custom hiring should be compared with the custom rate.
For picking corn, the custom operator usually furnishes the com- _
picker, a tractor, and one man for operating this machinery. Hence,
the unit costs a farmer eliminates through custom hiring are the total 1
costs per acre of the corn-picker, cost of labor per acre of one man, I
and the operating costs per acre of the tractor. To help you decide {
whether to own your cornpicker or hire the service of one, these per- c
acre costs of harvesting corn have been computed for both a 1-row E
and a 2-row cornpicker (Table 1). , r
Table 1.- Cost Per Acre of Harvesting Corn with a l-Row and a 2-Row Cornpicker
for Comparison with the Cost of Custom Hire. (Cost per acre is based on li
machinery and labor usually furnished by the custom operator.) j;
Acres 1-Row Cornpicker 2-Row Cornpicker n C
Annual Labor 50¢ Labor $1 Labor 50¢ Labor Sl 1]
Use Per Hour Per Hour Per Hour Per Hour b
25 ............................................ $7.60 $8.44 $10.96 $11.61
50 ............................................ 4.81 5.65 6.29 6.94 P
75 ............................................ 3.88 4.72 4.73 5.38 c
100 ............................................ 3.69 4.53 3.95 4.60 az
125 ............................................ 3.57 4.41 3.48 4.13
150 ............................................ 3.49 4.33 3.17 3.82 , G'
200 ............................................ 3.40 4.24 3.03 3.68 ar
250 ............................................ . ..... . ..... 2.94 3.59 ‘ €(
300 ............................................ . ..... . ..... 2.88 3.53
yr
In harvesting small grains by custom hire, the custom operator C<
usually furnishes a 2-plow tractor, a combine, and one man. The unit _
costs of owning the machinery, which a custom operator usually fur- _
nishes in harvesting small grains, have been computed for a 6-foot T Q;
combine (PTO) combination (Table 2). Since the combination ol o
machinery and labor furnished by custom operators varies am0H{l lu'
. . . . ic
communities and areas, the costs in Tables 1 and 2 may require s0m€ E
adjustment when you figure the costs of harvesting with your own dri
combine or cornpicker.
7
re) can Table 2.— Cost Per Acre of Harvesting Small Grains with a 6-Foot (PTO) Combine ‘
d S f for Comparison with the Cost of Custom Hire. (Cost per acre is based on
‘ e OI . machinery and labor usually furnished by the custom operator.)
custom · girlreriu Labor so.; Labor $1
is_ The ` Use Per Hour Per Hour
`
51-y and 25 .................................................................... $9.13 $9.57
l 50 .................................................................... 5.10 5.54
Jreover
> 75 .................................................................... 3.75 4.19
e) that ‘ 100 .................................................................... 3.08 3.52
lted OH 125 .................................................................... 2.68 3.12
` 150 .................................................................... 2.41 2.85
°P€m*‘ 200 ....................... . ..... . .......... . ..... .... 221 2 65
tted by 250 .................................................................... 2.13 2.57 .
t 300 .................................................................... 2.08 2.52
te corn- ~ ·
Hence, The cost of custom hire varies among areas of the state. The
he total 1 median custom rate5 for picking com for the state in 1955 was $6.50
1e man, . per acre; however, the median custom rate for the various areas ranged
decide from $5 to $8 per acre." Similar variations exist in custom rates for
ese per- combining small grains. The median custom rate for combining small
a 1-row ; grains for the state in 1955 was $6.50 per acre; however, the median
rate for the various areas of the state ranged from $5 to $9.50 per acre.7 ,
ornpicker Both cost of custom hire and the price of labor influence the num-
n · ber of acres you must harvest before the cost of ownin the machine
l 0 g
l 4 is less than the cost of custom—hired machines. For example, when the i
M custom rate for harvesting corn is $5 and labor is 50 cents per hour, i
` psirgii it more than 47 acres of corn must be harvested with a 1-row picker l
0‘ . . . . .
—§i§é . before owning costs less than custom hiring. However, if labor is $1 I
‘ hour 64 acres must be harvested before ovvnin costs less than
6.94 » Per , g
5.38 _ custom hiring. On the other hand, if the custom rate is $6.50 per acre
. and labor is 50 cents per hour, costs of owning and custom hiring are '
3:82 . equal at approximately 31 acres per year. If the custom rate is $8 per
368 1 acre and labor is 50 cents, the cost of owning and custom hiring are
`_ equal at approximately 23 acres. With the information presented here, ,
___; p you can make similar comparisons for a 2-row cornpicker and a I
. bine
operator com , i
[`he unit l
ally fur- _ 5 The median is the value of the midterm (middle figure) of a series arranged l
6_fO0t ` m order of size. The median more nearly represents a series of observations than ·
a _ { p an average since the influence of extreme values is reduced.
ation 0 ` 8See Fuqua, ]. E., and Allen, S. Q., “Custom Rates for Farm Iobs in Ken-
amgng ; §¤cl 000 92:9 %:‘;r;.%2s* ';»:E·a§.?.¢ ¥:.*:aZ.i: 9:%%;.%%
g
Of com — 25 ............................................ $11.80 $13.75 $14.73 $15.70 I
HCf€Hg€$ l 50 ............................................ 7.13 9.08 10.06 11.03 ,
. 75 ............................................ 5.57 7.52 8.50 9.47
100 ............................................ 4.79 6.74 7.72 8.69
_ . 125 .............................. . ............. 4.32 6.27 7.25 8.22
¤* V¤"°"’ 0 150 ............................................ 4.01 5.96 6.94 7.91
200 ............................................ 3.87 5.82 6.80 7.77
250 ............................................ 3.78 5.73 6.71 7.68 l
_... 300 ................................,........... 3.72 5.67 6.65 7.62
Ifabg S1 I
er 0\11’
$13.77 The machine combination used in computing the per-acre costs of r
10.98 harvesting corn consists of a 2-row compicker, a 2-plow tractor, a
‘ 1-plow tractor, and two wagons. The labor force consists of three men,
9.74 one on the picker and two hauling and housing. An average of 7.7 _
9.66 · acres per day was harvested by farmers in the study or 1.3 hours '
957 L per acre.11
X A comparison between harvesting with 1-row and 2-row cornpiclcers
deprecia- shows that without including labor the 1-row picker costs less than the
lis a fixed 2-row when 100 acres or less are harvested. Owing to the difference .
St Ofmés p IU labor required by the two machines, costs per acre are equal at
G the approximately 75 acres if labor is 50 cents er hour. If labor is $1 er
> kefp _1 P P
[rn am1.>’
results.? ~ U The average performance per day of 2-row cornpickers is below Hgurcs put
OY not m ; out 1°1‘0m other states. Some of the difference may be explained by smaller fields
and rougher terrain in Kentucky.
12 1
hour, costs per acre of harvesting with a 1-row and 2-row cornpicker l wagr
are equal at approximately 50 acres. pulli
Effect of Using an Elevator for Unloading on Costs gran
. · the s
of Harvesting Corn (
The use of an elevator for unloading and elevating corn into the ·
crib reduces costs of harvesting per acre when the cost of labor re-
placed by the elevator is greater than the costs per acre of owning
the elevator. The elevator should replace one man in unloading or A
1.3 hours per acre when harvesting with a 2-row picker. If labor costs (
50 cents per hour, an elevator costs less than hand unloading and . resu.
storing when more than 100 acres are harvested. With labor at $1 heat
per hour, 45 acres must be harvested for the elevator to cost less than ‘ of tl
hand unloading and storing. 6 enor
Combination elevators can be used for both baled hay and com, 1 bine
If the elevator is used for both corn and hay, the costs per acre of Crop
corn would be reduced. A cost:
Harvesting Small Grains Si
The costs per acre for harvesting small grains decreased as acres I X
harvested annually increased. With labor at 50 cents per hour, costs by (
per acre decreased from $10.49 to $3.44 as acres harvested increased retu;
from 25 to 300. Similarly, with labor at $1 per hour, costs per acre The
decreased from $11.37 to $4.32 as acres harvested increased from 25 eral
to 300. To approximate various farm situations, costs per acre for the g (2)
complete harvesting operation of small grains were calculated f0r of c
various acreages harvested and selected prices of labor (Table 6). - com
Table 6.- Cost Per Acre of Harvesting Small Grains with a 6-Foot Power Take-oll ` to d
Combine at Various Levels of Annual Use and Wage Rates 4
Acres Cost Per Acre I l
Annual Labor Not Labor 504: Labor 75¢ Labor $1 ' Cost
Use Included Per Hour Per Hour Per Hour 4 Of 12
25 .............................................. $9.61 $10.49 $10.93 $11.37 “ $95
50 .............................................. 5.58 6.46 6.90 7.84 _ Let
75 ............. . ................................ 4.23 5.11 5.55 5.99 _
100 .............................................. 3.56 4.44 4.88 5.32 ~ in li
125 .............................................. 3.16 4.04 4.48 4.92 ‘ and
150 .............................................. 2.89 3.77 4.21 4.65 Sa
200 .............................................. 2.69 2.57 4.01 4.45 Vt
250 .............................................. 2.61 3.49 aes 4.37 $23S
300 ............... . .............................. 2.56 3.44 3,88 4.32 A and
The machine combination used for computing the per-acre c0Sl5 . OH (
of a complete harvesting operation for small grains consists of a 6-foot _ —
power take-off combine, a 2—plow tractor, a 1-plow tractor, and 3 mt.
13
(er wagon. The labor force consists of two men, one to drive the tractor I
I pulling the combine and one to load, haul, and store the harvested .
grain. An average of 11.8 acres per day was harvested by farmers in
{ the study.
the WAYS OF REDUCING PER ACRE COSTS OF OWNING
_f€` HARVESTING MACHINERY FOR CORN
mg AND SMALL GRAINS
or
ms { Cornpickers and combines require a high initial investment, which
md results in large fixed or overhead costs each year. Spreading these over-
$1 head costs over more acres annually reduces the costs per acre. Many '
mn I of the farms in Kentucky do not have corn and small grain crops large _
enough to permit the economical ownership of cornpickers and com-
)m_ bines. Moreover, many farms cannot expand their acreages in these
, Og I crops. There are some ways of expanding annual use and reducing
costs of machinery and still own all or part of the machines.
Supplementing Ownership by Doing Custom Work for Others
zres t You may lower the costs per unit for using machinery on your farm
osts i by doing custom work for others. Also, you may make a satisfactory !
tsed return on your investment and labor if enough custom work is done. I
rcre 1 The proiitableness of this way of reducing unit costs depends on sev—
i 25 eral factors: (1) investment opportunities of capital on your farms; I
the ( (2) employment opportunities of your labor at home; (8) availability I
for . of custom hire for your own use; (4) price of custom hiring in the
), community; and (5) the amount of custom work you can contract I
MH to do. I
‘ As an example of supplementing ownership by doing custom work I
:: } for others let us assume a farmer has 25 acres of small grains. The
gm I cost of custom hire in his community is $6.50 per acre and the price I
jigf 5 of labor is $1 per hour. Owning a combine for 25 acres would cost
l1·37 _ $9.57 per acrelz or $8.07 more per acre than custom hiring (Table 2). l
Let us say the farmer can contract 50 acres of small grains to combine
5.32 ., in his community. Total acres harvested per year then would be 75 ;
and the cost would be reduced to $4.19 per acre. The farmer would Q
445 . Save $184.50 in costs on the 25 acres on his farm. ($9.57 X 25 acres =
4,37 . $239.25 and $4.19 X 25 acres = $104.75. Difference between $289.25
iii? ` and $104.75 : $184.50.) In addition he would make a $115.50 profit
com OH custom work for others ($6.50 — $4.19 = $2.81 X 50 acres =
fool _ 12 This cost is for equivalent services performed by the custom operator and
nd H 3 not a complete harvesting operation.
14
$115.50). In other words, the farmer would increase his returns $250.00 i and 5
($134.50 -j— $115.50) by choosing to own the combine and harvest l picke
his own 25 acres plus 50 acres more instead of choosing to own