Costing machinery out on a per acre basis

[leemsutton]

When working out how much it cost's to own/operate any machine over an area I include these things:

Machine value
Balance to fund (if any)
Annual finance payment (if any)
Amount of predicted use in years
Interest on capital employed
Depreciation @ 18%
Insurance as a % of the value (normally 1%)
Predicted repairs per year
Fuel cost (litres per hour used)
Labour cost (ie the driver per hour)
Amount of acres to cover

I put all of this into a self designed spreadsheet and I get a cost of operation, of any machine whether its been in the nettles for 20 years or whether its a new machine were looking at purchasing. It can be used for a trailer right through to a combine.

Anybody do a similar thing or have i missed anything out or have i included to much etc.

[Fred]

Hey Lee is silly season over?
Re your question. I think if everyone did as you in a spreadsheet there would be less shiney metal being delivered to farms.
Do you put wearing parts under repairs. I think that should be separate as it is a fairly known quantity for a given soil type. Repairs can be a real unknown- who can tell when a gearbox is going to go bang? Comparing wearing parts, say plough shares, solo discs etc could be useful for costings. I also think the depreciation value could be tailored a bit better, a flat rate can be OK for the books but reality of machine type and make can change the viability of a job. Hope that makes sense!!

[eppie]

We have bought our last machines just if we could get it real cheap.

Last saturday, i traded my silage block cutter for another old thing. I had to add 180 Euro on the deal. (actually, i made the deal, and my father was the source for money) I spent 2 evenings to refurbish the thing.
I unmounted the Inox saw blades, and scraped 2 millimeters of rust and grease sludge from the wear surface, and grinded the surface till it was blank. Some good greasing and lubrication, and the machine runs like new.

It is an older type of machine, which are known to wear faster and will brake down earlier. But, with our 3 to 4 blocks a week we cut, and when i service it myself, it will do the job fine and affordable for another 5 years.
I just have to take care of the copper wear pads. If you look after it, it will do just as fine as a newer machine.

I am also thinking of buying that old JF chopper to mount it on my worn out Claas hay wagon, to do the harvesting on our own again. (It just gives a good feeling, harvesting on your own)
This would become also a project with low purchase value, more own maintenance and refurbish labour hours, and purchase on occasion. If you keep your eyes open, and are willing to spend a few hours in the workshop, you can have cheap running machinery.

About interest on capital employed:

If everybody would seriously take care of this matter, Fendt would be bankrupt soon !!

Yes, i know i'm an extremist

[leemsutton]

Fred: re the repairs question, basically yes i do couple points, discs, plough shares etc under the repairs section and I think your quite right i should not. Like you say the amount of points you go through is pretty stable as this year i odered before hand and now we have finished i have not points left. So that means I calculated correctly.

However on the repair front: nobody could of predicted that we would have had to have 12 puncture repairs! and 4 ram seal kits.

Look like i'll have to add another line to my spreadsheet to sort that one out.

I think your right, that if people did cost out like i have been doing and sounds like how you do then there would be far less new equipment being purchased.

I know somebody who bought 2 new 5 furrow ploughs this year to do 1500 acres between them. A bit silly as far as I am concerned as he needed 2 drivers to do the job, there is more fuel, more wearing parts. He would of been better off fitting a bigger plough to his biggest tractor which happens to be over 200hp and using one man which would free up the second man to follow up with secondry cultivations. As it happens he is still trying to establish crops while most people have finished around here.

[robert hales]

Just wondered lee,why would it cost him more in wearing parts as he's covering the same area with two ploughs as he would with one.I would also think he should cover the ground quicker so the extra feul if any would be justified.But then i'm probly looking at it the wrongway. ROB

[eppie]

What also matters, is his average field size:

On small fields with many corners and bends, a smaller plough will do a better job, and work easier.