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ECONOMICS OF AUTONOMOUS MACHINERY

ECONOMICS OF AUTONOMOUS MACHINERY. Economic Issues Regarding The Implementation Of Autonomous Machinery In U.S. Agriculture Jordan Shockley Agricultural Economics. Some Economic Issues:. How much will they cost? What are the benefits? Are they more profitable than conventional machines?

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ECONOMICS OF AUTONOMOUS MACHINERY

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  1. ECONOMICS OF AUTONOMOUS MACHINERY Economic Issues Regarding The Implementation Of Autonomous Machinery In U.S. Agriculture Jordan Shockley Agricultural Economics

  2. Some Economic Issues: • How much will they cost? • What are the benefits? • Are they more profitable than conventional machines? • How many machines will I need? • Insurance? • Labor impacts? • Risk? • Environmental impacts? • Energy consumption? • More questions than answers!!!

  3. FACTORS IN MACHINERY SELECTION OBJECTIVE: Purchase the machine that will complete the required task within the time available for the lowest possible cost.

  4. Factors: • Machinery Size • Timeliness • Costs

  5. Machinery Size • Field Capacity (FC): Acres per hour FC = Speed(mph)*Width(ft.)*Efficiency(%) 8.25 • Minimum Field Capacity (MFC) –Acres per hour MFC = Acres to Cover Hours per day * Days Available

  6. Suitable Field Day • Climate • Machinery Operations • Soil Moisture • COMPACTION! • Solutions???? Field Days Needed (FDN) = Acres to Cover Hours per day * FC http://www.nass.usda.gov/Statistics_by_State/Kentucky/Publications/Crop_Progress_&_Condition/index.asp

  7. Timeliness

  8. Costs • Timeliness Cost • Ownership Cost • Operating Cost

  9. Timeliness Cost • Timeliness costs arise due to the inability to complete a field operation in a relatively short period of time. • How much time? Difficult to estimate! • Varies year to year based on weather and crop prices.

  10. Machinery Ownership Costs • Depreciation = (Cost - Salvage Value)/Useful Life • Interest= Avg Value of Investment * Interest Rate • Avg Value = (Purchase Price + Salvage Value)/2 • Property Taxes = Purchase Price * Tax Rate • Insurance = Purchase Price * Insurance Rate

  11. Machinery Operating Costs • Labor = Wage * (1/Field Capacity) • Fuel, oil, lube = Fuel Price*1.15*Fuel Consumption Rate*(1/Field Capacity) • Repairs and maintenance = R&M Factor*Purchase Price*(1/Field Capacity)/Total Hours Used • ALL COSTS ARE PER ACRE!!! • Relevant machinery data can be found in ASABE Standards form D497.5-Agricultural Machinery Data

  12. Example: Machinery Selection for Planting 8 Row No-Till Planter Speed: 6 mph Width: 20 feet Efficiency: 70% FC= 6*20*.70 = 8.25 500 Acres, 13 hours per day and 4 suitable field days MFC= 500 = 13*4 This planter CAN plant all 500 acres. 10.18 acres per hour 9.62 acres per hour

  13. Example: Machinery Costs for Planting Tractor Planter • 130 hp Tractor • Purchase Price: $91,323 • Salvage Value: 40% • Useful Life: 8 years • Interest Rate: 8% • Fuel Consumption: 8.75 gal/hr • R&M: 15% • Annual Use: 600 hours • 8 Row No-Till Planter • Purchase Price: $34,072 • Salvage Value: 45% • Useful Life: 8 • Interest 8%: • R&M: 45% • Annual Use: 150 hours

  14. Example: Machinery Ownership Costs for Planting Tractor Planter • Depreciation ($91323-$36529)/8 = $6849 • Interest ($91323+$36529)*.08 = $10228 $10228/2 = $5114 • Total Ownership Cost $6849+$5114 = $11963 • Depreciation ($34702-$15616)/8 = $2386 • Interest (34702+$15616)*.08 = $4025 $4025/2 = $2013 • Total Ownership Cost $2386 + $2013 = $4399 Total Machinery Ownership Cost for Planting = $16,362 per year

  15. Example: Machinery Operating Costs • Labor $12*(1/10.18) = $1.18 per acre • Fuel & Lube $3*1.15*8.75*(1/10.18) = $2.97 per acre • R&M • Tractor .15*$91323*(1/10.18)/600 = $2.24 per acre • Planter .45*34027*(1/10.18)/150 = $10.03 per acre Total Machinery Operating Cost for Planting = $16.42 per acre

  16. Total Machinery Costs • Ownership Costs = $16,362 • Operating Costs = $16.42*500 = $8,210 • Total Machinery Costs = $24,572 This planter and tractor can get planting done in a timely manner and it will cost $24,572 per year.

  17. Important Notes: • If the field capacity of the machine is less than the minimal field capacity required you will need a larger planter or you might go with 2 tractors and planters • If you own more than one machine, ownership costs must reflect multiple machines. • If the machine is going over the field more than once, that must be incorporated into the machinery operating costs by multiplying the total cost per acre by the number of trips across the field

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