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Relative Cost Efficiency of No-Till Farms

Relative Cost Efficiency of No-Till Farms. 2007 Ag Profitability Conference: Wakeeney Michael Langemeier December 20, 2007. Outline of Presentation. Introduction KFMA Data Detailed Cost Comparisons Whole Farm Analysis Summary and Conclusions. Introduction.

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Relative Cost Efficiency of No-Till Farms

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  1. Relative Cost Efficiencyof No-Till Farms • 2007 Ag Profitability Conference: Wakeeney • Michael Langemeier • December 20, 2007

  2. Outline of Presentation • Introduction • KFMA Data • Detailed Cost Comparisons • Whole Farm Analysis • Summary and Conclusions

  3. Introduction • Using the 2006 Crop Residue Management Survey, the adoption of no-till production has increased from 7.4% of planted acres in 1990 to 31.5% of planted acres in 2006. • This presentation documents cost differences between farms that have adopted a no-till production system, and those with a conventional or reduced tillage system.

  4. KFMA Data • Identification of No-Till Farms • Participating Associations: • Northwest • North Central • South Central

  5. KFMA Data • Detailed Cost Comparisons (2006 data) • Northwest • North Central • South Central • Whole-Farm Analysis (2002 to 2006 data) • Western Kansas

  6. 25 6 5 13 7 46 12 10 3 36 5 9 2 24 7 142 265 8 2 7 1 11 1 8 14 5 4 0 19 5 25 11 27 4 13 5 37 13 31 8 4 1 32 13 13 2 3 0 35 6 31 10 15 8 15 3 40 11 0 0 10 4 22 14 3 0 49 17 30 7 40 9 17 5 1 0 6 0 4 1 18 4 27 8 6 1 29 11 12 2 23 4 25 4 31 9 0 0 0 0 1 0 15 4 7 0 49 12 31 12 0 0 77 15 32 14 68 26 22 4 27 3 24 8 20 5 8 0 8 2 40 15 21 12 23 8 19 10 8 4 77 11 8 0 27 19 47 25 29 10 35 6 22 10 36 16 53 20 55 35 36 5 1 0 2 0 15 14 36 18 0 0 14 4 39 13 21 5 29 13 4 2 51 7 3 1 13 5 12 0 40 10 15 2 0 0 0 0 20 3 33 5 34 15 49 12 16 7 Kansas Farm Management Associations 2006 Membership Top Number = Number of Farm Units Per County Bottom Number = Number of Extra Partners or Persons in the Multi-Operator Farm Units

  7. Detailed Cost ComparisonsPer Harvested Acre • Labor • Hired labor and opportunity charges on operator and family labor • Machinery • Repairs on machinery and equipment, machine hire, gas, fuel, oil, and depreciation on machinery and equipment • Crop • Seed, crop insurance, fertilizer, herbicide, and miscellaneous costs such as irrigation energy, crop storage and marketing, and crop supplies • Improvement • Asset Charges • Other Expenses

  8. Detailed Cost AnalysisTotal Crop Cost per Harvested Acre

  9. Detailed Cost Analysis • The largest difference in total cost occurred for central Kansas. • Labor cost and machinery cost are relatively lower for the no-till farms. • Crop cost is relatively higher for the no-till farms.

  10. Detailed Cost AnalysisCost Categories: NW KFMA

  11. Detailed Cost AnalysisCost Categories: NC KFMA

  12. Detailed Cost AnalysisCost Categories: SC KFMA

  13. Detailed Cost AnalysisMachinery Cost: NW KFMA

  14. Detailed Cost AnalysisMachinery Cost: NC KFMA

  15. Detailed Cost AnalysisMachinery Cost: SC KFMA

  16. Detailed Cost AnalysisCrop Cost: NW KFMA

  17. Detailed Cost AnalysisCrop Cost: NC KFMA

  18. Detailed Cost AnalysisCrop Cost: SC KFMA

  19. Whole-Farm AnalysisWestern Kansas • The rest of the presentation examines differences among farms in Western Kansas using a less tillage index and data from 2002 to 2006. • Less Tillage Index (LTI) = Herbicide Cost / Crop Machinery Cost • Crop machinery cost includes repairs, fuel, machine hire, machinery and equipment depreciation, farm share of auto expense, and an interest charge on machinery investment less custom work income. • A farm that has reduced tillage would typically have higher chemical costs, relatively lower machinery costs, and a higher less tillage index.

  20. Whole-Farm AnalysisWestern Kansas • Comparison of Whole-Farm Characteristics • Total Acres • Crop Acres • Crop Intensity (Harvested Acres/Crop Acres) • Percent of Crop Acres Planted to Wheat, Feed Grains, and Oilseeds

  21. Whole-Farm AnalysisWestern Kansas • Comparison of Whole-Farm Characteristics • Value of Farm Production • Net Farm Income • Labor Cost as a Percent of Value of Farm Production • Value of Farm Production per Worker • Adjusted Total Expense Ratio • Operating Profit Margin • Asset Turnover Ratio

  22. Acres Farmed andCrop Intensity

  23. Percentage of Acres Used forWheat, Feed Grains, and Oilseeds

  24. Value of Farm Production andNet Farm Income

  25. Value of Farm Production Categories

  26. Number of Workers andLabor Efficiency

  27. Financial Performance

  28. Significant Relationships • Correlation Coefficients • LTI and Value of Farm Production 0.237 • LTI and Crop Intensity 0.316 • LTI and Labor Cost -0.182 • LTI and Profit Margin 0.164 • LTI and Asset Turnover Ratio 0.278

  29. Summary and Conclusions • Cost per harvested acre was relatively lower for farms that have adopted a no-till system. • Farms that have reduced tillage were larger, have increased crop intensity, have improved labor efficiency indices, and have higher profit margin and asset turnover ratios.

  30. Contact Information • Publications and Data: • www.agmanager.info • www.kmar105.com • E-mail: • mlange@agecon.ksu.edu

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