Jordan Shockley and Tim Stombaugh. Losing Popularity Savings of 2-10% Upgradeability

Jordan Shockley and Tim Stombaugh

Overview of Navigational Aids & Precision Agriculture Investment

LightbarsLosing PopularitySavings of 2-10%Upgradeability

Auto-Steer

GPS Classifications

Low-Cost Sub-Meter Decimeter RTK

$50-300 $1k – 4k $5k-10k+$1500/yr >$25k

8-25 ft. <3 ft. <1 ft. < 1 in.

Auto-Steer AccuracyHardwareGPSMachine qualityCalibrationImplement drift

A-B Line

Passive: Over-steer tractorActive: Steer implement

Solutions

Less expensiveTractor running over rowLimited response speedDifficult to predict implement performance

Passive Steering

Implement Steering

Reduces skips and overlapsReduces fatigueAccurate placement of inputsLengthening of operator’s workdayIncrease in machinery field capacity

Reduced machinery costsPermits more land area to be planted during

optimal timeReduce riskLand investment implications

Benefits of Auto-Steer

Is Auto-steer Profitable?Should I Adopt?

Answers “Should I make a change?”Estimate of changes in income, expenses and

profits associated with a proposed modification in the whole farm plan

Examples of possible changes?

Partial Budgets

Allows managers to make adjustments“Fine-tuning”Consider interactions consciouslyFocus on marginal - things that actually

change from implementing the new planIf it doesn’t change, don’t include it

Partial Budget Aspects

Additional RevenueReduced RevenueAdditional CostsReduced Costs

Additional revenue and reduced costs raise profits

Reduced revenue and additional costs lowers profits

Four Things Can Happen as a Part of a Change:

Simplifies task involving complex decisionsForces consideration of marginal economicsEncourages considering change -simple tool

Advantages of Partial Budgets

Can still be cumbersome with complex changes

Economic evaluation not always a physically feasible evaluation

Many small changes are possible but not enough time to evaluate them all with partial budgeting

Disadvantages of Partial Budgets

Partial Budget Framework

Additional Costs (AC): AC – Fixed AC – Variable (per acre)*A

Additional Revenue (AR): AR – Fixed AR – Variable (per acre)*A

Reduced Revenue (RR): RR – Fixed RR – Variable (per acre)*A

Reduced Costs (RC): RC – Fixed RC – Variable (per acre)*A

Total1 = ACF + ACV *A+ RRF + RRV *A

Total2= ARF + ARV *A+ RCF + RCV*A

Net Change In Profit = Total2 - Total1 + or - ???If + , then implement the changeIf - , then don’t implement the change

Break-Even Acreage

VVVV

FFFF

RCARRRAC

RRACRCARA

The amount of acres required for which you would be indifferent to making the change. (i.e. the net change in profit = 0)

Opportunity cost (e.g. learning curve)Risks (up/down)Feasibility (physically possible, resource

requirements)Desirability (noneconomic goals)

Considerations

800 acres$35,000 investment outlay, $5,000 ownership costIncrease yields from 150 bu/ac to 151 bu/acCorn price = $4.40/bu

Fertilizer = $111 Savings = 3%Seed = $76 Savings = 2%Herbicide = $30 Savings = 7%Fuel = $17 Savings = 10%Labor = $20 Savings = 10%

Auto-Steer Example

Partial Budget – Auto-Steer ExampleAdditional Costs:Auto-steer Ownership $5,000

Additional Revenue:Corn Sales (151-150 bu/ac)*$4.40/bu*800 ac = $3,520

Reduced Revenue: Reduced Costs:Fertilizer $111*800*.03 = $2,664Seed $76*800*.02 = $1,216Herbicide $30*800*.07 = $1,680Fuel $17*800*.10 = $1,360Labor $20*800*.10 = $1,600

Total: $5,000 Total: $12,040

Net Change In Profit: $7,040

Should you purchase auto-steer to increase profits?

YES – Profits are expected to increase $7,040 for the farm

Break-Even Acreage: Auto-Steer Example

)1.*20()1.*17()07.*30()02.*76()03.*111(40.400

0500000

A

acres 2.332A

VVVV

FFFF

RCARRRAC

RRACRCARA