Relative Cost Efficiency of No-Till Farms
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Transcript of Relative Cost Efficiency of No-Till Farms
Relative Cost Efficiencyof 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
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.
KFMA Data
Identification of No-Till Farms Participating Associations:
Northwest North Central South Central
KFMA Data
Detailed Cost Comparisons (2006 data) Northwest North Central South Central
Whole-Farm Analysis (2002 to 2006 data) Western Kansas
142
265
8 2
92
71
3713
318
132
30
41
409
175
60
4 1
10
00
00
10
154
00
70
1910
84
82
4015
80
10
20
00
2210
3616
80
144
152
00
00
31
42 13
5120
247
111
65
103
137
135
195
40 32
13 158
30
104
153
122
278
4917
2214
6826
2911
22 4
3112
184
2511
365
4612
274
25
14 5
4011
356
3110 0
030
6
8
7
1
234 31
9254
205
248
273
5320
356
4725
2719 29
10
517
215
3913
3618 29
13
203
335
3415
4912
4912
2112
7715
3214
7711
238
365 15
14
5535
167
4010
Top Number = Number of Farm Units Per CountyBottom Number = Number of Extra Partners or Persons in the Multi-Operator Farm Units
Kansas Farm Management Associations2006 Membership
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
Detailed Cost AnalysisTotal Crop Cost per Harvested
Acre
202 196 205201189 193
$0
$50
$100
$150
$200
$250
$300
$350
NW NC SC
Item
Avera
ge
TillNo-Till
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.
Detailed Cost AnalysisCost Categories: NW KFMA
20
50
69
50
19
43
72
54
$0
$15
$30
$45
$60
$75
$90
Labor Mach Crop Asset
Item
Avera
ge
TillNo-Till
Detailed Cost AnalysisCost Categories: NC KFMA
26
50 5449
24
41
63
45
$0
$15
$30
$45
$60
$75
$90
Labor Mach Crop Asset
Item
Avera
ge
TillNo-Till
Detailed Cost AnalysisCost Categories: SC KFMA
28
59 58
46
22
49
73
38
$0
$15
$30
$45
$60
$75
$90
Labor Mach Crop Asset
Item
Avera
ge
TillNo-Till
Detailed Cost AnalysisMachinery Cost: NW KFMA
16
1013
1013
89
13
$0
$5
$10
$15
$20
$25
Repairs Hire Fuel Depr
Item
Avera
ge
TillNo-Till
Detailed Cost AnalysisMachinery Cost: NC KFMA
16
9
1412
14
5
11 11
$0
$5
$10
$15
$20
$25
Repairs Hire Fuel Depr
Item
Avera
ge
TillNo-Till
Detailed Cost AnalysisMachinery Cost: SC KFMA
18
11
161313
8
1316
$0
$5
$10
$15
$20
$25
Repairs Hire Fuel Depr
Item
Avera
ge
TillNo-Till
Detailed Cost AnalysisCrop Cost: NW KFMA
14
2018
16
24
19
$0
$5
$10
$15
$20
$25
$30
$35
Seed Fert Herb
Item
Avera
ge
TillNo-Till
Detailed Cost AnalysisCrop Cost: NC KFMA
13
28
1216
30
17
$0
$5
$10
$15
$20
$25
$30
$35
Seed Fert Herb
Item
Avera
ge
TillNo-Till
Detailed Cost AnalysisCrop Cost: SC KFMA
14
28
12
20
28
21
$0
$5
$10
$15
$20
$25
$30
$35
Seed Fert Herb
Item
Avera
ge
TillNo-Till
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.
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
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
Acres Farmed andCrop Intensity
Low Index High Index
Crop Acres 1,768 2,119
Harvested Acres
1,007 1,576
Crop Intensity 57.0% 74.4%
Percentage of Acres Used forWheat, Feed Grains, and Oilseeds
69%
13%
1%
55%
35%
4%
0%
20%
40%
60%
80%
Wheat Feed Grains Oilseeds
Crop
Perc
ent
LowHigh
Value of Farm Production andNet Farm Income
Low Index High Index
Value of Farm Production
144,562 301,383
Net Farm Income
29,392 47,408
Value of Farm Production Categories
35%
52%
13%
0%
9%
50%
25%
16%
0%
15%
30%
45%
60%
< 100 100 to 250 250 to 500 > 500
Value of Farm Production (thousands of dollars)
Perc
ent of Farm
s
LowHigh
Number of Workers andLabor Efficiency
Low Index High Index
Number of Workers
1.22 1.46
Labor Cost as a Percent of Value of Farm Production
28.0% 19.5%
Value of Farm Production per Worker
$118,057 $206,870
Financial Performance
Low Index High Index
Profit Margin 4.53% 9.39%
Asset Turnover Ratio
18.59% 36.38%
Adjusted Total Expense Ratio
1.040 0.973
Percent of Farms with ATER < 1
35.48% 53.13%
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
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.
Contact Information
Publications and Data: www.agmanager.info www.kmar105.com
E-mail: [email protected]