Adding Up All the Costs

Farmer Iron

How much does downtime hit your bottom line? There's a lot to think about.

Published on: July 1, 2010

Sitting in an air-conditioned sprayer cab on a hot, humid day is a good thing. Having a conversation with a savvy precision ag specialist just adds value. That's the experience I had last week with Dan Lucas, precision ag specialist for HTS Precision Ag Solutions. The Harlan, Iowa, company provides a range of precision ag services to farmers and dealers, but during my conversation with Dan we talked about something else - production costs and time.

Working with growers trying to maximize every piece of equipment on the farm, and he helps them do that - from row control on planters to sprayer boom controls. And he rattles off statistics about acres per day and hours in the field with the best of them. Then he says: "When I have a combine down it costs $800 an hour."

Now I've been talking about downtime costs for some time - in my print column and elsewhere. But it's the first time I've had anyone play back to me a true per hour cost of a stopped machine. So I asked him what made up the cost?

"The trucks, tractors and wagons waiting on that combine, they're costing me that," he notes. Then we talked about opportunity cost too - what would that hour be worth if he lost a half day (say 6 hours or $4,800) but when the combine was back up it could only run a couple hours and then two weeks of rain hits, keeping him out of the field. While it all depends on timing and how many acres are left, that $800 hour could get more expensive depending on yield lost for that downtime.

So is his number high? Depends on the size of the equipment (a Class 7 combine) and the number of support vehicles, hourly expenses for the labor (including benefits) plus the capital costs tied up in trucks, tractors, wagons and don't forget the person working at the unloading auger back at the farm if you have on-farm storage. It adds up pretty fast.

As the crop matures into the hopefully hot days of summer - we want those gdu's - consider your harvest plan and how best to deploy those resources.

I'll have more on my visit to HTS in future blogs. They covered a lot of ground in a couple of days. I'll share more next week.

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