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Group Title: Computer series Florida Cooperative Extension Service
Title: TILLAGE
CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00095259/00002
 Material Information
Title: TILLAGE
Alternate Title: User's guide to TILLAGE, a comparative economic analysis for tillage systems
Physical Description: 1 computer disk : ; 5 1/4 in. +
Language: zxx
English
Creator: Ford, S. A. ( Stephen Allyn )
Hewitt, Tim
Florida Cooperative Extension Service
Publisher: Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: c1989
Copyright Date: 1990
Edition: Version 2.01.
 Subjects
Subject: Soil management   ( lcsh )
Tillage   ( lcsh )
 Notes
Summary: TILLAGE is a computer speadsheet template developed to evaluate the profitability of adopting reduced tillage practices using partial budgeting analysis.
Statement of Responsibility: Steve Ford and Tim Hewitt.
System Details: System requirements: IBM PC or compatible; LOTUS 2.0 or higher.
General Note: Title on documentation: A User's guide to TILLAGE: comparative economic analysis for tillage systems.
General Note: Description based on: documentation and diskette label; title from disk label.
General Note: Florida Cooperative Extension Service, computer series circular 857
 Record Information
Bibliographic ID: UF00095259
Volume ID: VID00002
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 24632213

Table of Contents
    Front Cover
        Page i
    Disclaimer
        Page ii
    Main
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
    Back Cover
        Page 10
Full Text

Disk(s) under separate cover


May 1990


Circular 857


A User's Guide to TILLAGE:

Comparative Economic

Analysis for Tillage Systems

Steve Ford and Tim Hewitt


Florida Cooperative Extension Service/Institute of Food and Agricultural Sciences
University of Florida/John T. Woeste, Dean


SDOC
101
F6316
&57











DISCLAIMER


The Board of Regents of the State of Florida, the State of Florida, the University of
Florida, the Institute of Food and Agricultural Sciences, and the Florida Cooperative Extension
Service, hereinafter collectively referred to as "UF-IFAS," will not be liable under any
circumstances for direct or indirect damages incurred by any individual or entity due to this
software or use thereof, including damages resulting form loss of data, lost profits, loss of use,
interruption of business, indirect, special, incidental, or consequential damage. This limitation
of liability will apply regardless of the form of action, whether in contract or tort, including
negligence.

UF-IFAS does not provide warranties of any kind, expressed or implied, including but not
limited to any warranty of merchantability or fitness for a particular purpose or use, or
warranty against copyright or patent infringement.

The entire risk as to the quality and performance of the program is with you. Should the
program prove defective, you assume the entire cost of all necessary servicing, repair, or
correction.

The mention of a tradename is solely for illustrative purposes. UF-IFAS does not hereby
endorse any tradename, warrant that a tradename is registered, or approve a tradename to the
exclusion of other tradenames. UF-IFAS does not give, nor does it imply, permission or license
for the use of any tradename.

If user does not agree with the terms of this limitation of liability, user should cease using
this software immediately and return it to UF-IFAS. Otherwise, user agrees by the use of this
software that user is in agreement with the terms of this limitation of liability.







Copyright 1990
University of Florida, Institute of Food and Agricultural Sciences


Steve Ford is Assistant Professor, Tim Hewitt is Associate Professor, Department of Food and Resource
Economics, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL 32611.






WinFRSL IDA LW",....








A User's Guide to TILLAGE:
A Decision-Aid to Determine the Economic
Feasibility of Adopting Reduced Tillage Practices

by Steve Ford and Tim Hewitt


TILLAGE is a computer spreadsheet template developed to evaluate the profitability of
adopting reduced tillage practices using partial budgeting analysis. Qnly costs and returns
that will change with production systems are considered in partial budgeting analysis.
TILLAGE, then, requires the minimum amount of information necessary to provide an
accurate economic analysis of a proposed change to reduced tillage practices.

Getting Started

TILLAGE is developed to run in LOTUS version 2.0 or higher. Other software that is
compatible with LOTUS or that can import LOTUS files can be used to run TILLAGE.
The instructions that follow are based on LOTUS commands.

TILLAGE can be loaded into LOTUS like any other spreadsheet by using the file
retrieve commands after entering LOTUS. Pressing the slash key (/) brings up the main
LOTUS menu and individual commands are chosen by pressing the first letter of each
command or by moving the highlighted box to the desired command using the arrow keys
and then pressing the enter key. The name of the file to be retrieved is TILLAGE.WK1.

A compiled version of the spreadsheet template is also included on the distribution
disk. This allows the use of TILLAGE without LOTUS or some other spreadsheet software.
Type the command "RUN TILLAGE" and press the enter key to start the program. / The
instructions that follow are for both the LOTUS and compiled versions of the software.

TILLAGE contains its own menu structure so that a new menu system will appear
after the template is loaded. The main menu consists of the following options: PRICES &
COSTS, CONVENTIONAL, REDUCED, ANALYSIS, OUTPUT, and EXIT. The menu op-
tions can be chosen as in LOTUS by either moving the cursor (highlighted box) to the de-
sired option and pressing the Enter key, or by typing the first letter of each option. If for
some reason there is an error in the spreadsheet and the menu system fails, pressing the
Esc key and then the Alt and M keys simultaneously will bring back the menu. More
advanced LOTUS users may wish to work without the preset menu. In that case the Esc
key will put the user back into the normal LOTUS menu environment. The Alt-M
sequence will always bring back the TILLAGE menu. In the compiled version of TILLAGE
the F8 function key will also bring back the menu.

The introductory screen for TILLAGE appears in Figure 1. Menu options appear
across the top of the screen. The user can move to other screens by selecting the different
menu options. The menu options and other screens and their use are described below.








An example farm is used throughout this guide to illustrate the use of TILLAGE in
deciding whether to adopt reduced tillage practices. A farmer is considering switching to a
no-till production plan on 120 acres of corn. A no-till planter will be purchased and no
tillage or cultivation will be performed. An additional application of herbicide will be made,
however. The farmer expects a slight reduction in yield, and wants to know if any cost
savings from reduced tillage will compensate for yield loss. The input and output for this
decision are discussed in the following sections.

Figure 1. Opening Screen for TILLAGE

TILLAGE

Comparative Economic Analysis of Tillage Systems

by

Steve Ford and Tim Hewitt

Food and Resource Economics Department
Institute of Food and Agricultural Sciences
Florida Cooperative Extension Service
University of Florida

Copyright, University of Florida, IFAS, 1989


PRICES & COSTS
The PRICES & COSTS menu option takes the user to the screen appearing in Figure
2. General farm information, prices, and variable costs are entered on this input screen.
Machinery costs will be entered on later screens. Since a change to a reduced tillage system
typically involves a commitment over several years, the prices and costs entered on this
screen should be typical of average expected values over the next five years or so. The re-
sulting analysis, then, will be reflective of long-term profitability instead of the costs and
returns for only the next year.

The user is asked to input information only in the highlighted (bold) or blank fields.
At the top of the screen are spaces for the crop name, the interest rate, the crop price, fuel
price, the per-acre yield of the crop under conventional tillage, the per-acre yield under re-
duced tillage, the number of acres of this crop that will be switched to reduced tillage, and
the labor wage rate. If no hired labor is used, then an hourly wage for the farmer's labor
should be entered.

The example farm situation presented in Figure 2 and throughout this documentation
is for a 120-acre field of corn typically yielding 65 bushels per acre. The expected price of
corn is $2.30 per bushel, the interest rate is 11 percent, diesel fuel costs $0.90 per gallon,
and the labor wage rate is $5.00 per hour. The yield from reduced tillage production is
expected to average 60 bushels per acre.








The bottom part of the PRICES & COSTS screen is for the entry of variable inputs
and their costs. The name and price per unit of the input are entered in the first two
columns. The number of units used under the conventional tillage system is entered next,
followed by the number used in reduced tillage. Thus, an input used in both tillage
systems but in different amounts can be entered on one line. In the example in Figure 2,
the only difference in variable inputs is an additional application of herbicide, costing $3.90
per quart. One quart will be added to the reduced tillage operation.

There is space for nine different inputs. However, if more inputs are used, items can
be combined with the total costs entered as a price and a one entered as a quantity. Again,
only inputs that change as reduced tillage is adopted are included in the partial budgeting
analysis.

The variable costs entered for each tillage system are totalled at the bottom of the
screen. The total for reduced tillage is $3.90 in the example. When the input process is
completed, pressing the Enter key a final time will return the user to the main menu.

Figure 2. PRICES & COSTS Input Screen


Crop Name
Crop Price
Conventional Yield
Number of Acres


Corn
$2.30
65
120


Interest Rate
Fuel Price
New Yield
Labor Wage Rate


Conventional
Tillage
Price Quant Total


Input


Reduced
Tillage
Quant. Total


Atrazine & Oil $3.90 0 $0.00 1 $3.90
$0.00 $0.00
$0.00 $0.00
$0.00 $0.00
$0.00 $0.00
$0.00 $0.00
$0.00 $0.00
$0.00 $0.00
$0.00 $0.00


Total Variable Costs


$0.00


$3.90


CONVENTIONAL
The CONVENTIONAL option of the main menu takes the user to the input screen for
conventional tillage machinery. Only machines and machinery operations that will be
changed or omitted as the farm changes to reduced tillage should be listed on this screen.
There is room for up to ten machines. The screen appears in Figure 3.


11.0%
$0.90
60
$5.00









Figure 3. CONVENTIONAL Input Screen

Conventional Tillage:
Fuel Est. % Time
Times Speed Use Annual On This Sales Life
No. Machine Over A/HR. GAL/HR Repair Crop Price Remain
.........................................................................................................................
1. Disk 2 2.00 2 $500 50 $0 10
2. Plow 1 1.50 2 $640 50 $0 5
3. Planter 1 2.50 2 $370 50 $0 5
4. Cultivator 2 2.00 2 $460 75 $0 5
5.
6.
7.
8.
9.
10.

Per-acre Totals:
Fuel and Lube $6.35 Fixed Costs Foregone
Repairs $9.17 Total $0
Labor 3.37 hours Per Acre $0.00

Each machine is described on a separate line. The machinery name is entered in the
first column. The other entries for each machine are described below.

Times Over The number of trips or passes over the field made by the machine is
entered in this column. The example in Figure 3 shows that the conventional tillage
practice includes disking twice.

Speed The speed of the machine in acres per hour is entered here. The farmer in
the example can disk two acres per hour.

Fuel Use The fuel consumption of the tractor or power implement is entered in this
space in gallons per hour. The disking operation requires two gallons per hour of machin-
ery use in the example.

Repairs An estimate of the total annual repairs for this machine is entered in this
column. This figure should include all repairs and maintenance costs excluding fuel and oil.
This figure should also reflect average annual repair costs rather than last year's or next
year's costs to better estimate the long-term costs of production. The average repair costs
for the disk in the example total $500 per year.

% Time The entry in this column should reflect the percentage of total field time of
the machine that is spent on this crop. The percentage should only reflect the time spent
on the field that will use the new tillage systems. For example, if a crop is currently grown
using conventional tillage methods and only part of the total crop will be switched to







reduced tillage, then the percentage time should reflect only the amount switched. The
farmer in the example estimates that disking 120 acres twice accounts for about half of the
total use of that disk on the farm.

Sales Price Fixed costs are normally not included in partial budgets unless an asset is
bought or sold. If a machine will no longer be used on a particular crop, but will be used
elsewhere on the farm, the farm will still incur the fixed costs of that machine. However, if
the machine is sold as a result of a change to reduced tillage, then the fixed costs of that
machine are no longer incurred by the farm, resulting in a cost savings. If the machine will
be sold, the estimated sales price of the machine should be entered in this column. Howev-
er, if the machine will remain on the farm then a zero should be entered. The disk in the
example will continue to be used on other fields on the farm. A value of $0 is entered in
the Sales Price column since the fixed costs of owning the disk must still be covered.

Life Remaining The useful remaining life of the machine is entered in this column.
The farmer in the example estimates the disk will continue to be used for another ten
years.

As machines are entered on the input screen, summary information is calculated and
displayed at the bottom of the screen. This information includes costs per acre for fuel and
lube, repairs, and fixed costs. Labor hours associated with machinery use are also displayed.
Machinery costs are calculated using the following formulas.

Fuel and Lube = 1.15 x (1 / Speed) x (Times Over) x (Fuel Price) x (Fuel Use)
Repairs = (Annual Repairs / Total Acres) x (% Time)
Labor = 1.1 x (Times Over) x (1 / Speed)

Lubrication costs are assumed to be 15 percent of fuel costs so the fuel use estimate is
multiplied by 1.15. Machinery labor hours are assumed to be 10 percent greater than
actual field time to account for machinery preparation time and travel time to the field.
Fixed costs include depreciation, interest, and insurance. They are calculated by:
Depreciation = (Sales Price / Life Remaining) x (% Time)
Interest = (Sales Price / 2) x (Interest Rate) x (% Time)
Insurance = .0075 x (Sales Price / 2) x (% Time)

Depreciation is estimated using the straight method and interest and insurance costs
are based on average investment levels over the remaining life of the machine. Since every
farm situation is different, fixed costs calculated by this program will only be estimates.
The program user may want to make adjustments to better reflect a specific farm situation.
For example, the insurance rate of .75 percent can be changed in the LOTUS formulas by
knowledgeable users of LOTUS. To reflect the reduction in fixed costs of a machine from
decreased use but not the sale of the machine, a price can still be entered in the sales price
column but with a small percentage of time used on the crop. The change from conven-
tional tillage, then, will also have accounted for a decrease in depreciation of a machine that
is still used on the farm, but not as heavily.








The example in Figure 3 shows that four machines will no longer be used in corn
production after a change to reduced tillage. The farmer will no longer disk, plow, or
cultivate under the new tillage system, and will purchase a different planter. The total per-
acre savings, then, associated with the discontinued use of these machines are $6.35 in fuel
and $9.17 in machinery repairs. Also, 3.37 hours of labor are now available for other work.

When the input process is completed for the CONVENTIONAL screen, pressing the
Enter key a final time will return the user to the menu.

REDUCED
The REDUCED option of the main menu takes the user to a screen similar to the
CONVENTIONAL option but for reduced tillage machinery instead. The REDUCED screen
appears in Figure 4. All information required for the reduced tillage machinery is of the
same type as for conventional machinery with the exception of the purchase price column.
If new machinery is to be purchased in conjunction with the change to reduced tillage, then
new fixed costs of ownership of that machine will be incurred by the farm and need to be
included in the partial budgeting. analysis. The purchase price reflects the value of the
machine. In the example, the purchase of a no-till planter for $8,800 will add fixed costs of
approximately $5.82 per acre. Fixed costs are calculated for the reduced tillage machinery
in the same way as for conventional tillage machinery.

Repair costs should be estimated carefully. Increased use of the sprayer in this
example may also increase repair costs. The user must be sure to account for changes in
machinery usage when estimating annual repair costs.

Figure 4. REDUCED Input Screen
Reduced Tillage:
Fuel Est. % Time
Times Speed Use Annual On This Purch. Life
No. Machine Over A/HR. GAL/HR Repair Crop Price Remain

1. Sprayer 1 8.00 2 $155 50 $0 10
2. No-till Planter 1 2.00 3 $160 100 $8,800 10
3.
4.
5.
6.
7.
8.
9.
10.

Per-acre Totals:
Fuel and Lube $1.81 Fixed Costs Incurred
Repairs $1.98 Total $699.00
Labor 0.69 hours Per Acre $5.82









ANALYSIS
The screen for the ANALYSIS menu option appears in Figure 5. This option takes the
user to a summary of the economic analysis of the proposed change to reduced tillage based
on the information entered in previous screens. The costs and returns are presented on a
per-acre basis. The left column shows returns and costs associated with conventional tillage.
These are compared with the costs and returns of reduced tillage in the right column. The
difference between the two columns is displayed at the bottom of the screen as the
advantage of reduced tillage over conventional tillage. If this figure is negative, then
conventional tillage practices should be continued. If it is positive, then the change to a
reduced tillage system would be profitable.

The example in Figure 5 shows the machinery and variable costs determined on the
other screens. The net benefit of a switch to reduced tillage in this example would be only
$3.93 per acre. The total benefit of such a change to the 120 acres of corn would then be
$471.91.


Figure 5. ANALYSIS Screen Showing Economics of Switch to Reduced Tillage

Partial Budget Comparison of Tillage Systems (per acre)


Conventional Tillage
--------------------------------------------------
Returns $149.50

Costs:
Machinery Repairs $9.17
Fuel and Lube $6.35
Machinery Labor $16.87
Other Variable Costs $0.00
Fixed Machinery Costs $0.00
--------------------------------------------------


Net Returns


$117.12


Reduced Tillage
------------------------------------------------
Returns $138.00

Costs:
Machinery Repairs $1.98
Fuel and Lube $1.81
Machinery Labor $3.44
Other Variable Costs $3.90
Fixed Machinery Costs $5.82
-----------------------..-.----------------------


Net Returns


ADVANTAGE OF REDUCED TILLAGE
OVER CONVENTIONAL TILLAGE


$121.05


$3.93 PER ACRE
$471.91 TOTAL


It would be more profitable to switch to reduced tillage given the infor-
mation provided on the other screens.



OUTPUT

The OUTPUT menu option prints the three input screens -- PRICES & COSTS,
CONVENTIONAL, and REDUCED TILLAGE -- and the ANALYSIS screen on the printer.
The screen displayed on the monitor will not change when this option is chosen.








EXIT


The EXIT option should be chosen when the user wants to leave the TILLAGE
template. When this option is chosen a new menu will appear, replacing the main menu.
Four options are available to the user on this sub-menu.

SAVE will save the TILLAGE template with the current farm information as it appears
in the template. RETURN will return the user to the main menu. LEAVE will take the
user out of the TILLAGE template but remain in LOTUS. Finally, EXIT will return the
user to the computer's operating system.


TIPS FOR USING 'TILLAGE'

The advantage of reduced tillage over conventional tillage must be considered in the
context of the whole farm before making any decision to change production practices. The
partial budgeting analysis presented in TILLAGE does not consider risk, management costs,
environmental benefits, or whole-farm benefits such as tax savings and increased labor avail-
ability that may be associated with reduced tillage. Thus, the farmer must consider wheth-
er the advantage of reduced tillage ($3.93 per acre in the example) is sufficient to warrant a
change when whole-farm effects are also considered.

The risk associated with reduced tillage can be identified somewhat using break-even
analysis. Yields, prices, and costs can be changed systematically on the input screens until
the advantage of switching to reduced tillage is zero. For example, if the new yield of re-
duced tillage production is reduced to 58 bushels per acre on the PRICES & COSTS screen,
the advantage of reduced tillage becomes negative. This means that the farm must get at
least a yield of 59 bushels per acre, on average, to make reduced tillage more profitable
than conventional tillage. This result assumes that all other costs remain the same. Simi-
larly, the break-even price of corn in the example is $3.08 per acre. If the price of corn is
expected to be above this price, then conventional tillage would be more profitable than re-
duced tillage because of the yield assumptions used in this example.

Break-even analysis can also be applied to variable and fixed costs. Added variable
costs of reduced tillage must remain below $7.83 per acre for reduced tillage to have an ad-
vantage. The farmer could also not afford to pay more than approximately $14,750 for new
machinery, given the existing farm situation and price assumptions. Again, the break-even
figures can be determined simply by altering the farm information, one item at a time, until
there is no advantage of switching to reduced tillage.

Reduced tillage operations frequently require more management skill and attention
than conventional tillage practices. If the advantage of reduced tillage is only $3.93 per acre
($471.91 for the farm), then the farmer must decide whether this amount is sufficient to
cover the time and effort required by increased demands on management ability.

Environmental costs and benefits associated with reduced tillage operations are difficult
to assign to individual farms. However, farmers may want to analyze the estimated value of








reduced erosion or the estimated cost of increased herbicide use that can be allocated on a
per-acre basis. Benefits of reduced tillage, such as reduced erosion, can be treated as costs
of continuing conventional tillage practices and can be entered as such on the PRICES &
COSTS screen. Environmental costs of tillage practices can be entered as costs on that
screen, as well. For example, the costs associated with increased herbicide use can be
entered under the reduced tillage column. It is important to recognize that any such
estimates are educated guesses at best. It is very difficult to allocate the costs of environ-
mental effects to individual farm fields.

Finally, tax implications of investment in reduced tillage machinery and/or the capital
sales of old machinery, and the effects of increased labor availability resulting from the
adoption of reduced tillage technology both may have significant effects on the whole-farm
financial situation. Increased labor availability, for.example, may allow the adoption of a
new enterprise that had previously been infeasible because of the unavailability of required
labor. Thus, the whole-farm profit effects of the adoption of reduced tillage practices may
be greater than the advantage of reduced tillage shown in the partial budget analysis.
Whole-farm analysis goes beyond the profitability assessment of partial budgeting analysis
and the intent of this publication, however. Most farm management books contain good
discussions of these whole-farm effects.


REFERENCES

Castle, E. N., M. H. Becker, and A. G. Nelson. Farm Business Management The Decision-
Making Process, third edition. Macmillan Publishing Company, New York. 1987.

Ford, S. A.. "Analyzing Changes in the Farm Business: Partial Budgeting". Circular 837,
Florida Cooperative Extension Service, University of Florida. 1989.

Halsey, L., and S. Ford. "Farm Pocket Notebook". Circular 841, Florida Cooperative
Extension Service, University of Florida. 1989.














































































COOPERATIVE EXTENSION SERVICE, UNIVERSITY OF FLORIDA, INSTITUTE OF FOOD AND AGRICULTURAL SCIENCES, John T. Woeste,
director, in cooperation with the United States Department of Agriculture, publishes this Information to further the purpose of the May 8 and June
30, 1914 Acts of Congress; and is authorized to provide research, educational information and other services only to individuals and institutions
that function without regard to race, color, sex, age, handicap or national origin. Single copies of extension publications (excluding 4-H and youth
publications) are available free to Florida residents from county extension offices. Information on bulk rates or copies for out-of-state purchasers
is available from C.M. Hinton, Publications Distribution Center, IFAS Building 664, University of Florida, Gainesville, Florida 32611. Before publicizing
this publication, editors should contact this address to determine availability.




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