Brian Watkins, Watkins Farm, Kenton, Ohio CropZilla Software
Transcript of Brian Watkins, Watkins Farm, Kenton, Ohio CropZilla Software
Brian Watkins, Watkins Farm, Kenton, OhioCropZilla Software
1) Decision Process2) Analysis
Solve Problem?
$ Economic Effect $
Vendor Trust
Why Buy?
Known Problems• Poor Machine Performance
– Low Quality Results – Down Time– Difficult to Operate
• Capacity– Bottleneck– Growth
• Professional Appearance
UnKnown Problems• Step Improvements in Technology
– Clear Yield Effect– Clear Cost Benefit
• Process Enhancement and Control– Automation– Time Savings and Convenience
Economic Effects
• Improve Margins• Enable Growth
1) Decision Process2) Analysis
Capital Budgeting
• What’s your CapEx?– Balance Sheet– Returns on Available Investment Projects– Taxes
Investment Analysis
• Return on Investment• Payback Period
• Net Present Value
Simple Case• $100 Investment
• $40/year net cash flow• $0 value in 5 years– $20/year depreciation
Investment Analysis
ROI• Return on Investment
Formula• = Increased Profits/Capital
Outlay
E.G.• = $20/$100 = 20% ROI
Investment Analysis
Payback• Payback Period
Formula• = Capital Outlay/Increased
Cash Flow
E.G.• = $100/$40 = 2.5 year
payback
Investment Analysis
NPV• Net Present Value
Formula
E.G.• =NPV(0.08,40,40,40,40,40)-100 = $59.71
Investment Analysis
• Marginal Analysis – (Partial Budget)
High Speed Planter• Added Expense
– Initial Investment– HP/Tractor Requirements– Repairs
• Added Revenue– Better Singulation– More Even Emergence– Capacity – Date of Planting
Changes to a Complex System
Field PlansField passes, harvest moisture, projected yield, travel times, tender labor, crop mix, etc
Knowledge = profits
FieldsLocation, size, field efficiency, harvest destination
Labor & InputsJob qualifications, hours per day, seed varieties, chemicals, fertilizer
EquipmentSpeed x width, fill time, machine capacity, market value
Scenario: purchase new planter
9 bushels/a
5 days 10 days
Capacity Comparison
• We input into CZ an analog weather year to project the effect of planting longer hours on planting date
• We look at historical yield by planting date chart• Applying the planting date difference to this chart shows a
5 bu per acres overall yield increase by increasing planting hours
• On this farm, that is over $170K increase y/y
High Speed Planter• Added Expense
– Initial Investment– HP/Tractor Requirements– Repairs
• Added Revenue– Better Singulation– More Even Emergence– Capacity – Date of Planting
$6.82 per Acre
2.9 Days – 3 bu/a -$27*
5% Seed Savings $2.40/a
High Speed Planter
• ROI = 22.8%• Payback = 3.3 years
• NPV (8%r) = $163,000• Profit Margin =68%
1) Decision Process2) Analysis
Thank You!
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