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!
www.CropZilla.com
Top Related