WHEN IT COMES TO COMBINE HEADER, IS BIGGER REALLY BETTER?
Originally published on September 8, 2011
We’ve all heard the saying, “go big or go home.” It has been a constant in the agricultural industry over the past two decades and it is now being played out by farm manufacturers in the combine header market.
A 50-foot combine header can now be added to your non-fictional wish list.
In mid-summer, one of our clients was faced with two purchase alternatives. He could buy a 30-foot John Deere flex header for $45,000 or the larger 40-foot Macdon flex draper for $90,000. While he had a preference, he wanted our office to look closer at the numbers.
Our farmer straight cuts 2,000 acres of wheat a year. His wheat yields have averaged 45 bushels per acre over the past two years.
His dealer has convinced him that his combine has enough capacity to handle the larger 40 foot flex draper and that the flat skid plates would enable him to travel up to five m.p.h. with either header.
Our farmer’s combine with existing header consumes 14 imperial gallons of diesel fuel per hour, which costs $4 per gallon.
What efficiencies are gained by acquiring the larger draper?
To start, we must first calculate the field capacity for each machine. Field capacity in our example is measured in acres harvested per hour. It is affected by three variables: width, speed and field efficiency.
Width refers to the effective cutting width of our header or draper and is measured in feet.
Speed, which is measured in miles per hour, refers to a safe operating speed under normal working conditions. This does not take into account slowing down to turn at the end of the field.
Field efficiency is the actual combining
capacity that can be achieved as a percentage of the maximum theoretical capacity without slowing for turns, stopping to adjust the machine, filling trucks, emptying hoppers and making minor repairs.
Our client wasn’t sure what his harvest field efficiency would be, but we settled on 85 percent. By plugging our data into a formula, we estimated the field capacity of the 30 foot flex header to be 15.45 acres per hour.
Our estimated field capacity for the larger 40 foot draper header is 20.61 acres per hour, an increase of 5.15 acres per hour.
By applying our calculated field capacity to the farmer’s wheat acres, we estimate that 129.41 combine hours are required to harvest the wheat using the 30 foot flex header and 97.06 combine hours using the 40 foot draper.
Our client’s combine with the 40 foot draper would have 32.35 fewer harvest hours, which could be used elsewhere on the farm or at the neighbour’s.
Our farmer was not able to learn from his on-line combine forum how the alternate header and draper widths would affect his combine’s fuel consumption. We assumed the larger 40 foot draper would leave 453 more imperial gallons in the bulk tank, or an additional $1,811 in the client’s pocket.
Crop yields and quality are affected by the timeliness of the farm machine systems. This represents a hidden cost and is sometimes referred as a timeliness cost.
For farmers, evaluating their combine capacity has always been a function of their available harvest days. In the fall of 2009, terrible weather left many farmers with too few days and too little combine capacity. For this reason we attached two value factors to our 32.35 hours of extra combine capacity.
One was for $150 per hour, which we considered to be a low harvest value because there were many available harvest days.
Our client’s dealer pointed out that the resale value of the combine would be greater with the 40 foot draper because it would have fewer separator hours. We felt that this resale bump, a timeliness factor and the potential for an alternative use of the excess could be conservatively captured in this $150 per hour.
To calculate field capacity (in acres/hr):
1. Multiply field width (feet) x speed (m.p.h.) x field efficiency (%)
2. Divide the result by 8.25 (this value is found by dividing 43,580 sq. ft/acre by 5,280 ft/mile)
The other factor was for $470 per hour, which we considered to be a high harvest value because there were few available harvest days.
In this type of fall, a timeliness cost is adding a considerable amount of stress. If you finish harvest early, other farmers will gladly pay you to help them. We arrived at $470 per hour by applying a straight cutting rate of $23 per acre to our 20.61 acres per hour.
Our client’s first preference was to buy the larger 40 foot flex draper. He reasoned that whenever he considered a machine to be too big, he always seemed to grow into it.
When we applied our two factors to the 32.35 hours of extra capacity, we calculated a return on investment of 14.81 percent using our low harvest value per hour factor and 37.82 percent when we used our high harvest value per hour factor. This was enough for him, and he is now owns a 40 foot flex draper.
Some people say it is just a matter of time until the equipment industry moves toward smaller machines because one large combine can’t compete with four small combines, I’m reminded of a farmer who said it doesn’t take near as much energy to run a smaller combine across a field, but to do it four times instead of once can really add up.
Allyn Tastad, chartered professional accountant, is a partner in the accounting firm of Hounjet Tastad Harpham in Saskatoon at 306-653-5100, e-mail at firstname.lastname@example.org or website www.hth-accountants.ca. All data and information provided is for informational purposes only. Readers are cautioned that laws and regulations are subject to change. Consult your accountant for current professional advice tailored to your situation.