What if you were handed a 7,200-acre corn and soybean farm in southern Illinois and asked to equip it with the machinery mix that would yield the highest profits? That’s exactly what Robert Hornbaker, professor of agricultural economics at the University of Illinois, asks students to do in his three-credit agricultural management class.
Hornbaker asks teams of students to come up with different equipment scenarios for harvesting, trucking, storing and planting corn and soybeans. The purpose is to examine harvest timeliness and capacity along with overall cost and efficiency. The students examine alternative numbers and sizes of equipment to show how the quantity and size of machinery affect the bottom line.
“What we try to show is that more and bigger equipment is not necessarily the answer,” Hornbaker says. “Rather, improving efficiency and appropriate scale of combines, trucking and grain storage can significantly reduce cost as well as ease management. Students can see, for example, how appropriate scale can mean less equipment and labor at a lower cost but similar acreage harvested within a given time period.”
Hornbaker says many variables are involved in calculating machinery costs and efficiencies, making it hard to arrive at the one perfect model. The key indicators he uses to define value are average per-acre machinery operating costs, average operator returns, and required investment in machinery, equipment, and labor combined with overall efficiency.
For the exercise, Hornbaker asks students to look at tractors, planters, combines, headers and grain carts. The size and number of tractors are to correspond with the size and number of planters and grain carts needed for planting and harvest, respectively. No-till is the prescribed method of tillage, so each scenario reflects no-till production budgets.
Hornbaker says that, over the years of teaching this course, the same three basic setups keep coming up (see chart). He says the first scenario is the one that most students think they should start with and what many farm operators may be doing for this large acreage. However, students later find that matching size and scale of equipment can reduce the overall numbers of equipment and required labor while increasing efficiency, lowering costs, and increasing overall returns to the operator.
The chart shows the three typical scenarios and what each one means for the bottom line.