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!

www.CropZilla.com