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Agricultural MachineryVIDEO ON THE TOPIC: Agricultural equipment manufacturing
A complete line of machinery is one of the largest investments that a farm business can make. Yet, unlike land or buildings, machinery must be constantly monitored, maintained, and eventually replaced. How and when equipment is replaced can mean a difference of thousands of dollars in annual production costs.
Farm record summaries point out some of the differences between the more profitable and the less profitable farms in Iowa. The table below shows the wide range of machinery cost per acre and machinery investment per acre from a sample of Iowa farms.
Costs related to the machinery line clearly had a large effect on whether farms were high profit producers. Many producers give less attention to machinery costs than other cost areas because the cash expenditures are made infrequently. And, once the investment is made, depreciation and interest except on loans become noncash costs, and are less visible.
One of the difficulties in analyzing machinery costs is that they change over time. Depreciation tends to be high at first, especially for a machine purchased new, but declines over time. Likewise, interest expense is high initially but gradually diminishes. This is true whether the interest cost is cash interest paid on a loan, or an opportunity cost based on revenue foregone by continuing to own a machine year after year.
On the other hand, repair costs may amount to little or nothing when a machine is still under warranty, but eventually increase as parts wear out and maintenance requirements rise. Fuel and lubrication costs usually do not change much over time, although an older engine may eventually lose some degree of fuel efficiency. Total costs decline rapidly during the first few years, then rise gradually. The decision to replace an item of farm machinery can be made for several reasons.
Cost minimization. The standard rule for minimizing the long-run cost of equipment is to make a change when the annualized total cost of owning and operating the machine begins to increase. In the example shown in Figure 1, this happens in about the ninth year of ownership.
At this point repair costs begin to increase faster than depreciation and interest costs decrease. However, the rate at which total costs rise is often very gradual. Thus, while the rule of increasing total cost can give a general picture of when to replace a particular machine, it cannot give a precise answer.
Note that repair costs are projected to increase gradually over time. In reality, though, repair costs tend to be quite variable from year to year, ranging from only routine maintenance items to a complete overhaul.
Being able to anticipate when large repair costs will be needed is a key consideration in deciding when to replace a machine. Besides the standard machinery costs, most operators also consider timeliness costs in their replacement decisions. Timeliness costs occur when crops are not planted or harvested at the optimal time. They can be attributed to losses in yield, such as when corn or soybeans are planted too late to enjoy a full growing season, or a loss of quality, such as when hay or silage is not harvested at its peak nutritional value.
If a machine breaks down at a critical time, timeliness costs can be quite high. Timeliness costs are very hard to measure, however, and their importance depends on the weather in any given year. Nevertheless, they should not be ignored, especially in climates where the optimal planting or harvesting period is rather short, and for crops that are particularly sensitive to the effects of weather.
Owning machinery that has a high probability of breaking down increases the risk of crop losses. Pride of ownership. Many farmers take pride in owning and operating new, modern machinery.
They may be willing to accept higher long-run costs in return. New technology. In some cases a machine may be in perfectly good working order, but the introduction of new technology has made it obsolete. Newer models may do a better job of harvesting or planting, or operate more efficiently. Care should be taken to distinguish new technology that can increase profits from changes that simply provide more convenience and comfort.
Need for capacity. When the number of acres of crops being produced increases significantly, operators may need to replace machinery with models that have higher capacity to complete planting and harvesting without serious timeliness losses. Likewise, when farm size is reduced, it may be possible to cut costs by downsizing the machinery set. The farm machinery market. The market for farm machinery is subject to changes in supply and demand, just as for any other product.
In particular, the demand for both new and used machinery is strongly affected by ups and downs in the farm economy. The operator who maintains a good capital reserve or borrowing capacity may be able to reduce long-run ownership costs by replacing machinery when dealers have excess inventory and are willing to offer deep discounts to make a sale.
When the farm economy is below average, there may be bargains available in used machinery. Replace frequently. This approach minimizes the risk of breakdowns and costly repairs by trading key machinery items every few years. Even when repairs occur, they often will be covered by the original warranty. Operators who cover a large number of acres each year and would be severely inconvenienced by extended down time are most likely to follow this strategy.
Although this is probably a more expensive approach over the long run, some of the extra costs are offset by fewer timeliness losses, the ability to farm more acres, and less need to invest in repair and maintenance tools and facilities.
Operators who trade machinery frequently may find that leasing or rollover ownership plans are more feasible for them than conventional purchase plans. These options are discussed later. Replace something every year. A second approach is to try to replace one or two pieces of machinery every year. The goal is to spend about the same amount on new equipment each year. This avoids having to make a very large cash outlay in any one year. However, it also could result in replacing machinery before it is really necessary.
This strategy often is used by operators who prefer to finance machinery purchases out of their annual cash flow rather than with borrowed money. It works best when the net cash income of the operation is fairly constant from year to year or when significant cash reserves are available. Replace when cash is available. A third approach is to postpone major machinery purchases until a year when cash income is higher than average. This keeps the machinery purchase from cutting into funds needed for other purposes such as family living and debt servicing.
It also helps to level out income for income tax purposes, although rapid depreciation methods and the ability to use income averaging have made this less of a consideration than in previous years. The biggest disadvantage of this strategy is that it is very hard to predict when extra cash will be available. Furthermore, a machine may become seriously unreliable before the business has sufficient funds to replace it.
Keep it forever. Finally, some operators simply hang on to machinery until it reaches the point where it can no longer perform its intended function and is not worth renovating. This may be the least cost approach in the long run, but it runs the risk of a machine failing at a crucial time, or having to arrange financing on short notice. The operator also must be willing to use less than the latest technology.
Some older items can be relegated to less critical uses, such as keeping a second planter for a backup unit, or using an older tractor for jobs such as powering an auger or moving wagons.
This strategy works best for operators who have considerable flexibility in when they complete key field operations, and who have the skill, patience and facilities to do their own repair and maintenance work. Most farm equipment is still acquired under a conventional purchase plan. More and more major machinery items are being leased, however. Most are acquired with an operating lease , in which a fixed annual or semi-annual payment is made for several years, after which the machine can be returned to the dealer or leasing company or purchased for a predetermined price.
The lease payments are tax deductible as ordinary operating expenses. A finance lease is similar to an operating lease, but the operator is considered to be the owner of the machine, and is entitled to take depreciation deductions.
The operator still can choose to keep the machine at the end of the lease period or return it. The final buyout price can be quite variable. In effect, the finance lease is equivalent to a conditional sales contract with a balloon payment at the end.
Another option is the rollover purchase plan, in which the operator purchases a new or nearly new piece of equipment from a dealer with the expectation that it will be exchanged for another model after one year or season.
Often the purchase is financed with a company loan that accrues no interest until the date to trade. At that point a cash payment is made, sometimes based on the hours of use accumulated on the model being returned. Both lease and rollover purchase plans minimize the direct cash outflows needed to acquire the use of a machine.
The rollover plan also guarantees that the machine will be relatively new and have little or no repair cost. For this same reason, it is usually the most expensive plan. For both a lease and a rollover, the operator will have built up no equity interest in the equipment at the end of the agreement. Estimated repair costs are assumed to be under warranty for all years in the rollover plan, but only in year one for the purchase and lease plans. The cash payments are shown as positive values.
For the purchase plan the salvage value of the combine is shown as a negative outflow i. Decision Tool A, Farm Machinery Financing Analyzer , can be used to compare alternative financing plans, with or without income tax effects.
While saving taxes should never be the sole reason for purchasing machinery, income tax effects do need to be taken into account. Figure 2 shows the estimated total annual cost of the tractor in Figure 1 after subtracting income tax savings.
In addition, depreciation expenses can be claimed according to IRS guidelines. Note that in Figure 2 the net after-tax costs begin to rise after year five, when the tractor has been fully depreciated. Generally speaking, it is advantageous to depreciate a machinery item as rapidly as possible. This is due to the time value of money; that is, it is better to save taxes today and have the use of the funds longer, even if the total savings are the same in the long run.
Recent low interest rates have made this less important, however.
Agricultural Implements and Machinery Division. Why Mechanization? The mechanization ensures reduction of drudgery associated with various farm operations as also economize the utilization of inputs and thereby harnessing the potential of available resources. If mechanization is necessary, what are the priorities? The mechanization is necessary to enhance productivity and conservation of energy required for various operations involved in crop production, threshing, processing, transportation, value addition, storage etc. The priorities for mechanization are to be decided as per the actual requirements of various agro climatic zones and involve land preparation equipment; crop production techniques for cereal crops, for cash crops, for oilseeds and pulses and horticultural crops etc.
Assembling Tractors and Equipment
Theodore E. JPRS R Automation and Mechanization of Production Informaticn Briefs pp Aerospace Timely Gathering and Protection. JPrs R JPRs R
Farm Machinery and Equipment Safety Part II: Preventing Machinery Accidents During Operation
Due to shortage in farm workers, farmers are not in a position to undertake various field operations in time. Hence, modernization of agriculture through Agricultural Mechanization is inevitable. Productivity of the farm depends considerably on the availability of farm power and its efficient use. The States which have higher farm power availability per hectare show higher productivity. The Agricultural Mechanization is the only way out to face the challenge of farm workers' shortage. The educated youth feel discouraged to work in farms due to human drudgery.
Agricultural machinery is machinery used in farming or other agriculture. There are many types of such equipment , from hand tools and power tools to tractors and the countless kinds of farm implements that they tow or operate. Diverse arrays of equipment are used in both organic and nonorganic farming. Especially since the advent of mechanised agriculture , agricultural machinery is an indispensable part of how the world is fed. With the coming of the Industrial Revolution and the development of more complicated machines, farming methods took a great leap forward. Instead of threshing the grain by beating it with sticks, threshing machines separated the seeds from the heads and stalks. The first tractors appeared in the late 19th century. Power for agricultural machinery was originally supplied by ox or other domesticated animals. With the invention of steam power came the portable engine , and later the traction engine , a multipurpose, mobile energy source that was the ground-crawling cousin to the steam locomotive.
Originally, the factory produced wheelbarrows, carts, and wagons for family-owned farmsteads and small agricultural enterprises. Workers As of January 1, , the plant employs more than workers and engineers, including more than new positions as we expanded production. Products Today, " Zavod Kobzarenko" is the 1 manufacturer of trailers in Ukraine.
Heavy machinery, especially Mining, Industrial or Farming Equipment, requires constant maintenance to keep it in good working order. Conversely, poorly maintained large machinery equipment runs inefficiently. Breakdowns are costly and safety is also an important consideration. Many types of large machinery have multiple operators. One of the ongoing inspections on any checklist should be overseeing the correct operation of the equipment. Large machinery should be inspected as soon as it is purchased. Operator training is usually done at that point, but training needs to be kept up. Employees come and go, skills become rusty and poor operation leads to breakdowns. Operator manuals can be revised for the specific work situation.
NAICS Code Description
It is important to be safety-conscious when doing any job that requires the use of machinery. Statistics show that the majority of machinery-related accidents occur as the result of human negligence. The operation of farm machinery is serious business and should be treated as such. To avoid any type of machinery-related injury, strict safety practices must be employed. In the past 30 years, the all-terrain vehicle ATV has become a common piece of machinery on numerous farms. Regardless of its popularity, the ATV is one of the most dangerous and deadly pieces of equipment. Between approximately , and , emergency-room-treated ATV related injuries occur every year. Since , there have been over 14, ATV-related deaths and over 2. Many of these deaths and injuries could have been prevented if the safety rules outlined above had been observed. Inspect hydraulic and air lines regularly for wear and cracks.
History of the Factory
Soviet Union : A Bibliography , Volumen 4. Theodore E. JPRS R Automation and Mechanization of Production Informaticn Briefs pp Aerospace Timely Gathering and Protection. JPrs R JPRs R
5 Maintenance Tips to Extend Equipment Life and ROI
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Aarhus University, Dept. Box 50, Tjele, Denmark. Statistics on the machinery performance are essential for farm managers to make better decisions. In this paper, the performance of all machineries in five sequential operations, namely bed forming, stone separation, planting, spraying and harvesting in the potato production system, were investigated during one growing season.
In fact, some large tractors boast more lines of software code than early space shuttles. Net farm income is expected to be up 28 percent, while net cash income will grow nearly 19 percent. Case IH, Deere and their competitors use automotive-style assembly lines and world-class lean production processes. However, tractor manufacturing involves much lower annual volumes, less automation on the production floor, longer production cycles and higher manufacturing costs.