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University of Idaho College of Agriculture Cooperative Extension Service Agricultural Experiment Station Current Information Series No. 335 May 1976 APR 2 81977 UNIVERSITY OF IDAHO Calculating Costs for Custom Haying Operations Terry L. Cornelison R.V. Withers David P. Bodine Rising machinery costs have made owning an entire set of equipment questionable for some farms—especially those too small to utilize expensive machines efficiently. When available, custom hiring to perform some farming operations is feasible for many farmers. Haymaking is a mechanized operation that lends itself to custom hiring. This report is presented to those interested in custom haymaking as an economic venture. It can also be useful to others to calculate costs for their haying operations and decide if they have enough acres to justify machine ownership rather than hiring custom operators. The cost calculation chart on page 3 will help a custom haying operator determine the costs associated with each operation and calculate a rate per acre which will cover all costs and provide a reasonable return on the investment. Investment and costs will vary; each operator should use his own figures to determine his custom rate. Information from the rate calculation chart then will help the custom operator find his breakeven point for haymak ing. Breakeven is that point where total revenues equal total costs—no profit is made and no loss is sustained. However, costs include the operator's time and an interest charge on the investment. Once the operator finds his break even point, he can compare the acreage he feels he can hay each season to the acreage he must hay in order to break even. He can then weigh this venture's profitability against that of alternative ventures and decide whether haymaking will be worthwhile. Rate Calculation The following is a step by step example of calculating the cost of operating a 14foot selfpropelled swather purchased for $16,350. Estimates are that the machine will last 10 years of normal operation and will have a salvage value of $1,635 when traded in at the end of its life. To calculate the average value of the swather, add the expected salvage value to the original cost, then divide by 2: cost $16,350 + salvage $1,635 Average Value $8,993 The next step is to determine average annual fixed costs. These are the costs which will be incurred regardless of the number of hours the machines are operated or how much hay is harvested. Annual costs include expenses for depreciation, shelter, taxes, insurance and interest on invest ment. The cost calculations are as follows: Yearly Depreciation cost salvage $16,350  $1,635 10 Life of Equipment Shelter Cost average value $8,993 .01 = Depreciation $1,472 Shelter Cost $90 Taxes average value assessed value mill levy Yearly Taxes $8,993 x .20 x .095 = $171 Insurance Costs average value $8,993 Yearly Insurance Costs .005 = $45 Interest on Investment Cost average value $8,993 .08 = Average Annual Interest Cost $719 Add all the average annual costs to get the total average fixed costs per year of $2,497 for the 14foot swather. The next step is to calculate the variable costs per hour. These are costs which will vary in proportion to machine use. They include fuel, repairs, lubrication, and labor, as well as transportation, movingcosts, management, supplies, etc. The calculations for these costs are as follows:
Object Description
Title  Calculating costs for custom haying operations 
Creator  Cornelison, Terry L.; Withers, Russell V.; Bodine, David P. 
Date  19760501 
Description  4 p.: ill.; 28 cm. 
Subject (NALT) 
hay production costs 
Subject (LCSH) 
HayHarvesting Hay tradeCosts 
Publisher  Idaho Agricultural Extension Service 
Identifier  uica_cis0335 
Disclosure Statement  Documents are preserved for archival purposes. The information may be out of date. For more recent editions check the University of Idaho Library catalog or University of Idaho Extension Publication website, http://www.cals.uidaho.edu/edComm/catalog.asp 
Rights  Digital image copyright 2011, the University of Idaho. All rights reserved. For more information contact Special Collections and Archives, University of Idaho Library, Moscow, ID 838442350; http://www.lib.uidaho.edu/specialcollections/. 
Source  Special Collections Idaho S 53 (Between E3  E415) 
Digitization Specifications  150 dpi jpg converted to pdf. Master file is a 400800 dpi TIFF. 
Contributing Institution  University of Idaho Library 
Extent  4 p.: ill.; 28 cm. 
Format  application/pdf 
Type  Text 
DateCreated  2013 
Language  eng 
RelationIs Format Of  Current Information Series (University of Idaho. College of Agriculture) 
Number  335 
Place of Publication  Idaho 
Original OCLC number  26231919 
Description
Title  Page 1 
Type  Text 
Full text  University of Idaho College of Agriculture Cooperative Extension Service Agricultural Experiment Station Current Information Series No. 335 May 1976 APR 2 81977 UNIVERSITY OF IDAHO Calculating Costs for Custom Haying Operations Terry L. Cornelison R.V. Withers David P. Bodine Rising machinery costs have made owning an entire set of equipment questionable for some farms—especially those too small to utilize expensive machines efficiently. When available, custom hiring to perform some farming operations is feasible for many farmers. Haymaking is a mechanized operation that lends itself to custom hiring. This report is presented to those interested in custom haymaking as an economic venture. It can also be useful to others to calculate costs for their haying operations and decide if they have enough acres to justify machine ownership rather than hiring custom operators. The cost calculation chart on page 3 will help a custom haying operator determine the costs associated with each operation and calculate a rate per acre which will cover all costs and provide a reasonable return on the investment. Investment and costs will vary; each operator should use his own figures to determine his custom rate. Information from the rate calculation chart then will help the custom operator find his breakeven point for haymak ing. Breakeven is that point where total revenues equal total costs—no profit is made and no loss is sustained. However, costs include the operator's time and an interest charge on the investment. Once the operator finds his break even point, he can compare the acreage he feels he can hay each season to the acreage he must hay in order to break even. He can then weigh this venture's profitability against that of alternative ventures and decide whether haymaking will be worthwhile. Rate Calculation The following is a step by step example of calculating the cost of operating a 14foot selfpropelled swather purchased for $16,350. Estimates are that the machine will last 10 years of normal operation and will have a salvage value of $1,635 when traded in at the end of its life. To calculate the average value of the swather, add the expected salvage value to the original cost, then divide by 2: cost $16,350 + salvage $1,635 Average Value $8,993 The next step is to determine average annual fixed costs. These are the costs which will be incurred regardless of the number of hours the machines are operated or how much hay is harvested. Annual costs include expenses for depreciation, shelter, taxes, insurance and interest on invest ment. The cost calculations are as follows: Yearly Depreciation cost salvage $16,350  $1,635 10 Life of Equipment Shelter Cost average value $8,993 .01 = Depreciation $1,472 Shelter Cost $90 Taxes average value assessed value mill levy Yearly Taxes $8,993 x .20 x .095 = $171 Insurance Costs average value $8,993 Yearly Insurance Costs .005 = $45 Interest on Investment Cost average value $8,993 .08 = Average Annual Interest Cost $719 Add all the average annual costs to get the total average fixed costs per year of $2,497 for the 14foot swather. The next step is to calculate the variable costs per hour. These are costs which will vary in proportion to machine use. They include fuel, repairs, lubrication, and labor, as well as transportation, movingcosts, management, supplies, etc. The calculations for these costs are as follows: 