WORKING COSTS

Ellesmere Guardian, Volume LX, Issue 16, 28 February 1939, Page 6

WORKING COSTS

Tractors and Horses

Varying Factors Set Out

Following up a discussion on tractors (Bulletin No. 115), the current number of the Agricultural Bulletin, prepared by Canterbury Agricultural College and issued by Canterbury Chamber of Commerce deals with working costs of both tractors and horses. Some very interesting figures of comparative costs have been prepared. These, and the full text of the bulletin, follow:—

In Bulletin No. 115, "Tractors I.— Mechanical Considerations," some of the mechanical considerations in- : volved in the purchase of a tractor '. were dealt with. In this bulletin' the costs of tractor operation are dis- , cussed and a comparison with costs I of horse work is made., This bulletin ( replaces bulletins 12 and 39 which ( were issued in June, 1930, and Sep- ] tember, 1932, respectively; these are out of print. | Methods of Arriving at Tractor Costs The costs of maintaining a tractor for any period can be arrived at by totalling all the direct costs for fuel, oil, grease, cartage, repairs, housing, attention, etc., and adding all the estimated indirect costs of interest and depreciation on the tractor, the tractor shed, and on any special implement attachments or other equipment required. When the total so obtained is divided by the number of hourj. worked, acres ploughed, etc., and an allowance is also made for the special costs of labour and implements used, then the total cost per hour worked and per acre ploughed,) etc., can be arrived at. It must be \ borne in mind, however, that costs!1 are 'not the only items to be dealt with when considering the purchase of a tractor. Such matters as ability to get the work done easily and on time, and the question of the relation between the cost per acre and the market price to be received for the farm products to be sold must also be considered. Typical tractor costs based on a weighted average of fifty individual costs for the various types of tractors working at farm work in Canterbury have been used to provide the examples of tractor costs set out in the table below. The table can be taken as a guide to the method of compiling costs rather than as a statement of actual costs likely to be incurred by any individual. Any particular farmer's costs will vary from the costs set out in the table below due to variations in type of soil worked, configuration of the land, depth of working, acreage dealt with, mechanical aptitude of the worker, and many other similar considerations. Since in the costs quoted, the kind and amount of work done by the different types of tractors per hour or per acre are not, and for efficient working, should not be similar, the above costs are not directly comparable The table is followed by an explanation and discussion of the individual items of cost detailed.

SCHEDULES

Tractor Costs—Tractor Type. The costs set out are for the wheel type of tractors.

New Cost and Work Hours—The higher-priced tractors are usually worked for more hours per year than are the lower-priced tractors; two or even three shifts are sometimes worked. The working of 1500 to 2000 hours with the higher-priced machines makes interest and depreciation costs per hour worked lower than they would appear if only 1000 to 1360 hours were worked per year.

Fuel Used—The fuel costs are much lower where diesel or semidiesel power is used. In Ashburton County, locally assembled tractors, driven by electric-power carried by cable attached to the. main power

TRACTOR WORKING COST SCHEDULE Motor Type A B C D E New Cost £300 £400 £450 £500 £750 Horse Power 10-20 15-36 15-25 15-36 25-50 SemiFuel Used Kerosene or Petrol Electric Diesel Diesel Work Hours 1000 1360 1360 1500 2000 Cost of Fuel £77 £176 £94 £48 £100 Oil and Grease £15 £30 £4 £20 £33 Repairs (standardise) £25 £25 £25 £25 £25 Total Running Cost £117 £231 £123 £93 £158 Total Running Cost per hour worked :..... 2/4 3/5 1/10 1/3 1/7 Depreciation at 12i% ..... £38 £50 £56 £63 £94 Interest on average value at 5% - £8 £10 £12 £13 £19 Tractor Shed, Cover, etc. £5 £5 £5 £5 £5 Total Cost £168 £296 £196 £174 £276 Total Cost per hour worked 3/4 4/4 2/11 2/4 2/9 APPROXIMATE TRACTOR PLOUGHING COST SCHEDULE (Based on total cost per hour of all classes of tractor work done as set out in the above schedule; i.e., costs equivalent to costs of light ploughing) Tractor Type ...... : A . B C D E Estimated Acres ploughed per hour , J 1 1 1J ' 1£ s. d. s. d. s. d. s. d. s. d. Working Cost of Tractor 34 44 2 11 24 29 Labour costs at 2/6 per j hour of operation 26 26 26 26 26 j Total Cost per hour* 510 610 5 5 410 5 3 Cost per acre 11 8 91 55 38 36 Similarly, by setting down all the various items of cost involved, a horse-working cost schedule can be compiled. HORSE-WORKING COST SCHEDULE j No. of Horses _ 4 6 12 • (2 teams of 6) New Cost £100 £150 £300 Team Hours 1300 1700 1700 Cost of Chaff £70 £105 £210 Grazing ...... £16 £24 £48 Sundries ...... £12 £18 £36 \ Total : £98 £147 £294 Depreciation at 10% £10 £15 £30 Interest at 5% £5 £7/10/- £15 Interest, Depreciation and Repairs on Stable, Chaff House, etc £10 £20 " £40 Total Cost .... £123 £189/10/- £379 i Total per team hours worked l/li 2/3 4/6 APPROXIMATE HORSE PLOUGHING COST SCHEDULE (Based on the total cost per hour of all classes of horse work as set out in the above schedule; i.e., costs equivalent to light ploughing) i No. of Horses 4 6 12 r (2 teams of 6) Estimated Acres ploughed per hour , | | lj '' > s. d. s. d. s. d. 1 Working Cost of Horses 1 11 2 3 4 6 • Labour Costs at 2/6 per hour of operation _ 2 6 2 6 5 0 . Total Cost per hour 4 5 4 9 9 6 \ Cost per Acre 11 9 7 7 7 7 1 CONSIDERATION OF INDIVD3UAL ITEMS OF COST SET OUT IN THE ABOVE

to be done, an additional horse is ! \ necessary; i.e., the four-horse team ! | would require five horses and the \ six-horse team would require seven i horses. , i 1 New Cost—The average value per 1 ! horse is estimated at £25. « Team Hours — Normally high- * priced, young and active horses are kept where a large 'number of hours per year are worked, and low-priced, old horses and sometimes breeding mares are kept where only few hours are to be worked per year. An average of approximately 163 days of 8 hours' work for the four-horse team, and 213 days of 8 hours' work with the six-horse team, is allowed for. This is about the average for the medium to heavy land small farm areas and the medium to light land large farm areas in Canterbury. On the latter areas the cropping programme and nature of soil enable cultivation work to be carried on almost continuously. Cost of Chaff and Grazing—The cost of chaff, oats, or other grain feed varies with the amount of work done. Where very little work is done, grazing plus a little hay may suffice. The above teams are estimated to consume 5 tons of chaff or equivalent feeds per horse per annum. Chaff is costed at £3/10/- per ton and 2 acres of grazing per horse at £2 per acre. Sundry items comprise veterinary, clipping, shoeing, covers, and harness ; expenses and repairs, fencing, etc. Depreciation is estimated on the basis of a ten-year working life, i.e., * a horse bought at three or four years t old is estimated to die or be dis- '■ carded after ten years' service. 1 Where horse breeding or skilful horse purchasing and handling is practised, : this cost may be more than counterl' balanced by the profit obtained from ■ sale of surplus horses. The stable and chaff house is estil mated to cost £160 for a four-horse * team, £200 for a sixhorse team, and < £400 for two six-horse teams. I Labour Costs—Labour cost is stani dardised at 2/6 per hour worked. * While not actually driving the horses 7 the teamster must devote some of his \ ■ time (probably about 20%) to atten--1 tion to the horses. The actual rate - received for all the time spent on - the teams woufd therefore be less i than 2/6 per hour and also less than . the rate received for tractor work. , The cost per acre ploughed does ) not include any allowance for use of 3 plough and ploughshares. 1 Cost Per Horse Hour Worked—A - horse team is not always worked as a complete unit. Occasionally only - a part of the team may be worked. .In the example above, the total of all - horse hours worked is estimated to 2 amount to 4,200; 7,600; and 15,200; i and the cost per horse hour to 7d, > sd, and 5d respectively. r Comparison with Horses—Tractors, 1 particularly low-cost fuel consuming t tractors, are cheaper than horses per j unit of work done, provided sufficient t area is cultivated. By enabling the f cultivation to "Be done early and at t the most opportune times, tractors a under these conditions' allow of a greater net production. o The advisability of purchasing a - tractor depends upon whether such a s purchase will tend to increase the net a income of the individual farmer over k the full period for which the tractor disto be used, taking into fuU account

power costs. t Repair Costs—Repairs are often nil i in the first year or so after a tractor i is purchased new, and towards the j end of a tractor's life are often ] heavy. Costs available show lower Lines, operate for relatively low ] repair costs for the higher-priced types of tractor, but for the purposes of this bulletin, repair costs have been standardised at what is considered to ] be an average figure under efficient management, The annual rate of depreciation or obsolescence is measured by the difference between the cost of the tractor delivered on the farm together with the cost of any improvements added, and the net sale price of the tractor when discarded, divided by the number of years held. Since the working life of the tractor cannot be definitely foretold, depreciation must be estimated for the cost purposes above. The estimated annual rate of depreciation is 12i% of the new cost, i.e., the tractor is calculated to have an eight years' life. The depreciation on a tractor depends 'not only on the number of hours or years worked, j but also on such factors as changes |of invention or of economic conditions which may make it advisable for the owner, for example, to purchase a newer type of tractor or to cease tractor work. Under normal conditions a depreciation rate of 12i% is the average figure encountered. Interest—lnterest is calculated at 5% on the average value of the tractor. Where regular annual rates of depreciation are allowed but the tractor, at the end of the period, still has a trade-in value, the average value will be a little more than one-half of the new cost. A tractor shed is estimated to cost £40. Other items of cost included' under this heading are, use of tractor cover, petrol drums, pumps, etc. j The total costs per hour worked are not so informative as costs per acre of work done. Much more work can be done by the more powerful tractors. Nevertheless, if only a few acres are to be ploughed or worked in a year, or if suitably j sized implements are not avail- ■ able, the cost per acre ploughed would be higher with the higherpriced types of tractors. Under varying conditions the actual variation in costs per hour worked is very great. For example, with tractor Type A, actual total costs vary from 3/- to 9/- per hour, the major cause of this variation being differences in total hours worked and expenditure for repairs. Labour Cost—Labour cost is standardised at 2/6 per hour worked. While not actually driving the tractor, the tractor-driver must devote some of his time (probably less than 10%) to refuelling and attention to the tractor. The above labour charge would therefore allow for all the time spent on the tractor, about 10% less than 2/6 per hour. The cost per acre ploughed does not include any allowance for use of plough and ploughshares. This cost would probably amount to from 6d to 1/6 per acre. Horse Costs-—No. of Horses. To allow of comparison with heavy tractors, costs for 2 six-horse teams as well as for a 4 and a 6-horse team are included. Where continuous work up to full team strength is required

the fact that prices may vary over that period. In. estimating the difference in the net returns involved v by the purchase of a tractor, care must be taken to allow not only for the cost of interest and depreciation on the tractor, but also for the cost of purchase of hew implements and conversion of other implements to tractor use and also to extra wear and tear of implements due to additional work. On the other hand it must be noted that where new horse equipment has to be purchased, horses require a considerable expenditure for harness, chains, and trees, etc., hot required by tractors. Farm and cost account records show that as a general rule tractors are profitable under the following conditions:— ■.-'-. 1. Where a large area is to be cultivated each year, large" tractors reduce the labour cost per acre. ~o£ 2. Where, as on heavy cropping land, a tractor is required for rush periods and for harvest work. 3. Where, as on the light plains land, horse feed is expensive to grow and a powerful, low fuel consuming tractor handling a large acreage for sheep feed can be economically used. 4. Where, as on back country, all the available supplementary feed is required for the sheep,: and the costs for provision of sheep feed can be kept down by the use of a lowpriced tractor. 5. When general prices and labour costs are rising and increased production from the area previously required for growing feed and pasture for horses can be sold at a profit. As shown above, the total average outlay per annum for running a tractor will range from £200 to £600, > but, whatever the outlay, a corresponding increase in cash income or decrease in cash expenditure will be required if the tractor costs are to be met profitably. When prices are low, this income is difficult to obtain. Lower interest and depreciation costs can be obtained by the use of horses, and when labour and land has little earning .value, the use '■, of horses involves little money outjlay, except for chaff-cutting, twine, ! use of sacks, etc. Conclusion The use of tractors permits an ! advance in the stahdard of living, ' and the possibility of a very great increase of production of other farm . commodities from the horse area disi placed. From the social point of ■ view the increasing use of tractors can be made profitable • only if I part of the increased production * which tractors make possible is able to be exchanged on an equitable basis for tractor materials, etc. From the individual point of view, however, the" ' proper way to decide whether or hot \ to buy a tractor is to make out bud- . gets of the estimated returns obtain- [ table from the property run by horse ; labour, by tractor power, by horse < i and tractor power, by contract i labour, with more or less, or with no cultivation. i If the conditions to be met on any J i particular farm are given in detail to t the Canterbury Agricultural Golleg-e, <±~* ■ advice will be offered as to whether :} the use of a tractor would be i * economical. '