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Economics of Tile Plow Investment and Use

John Hanchar, Farm Business Management
Northwest New York Dairy, Livestock & Field Crops

July 8, 2013

In an article of the February 2011 issue of AgFocus, James Kingston reviewed the topic of tractor-drawn tile plows. The article utilized data from presentations that he made at the NWNY Dairy, Livestock, and Field Crops Program's 2011 Corn Congresses in January. In the article, James included a brief summary of some economic analyses that we developed to examine tile plow investment and use. The purpose of this article is to provide more detailed information from those economic analyses. For the detailed analyses, including the MS Excel Spreadsheet developed to examine tile investment and use, please visit the team's website at and click on "AgFocus."

Partial budget analyses for profit indicated that 16 of the 20 expected feet installed annually, expected tile contractor charge combinations yielded expected increases to profit (Table 1). Net present value analyses indicated that of 14 of the 20 expected feet installed annually, expected tile contractor charge combinations yielded net present values greater than 0. Net present values greater than or equal to 0 reflect capital investments that would be considered attractive to the producer (Table 2).

Refer to Table 1 below

Overall, analyses suggest that if a producer can expect to install about 16,000 feet of tile or more annually over 5 years, then investment and use of a tractor pulled tile plow is attractive given expected contractor charges of about $0.65 per foot or greater.

Refer to Table 2 below

Tractor Drawn Tile Plows

Considering Costs to the Producer of Realizing Savings in Contractor Charges
A review of information sources prior to developing the economic analyses produced material that enthusiastically described the money that can be made using owned machinery and labor versus hiring a contractor. One example noted $4,000 made in one afternoon ($0.50 per foot excluding tile, the contractor charge avoided, times 8,000 feet installed). Although the savings are notable, the analysis seems to ignore that a farmer would expect to incur additional ownership costs (depreciation, interest, insurance and others) and operating costs (hired labor, machinery repairs and maintenance, fuel, oil and lube expense, and others) associated with tile plow investment and use. The purpose of our analysis was to evaluate the expected benefits and costs associated with tile plow investment and use. An important assumption for all of the analyses described below is that the decision to tile has already been made - expected benefits exceeded expected costs. The only decision remaining is whether to have tile installed by a contractor, or install tile using owned equipment and labor supplied by the farm.

Partial Budget Analysis
A partial budget projects the expected change in profit associated with a proposed change in the farm business, for example, investment in and use of a tile plow compared to hiring a contractor. The expected change in profit equals the expected change in total value of production, income minus the expected change in the costs of inputs used in production. With regards to tiling, expected cost savings might be considerable. However, what cost increases will the farmer incur to realize these savings? A partial budget considers all expected changes to income and costs ?? the decreases and the increases.<br><br>Net 

Present Value Analysis
Net present value analysis considers the time value of a stream of net cash flows, income over the life of the investment. The time value of money concept results from the fact that individuals, when given the choice, would prefer to receive a dollar today over a dollar received at some future date, for example, a year from now. The net present value of an investment is the sum of the present values for each year's net cash flow less the initial cost of the investment. If the net present value of an investment is greater than or equal to zero, then the investment is attractive to the decision maker. For this analysis, the initial cost of the investment was $33,000 for the tile plow, stringer cart, and control system.

The analyses described here focused on expected changes in profit and net present values of the investment. James' February article mentioned other considerations that help to determine whether tile plow investment and use makes sense for an individual operation.

Economics of Tile Plow Table 1 & 2 (pdf; 185KB)











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Upcoming Events

Beginning Farmer/Hobby Farmer Workshop $5/pp, class size is limited, so pre-register by April 15th!

April 27, 2019
9:00 am - 1:00 pm
Canandaigua, NY

This hands-on workshop is for beginning or part-time farmers who would like to improve their farm machinery skills, learn to properly and safely maintain their equipment to protect their investment. If you have been thinking about buying a tractor, new or used, two-wheel or four-wheel drive, compact or utility or more come join us. Topics include: selecting the right size/type tractor for the job; basic maintenance; staying safe around tractors and equipment; attaching implements properly; and information about ROPS and SMV's. There will be time for questions.

Pre-registration requested by April 15, 2019 email Amy with your name, address, and phone number or call 585-394-3977 x 429.
Fee: $5.00/person. Class size is limited.

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2019 Pastured Poultry Seminar, lunch included so please register by May 10th! $25/person

May 18, 2019
Registration begins at 8:00 a.m.w/ coffee & donuts with the Program running from 9:00 a.m. - 5 p. m.
Attica, NY

The main speaker this year is Eli Reiff of Mifflinburg Pennsylvania. Eli raises broilers, turkeys, sheep, and beef, all on pasture. Topics to be covered will include the pasture, feed and nutrition, marketing, costs, and much more. As we grow as farm operators and get bigger, we may not pay as much attention to the basics as we should. So those areas are where we will start, and then expand to cover the group's interests.

Mike Badger, Director of the American Pastured Poultry Producers Association will also be available for a round-table discussion. Plans are to have representatives from Farm Bureau, NYCAMH for farm health and safety, Wyoming County Chamber of Commerce, and Cornell Cooperative Extension of Wyoming County, as well as others.

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Calling all 9th-12th graders! 4th Annual Precision Agriculture Day at Genesee Community College

May 21, 2019
9:00 am - 1:30 pm Register by Friday May 10th! $15/per person includes lunch
Batavia, NY

Calling all 9th-12th graders!  We have an exciting new program for students interested in technology, science, engineering, and agriculture!
Would you like to:
  • Learn about how Drones collect information
  • Check out some potential career opportunities that have new and ever-changing technology
  • Learn how these technologies can be used in our own backyards in WNY
  • Discover potential and exciting career opportunities

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Producers Previously Enrolled in the LGM Program Now Eligible for MPP

Dairy Producers Previously Enrolled in the Livestock Gross Margin Program Now Eligible for 2018 Margin Protection Program
The U.S. Department of Agriculture (USDA) today announced that dairy producers who elected to participate in the Livestock Gross Margin for Dairy Cattle Program (LGM-Dairy) now have the opportunity to participate in the Margin Protection Program for Dairy (MPP-Dairy) for 2018 coverage. Sign-up will take place March 25 through May 10, 2019.
Eligible producers can enroll during the sign-up period at their local USDA service center. To locate your office, visit

Smart Farming Team Technical Assistance Grant Application

The Labor Ready Farmer Project is offering grants to provide up to 12 hours of Technical Assistance (TA) consulting services to farms who want to make improvements to their farm's processes in hiring, training, managing or evaluating employees. Applicants will choose from one of the following four areas for TA assistance and identify a specific project. If selected they will be matched with a "Smart Farming Team" of consultants who will provide one on one technical assistance.
Please complete this application and send to Nicole Waters, Beginning Farm Project Coordinator for the Cornell Small Farms Program. The form can be submitted by email, mail or in-person at the address listed below. Please feel free to call or email with any questions.

Nicole Waters - Beginning Farmer Project Coordinator
Plant Science Building, Room 15b
Tower Road, Cornell University
Ithaca, NY 14853
Phone: 607-255-9911

Applications accepted on a rolling basis.

USDA Announces January Income over Feed Cost Margin Triggers First 2019 Dairy Sa

WASHINGTON, March 6, 2019 ? The U.S. Department of Agriculture's Farm Service Agency (FSA) announced this week that the January 2019 income over feed cost margin was $7.99 per hundredweight, triggering the first payment for eligible dairy producers who purchase the appropriate level of coverage under the new but yet-to-be established Dairy Margin Coverage (DMC) program.

DMC, which replaces the Margin Protection Program for Dairy, is a voluntary risk management program for dairy producers that was authorized by the 2018 Farm Bill. DMC offers protection to dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer.

Agriculture Secretary Sonny Perdue announced last week that sign up for 
DMC will open by mid-June of this year. At the time of sign up, producers who elect a DMC coverage level between $8.00 and $9.50 would be eligible for a payment for January 2019.

For example, a dairy operation with an established production history of 3 million pounds (30,000 cwt.) that elects the $9.50 coverage level for 50 percent of its production could potentially be eligible to receive $1,887.50 for January.

Sample calculation:
$9.50 - $7.99 margin = $1.51 difference
$1.51 times 50 percent of production times 2,500 cwt. (30,000 cwt./12) = $1,887.50

The calculated annual premium for coverage at $9.50 on 50 percent of a 3-million-pound production history for this example would be $2,250.

Sample calculation:
3,000,000 times 50 percent = 1,500,000/100 = 15,000 cwt. times 0.150 premium fee = $2,250

Operations making a one-time election to participate in DMC through 2023 are eligible to receive a 25 percent discount on their premium for the existing margin coverage rates.

"Congress created the Dairy Margin Coverage program to provide an important financial safety net for dairy producers, helping them weather shifting milk and feed prices," FSA Administrator Richard Fordyce said. "This program builds on the previous Margin Protection Program for Dairy, carrying forward many of the program upgrades made last year based on feedback from producers. We're working diligently to implement the DMC program and other FSA programs authorized by the 2018 Farm Bill."

Additional details about DMC and other FSA farm bill program changes can be found at

New Guidance for Mortality Disposal Issued

NYS Department of Ag and Markets has posted guidelines on disposal of livestock carcasses, in response to reports that some rendering companies have halted pickups from farms.|1