Tobacco Irrigation Decision Aid
For more information, contact:
Greg Halich Laura Powers
Assistant Extenstion Professor Extension Specialist
Greg.Halich@uky.edu Laura.Powers@uky.edu
859-257-8841 859-257-7272 ext. 246
This decision tool has been created to help producers evaulate if irrigating tobacco would be
profitbale in drought conditions. To navigate through the tool, please click on the tabs below.
Be sure to review the "Instructions" page for important information about this decision aid.
Last Updated 7/20/07
Tobacco Irrigation Decision Aid - Introduction and Description
Purpose: This Decision Aid has been constructed to help producers evaluate if tobacco irrigation would be profitable in drought conditions.
Options evaluated: 1) Partial returns with irrigation, and 2) Partial returns without irrigation.
How decision aid works: The most important user input will occur in the sheet labeled "Main". You can enter your information (change the
spreadsheet) in cells that are colored blue. The net partial revenue from the irrigated and non-irrigated crop will change based on the
parameters the user enters here. Parameters in other sheets will effect the results, but by a much smaller degree. It is advised that the user
concentrate efforts on most accurately estimating parameters in the "Main" sheet and only change parameters in other sheets after these
efforts have been exhausted.
Notes for Specific Sheets
Main Sheet: This is by far the most important sheet of the overall decision-aid. Most of your efforts should be concentrated here .
The most important parameters entered will be your estimated yield without irrigation and the yield increase with irrigation. There is very little
empirical work that has evaluated irrigation's impact on tobacco yield. Thus these estimates will have to be based heavily on your past
experience on yields with varying amounts of rainfall during the growing season.
Irrigation Sheet: Use this sheet only if you already have irrigation equipment and have a good idea of your specific production costs. If you do
not already have irrigation equipment, use the "custom rate" option in the Main Sheet.
Labor Sheet: You can enter your specific information for wage rates and production activities. However, this has relatively little impact on the
final analysis. This sheet is mainly for "fine-tuning".
Transportation Sheet: This sheet allows you to either calculate your transportation costs for getting tobacco to market or estimate this cost
on a per pound basis. Again, this sheet has relatively little impact on the final analysis and is mainly for "fine-tuning". The default values are
set a mid-ranges and should only be changed if you have good estimates on these costs.
Machinery Sheet: This sheet allows you to either calculate your machinery costs (from dropping sticks to baling) or to estimate it on a per
acre basis. Again, this sheet has relatively little impact on the final analysis and is mainly for "fine-tuning". The default values are set at mid-
ranges and should only be changed if you have good estimates on these costs.
Results by Probability Sheet: Although you can simply take your most likely outcome for non-irrigated and irrigated yield, this approach can
be misleading because the profit function with crop insurance does not continuously increase with yield. It is far better to use the Results
Sheet where you allocate a percentage chance to each of seven non-irrigated production ranges. You still set the estimated yield increase for
irrigation in each range. You then need to calculate the Net for the Irrigated and Non-Irrigated Crop in the Main Sheet and copy these values
into the Results Sheet for each of these seven ranges. This is explained in more detail in this sheet.
Main Irrigation Decision-Aid Description:
Crop Insurance Coverage (y/n) ? Yes
5-Year Avg Yield for Insurance (lbs/acre) 2300 Average yield for the last five years documented for insurance purposes.
Tobacco Price - Irrigated ($/lb) $1.62
Price Discount for Low Yield Tobacco (y/n)? Yes Choose "Yes" if you expect a price discount for low-quality tobacco for non-irrigated crop.
Price for Low-Yield Tobacco ($/lb) $1.50 If "Yes" above, enter expected price for lower quality product.
Yield Below Which Discount Applies 1000 If "Yes" above, enter yield which discount will apply for below this level.
Policy Coverage 70%
Insured Yield (lbs) 1610
Est. Non-Irrigated Yield (lbs) 1750
Est. Irrigation Yield Increase (lbs) 400 Enter expected yield increase (not overall yield) here.
Final Yield - Irrigation (lbs) 2150
Yield Needed to Cover Harvest Costs (lbs) 573 Computed based on your labor and machinery costs for harvesting operations.
Use Custom Irrigation Charge (y/n) ? Yes
Custom Irrigation Charge ($/acre) $200
Final Irrigation Cost Used ($/acre) $200 Irrigation cost used in final analysis.
Net Irrigated Crop ($/acre) $1,856 Net revenue (including insurance) less costs incurred from this point forward (including irrigation).
Net Non-Irrigated Crop ($/acre) $1,518 Net revenue (including insurance) less costs incurred from this point forward.
Advantage to Irrigation ($/acre) $338 Irrigation will pay based on these assumptions.
Instructions:
Numbers in blue are meant to be changed based on your specific circumstances and estimates.
You can estimate irrigation costs as a custom rate in this sheet by typing in "y" after the question "Use Custom Irrigation Charge?".
Otherwise, a calculated value will be used based on assumptions in the sheet named "Irrigation".
If you don't already own the necessary irrigation equipment, use a custom irrigation rate (typically $200-300/acre).
Warning : Net for irrigated and non-irrigated crops are partial budget calculations and DO NOT INCLUDE COSTS INCURRED BEFORE IRRIGATION.
- Thus this decision-aid should be used for comparison purposes only.
Calculate Irrigation Costs Instructions:
Fuel Price ($/gal) $2.30 You can use this sheet to calculate your irrigation costs or you can simply estimate them.
Acres Irrigated per Day 6.0 To estimate irrigation costs, type in "y" in the Main sheet under "Use Custom Irrigation Charge?".
Irrigation Cycles (growing season) 2 Otherwise, the calculated value will be used in the analysis.
Total Acres Irrigated 40 To calculate irrigation costs, review all of the blue colored numbers.
Total Days Irrigated 13 Change numbers where applicable and the final cost will be adjusted accordingly.
An important assumption with the calculation method is that you already own irrigation equipment.
Tractor (105 PTO base): If you don't own equipment, you should use the custom irrigation method.
Fuel (gallons/hour) 4.6
Fuel ($/hour) $11.69
Maint and Repair ($/hour) $8.00
Total Tractor Cost ($/hour) $19.69
Tractor Hours/Day 9.0
Total Tractor (Cost/day) $177
Total Tractor (Cost/acre) $59
Labor-tractor (hours/day) 2.0
Labor-tractor Cost (Cost/Day) $20.00
Depreciation Pump/Day $10.00
Depreciation Gun/Day $3.00
Depreciation Pipe/Day $1.00
Number of Days Between Moves 2
Labor-move (hrs to move irrigation equip.) 3.0
Operator/Manager (number) 1
Employees (number) 2
Labor-move Cost/Per Move $120
Labor-move Cost/Day $60
Total Labor/Day $80
Total Labor/Season $1,067
Total Labor/Acre $27
Calculated Irrigation Costs / Acre $90
Irrigation Cost / Acre used in Analysis $200
Labor Costs
Labor Rate ($/hr)
Operator/Manager $20
Employee $10
Labor
Hand Cultivate ($/acre) $25
Topping (hours/acre) 5
Stick Dropping (hours/acre) 1
Housing ($/acre) $600
Stripping ($/Lb) $0.25
Instructions:
Enter labor rate for yourself/manager and employees.
Enter labor information for specified production activities.
Transportation Costs
Calculate Transportation Costs:
Trans. Cost ($/loaded mile) $6.00
Loaded Miles Traveled 40
Pounds per Load 10,000
Calculated Transportation Cost ($/lb) $0.024
Alternative Method:
Estimate Transportation Cost (Y/N) ? Yes
Estimated Transportation Cost ($/lb) $0.025
Transportation Cost Used in Analysis ($/lb) $0.025
Instructions:
You can use this sheet to calculate your transportation costs or you can simply estimate them.
To estimate transportation costs, type in "y" under "Alternative Method". Otherwise, the calculated value will be used in the analysis.
To calculate transportation cost, enter the typical cost per loaded mile, the distance traveled to market, and the number of pounds delivered per load.
Machinery Costs for Harvesting
Fuel Maint and Total
Hours/ (gallons/ Fuel Cost Repair Depreciation Total Cost Cost per
Calculate Machinery Costs: Acre hr) (per hr) (per hr) (per hr) (per hr) Acre
Hauling and Droping Sticks - Tractor 1.0 3.0 $6.90 $1.00 $3.00 $10.90 $10.90
Hauling and Droping Sticks - Wagons 1.0 - - $0.50 $0.00 $0.50 $0.50
Housing - Tractor 2.0 3.0 $6.90 $1.00 $3.00 $10.90 $21.80
Housing - Wagons 2.0 - - $0.50 $0.00 $0.50 $1.00
Baling - Tractor 0.5 4.0 $9.20 $1.00 $3.00 $13.20 $6.60
Baling - Baler 0.5 - - $1.00 $3.00 $4.00 $2.00
Calculated Costs ($/Acre) $42.80
Alternative Method:
Estimate Machinery Cost (Y/N) ? Yes
Estimated Costs ($/Acre) $50
Machinery Cost used in Analysis ($/Acre) $50
Instructions:
You can use this sheet to calculate your machinery costs for harvesting or you can simply estimate them.
To estimate machinery costs, type in "y" under "Alternative Method". Otherwise, the calculated value will be used in the analysis.
To calculate machinery costs for each activity, you will need to estimate hours used per acre, as well as fuel use, repairs, and depreciation per hour.
Results Weighted by Probability of Occurrence
Base Yield Range
(no irrigation)
Your Current Est. Est. Yield Net Net Non- Weighted
Low end High end Chance for this Avg. Yield Est. Irrigation with Irrigated Irrigated Irrigation Irrigation
of Range of Range Outcome No Irrigation Yield Increase Irrigation Crop Crop Advantage Advantage
0 500 5% 250 800 1050 $1,283 $2,138 -$854 -$43
500 1000 10% 750 700 1450 $1,173 $1,476 -$303 -$30
1000 1500 20% 1250 500 1750 $1,318 $1,428 -$111 -$22
1500 2000 30% 1750 400 2150 $1,856 $1,518 $338 $101
2000 2500 20% 2250 300 2550 $2,394 $2,190 $204 $41
2500 3000 10% 2750 200 2950 $2,932 $2,863 $69 $7
3000 3500 5% 3250 100 3350 $3,470 $3,535 -$66 -$3
Averages 100% 1750 415 2165 $1,947 $1,897 WtAvg $51
Instructions:
1. Estimate the percent chance that each yield range will occur given the current crop condition and no irrigation (make sure they add up to 100%).
2. Enter your expected yield increase due to irrigation for each base yield range (the default values are for demonstration purposes only).
3. Transfer each line (one by one) of the "Est. Yield No Irrigation" and "Est. Irrigation Yield Inc" values (higlighted in grey) to the "Main" Sheet .
4. Transfer the corresponding results from "Net Irrigated Crop" and "Net Non-Irrigated Crop" on the "Main" Sheet back to this Sheet (highlighted in yellow).
"Net Crop" (irrigated and non-irrigated) = revenue (including insurance where applicable) less costs incurred from this point onward (including irrigation).
"Wt. Irrigation Adv." is the "Irrigation Advantage" multiplied by the percent chance that this would occur.
"WtAvg" is the sum of "Wt. Irrigation Adv." and is interpreted as the average expected advantage/disadvantage from irrigating the crop on a per acre basis.
E.G. a +$50 WtAvg means that based on the assumptions, you would on average expect to net an additional $50 per acre by irrigating the crop.
Warning : Each time you change the "Est. Irrigated Yield Increase", you must also go back to the Main Sheet to enter these new values and enter the new
values for "Net Irrigated Crop" and "Net Non-Irrigated Crop" on this page.