Calculating farm fuel costs as part of your annual management plan
Farm fuel cost calculations are just one part of understanding your overall costs for the year. But, given the rising price of fuel, it’s an important one. From a big picture perspective, fuel cost estimates contribute to understanding break even points for your farm, and how that links to cash flow and profitability. It also contributes to understanding the overall costs for each piece of equipment you own and operate. This data is valuable when it comes time to crunch numbers on whether or not you should purchase or lease new equipment.
Historical records are the best tool for predicting fuel demands, but if you don’t have that or expect changes to how and what you’ve used historically, then there are some basic calculations you can use to determine what your fuel budget will look like for the year. (We’ve sourced these calculations from OMAFRA)
What you’ll need to start.
- Equipment maximum PTO
- Estimated hours of use
- Fuel price
To calculate estimated Litres per Hour fuel consumption
For GASOLINE units
L/hr = (0.229) x maximum PTO horsepower
For DIESEL units (approximately 73% less fuel than gas units)
L/hr = 0.167 x maximum PTO horsepower
To calculate estimated annual fuel costs
For GASOLINE units
Annual costs = (0.229 x maximum PTO horsepower) x total hours of use x fuel costs per L
For DIESEL units
Annual costs = (0.167 x maximum PTO horsepower) x total hours of use x fuel costs per L
Factors that impact your calculations
These calculations should be considered a starting point for your budgeting. There are many factors that can affect the actual fuel demands for your equipment, including:
- Travel to and from field
- Condition of equipment
- Soil type
- Field shape
- Equipment operators
Other helpful resources
Alberta Agriculture and Forestry has a good Farm Machinery Cost Calculator. You can select your equipment from a drop-down list to view data on costs, including fuel usage in Litres or gallons per hour.
The Nebraska Tractor Test Laboratory (part of the University of Nebraska – Lincoln) publishes tractor test reports from most popular manufacturers from 1999 to current. The reports are in PDF format for each model and includes a wide range of data from fuel and power performance to sound levels in the cab.
If you’re interested in fuel trends, you can see the Statistics Canada data for retail pricing in Table 18-10-0001-10
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Source: Ag Exchange Group