160 Acre Center Pivot

160 Acre Center Pivot Example

Estimating Annual Irrigation Operation Costs -3-10

Standard 160 acre system and end gun with actual irrigated area of 132 acres installed at a cost of $62,000 with a power and water source and connecting equipment cost of $32,000.

Ownership Cost

Depreciation: (original cost - salvage value)/years of use

(pivot cost + installation cost - salvage value)/10 years=

($62,000 - 18,000)/10 = $4,400

(well cost - salvage value) / 20 years =

($32,000 - 12,000)/20 = $1,000

Interest: interest rate * average investment value

6.5% * (original cost + salvage value/2) =

6.5% * ($94,000 + $32,000/2) = $ 63,000

6.5% * $ 63,000 = $4,095

Repair: estimated to between 2 to 5% of original cost

well cost * 2% =

$32,000 * 2% = $640

pivot cost * 3% =

$62,000 * 3% = $1,860

Taxes: no personal property tax in Michigan

the addition irrigation equipment should not increase property taxes. Indiana personal property tax estimated at 1%. $94,000 * 1% = $940 not shown in calculation

Insurance: estimated at 0.5% * Average Investment Value

0.5% * (original cost + salvage value/2)

0.5% * ($94,000 + $32,000/2) = $ 63,000

0.5% * ($ 63,000) = $315

Total Ownership Cost = $4,400 + $1,000+ $4,095 +$640+ $1,860+ $315 = $12,310

$12,310/132 acres = $93.26 / irrigated acre / year

Operating Cost (per acre) or total actual annual cost

These costs are best handled annually calculated using actual costs at the end of season.

Power: use actual fuel or power bill is recommended

estimated power cost:

$3.50/ acre in. * 7 in.* 132 acres = $3,234 annually

$2 to $7.50/acre in. range