Length of Operational Life and Its Impact on Life-Cycle Costs of a Tractor in Switzerland

Abstract

Assuming full exhaustion of their estimated service life-also referred to as estimated technical working life-the low annual utilisation of agricultural machines in Switzerland leads to a long operational life. To determine the costs of an additional year's service, we calculate the life-cycle costs (LCCs), which encompass all costs for an 82 kW four-wheel-drive tractor over its entire operational life. Assuming full utilisation of the estimated service life of 10,000 h, five operating versions are compared, each with an operational life of between 10 and 30 years and matched annual utilisations between 1000 h and 333 h. A key finding is that an additional year in service increases LCCs by 4.5% of the tractor's purchase price. In addition, we carry out a sensitivity analysis by applying discount rates of between 0% and 4%, finding that a comparatively high discount rate of 3% leads to almost identical LCCs for all operating versions. We conclude that the annual utilisation and the resulting duration of operational life have a strong impact on LCCs. A short operational life associated with high annual utilisation is a promising strategy for substantially cutting machinery costs.

Combining Total Cost of Ownership and Multi-Criteria Decision Analysis to Improve Cost Management in Family Farming

“…Table 1 presents the different applications of TCO, which can be extended for application in the agribusiness. [31,36,37,40,45,46] According to Scott et al [47], TCO is the most comprehensive tool to obtain the total cost of inputs and services, in which all aspects related to the life cycle and maintenance costs are considered. Indeed, some authors claim that TCO has proven to be an efficient methodology to recognize all costs considering the entire company's value chain [23].…”

“…The use of TCO was mostly focused on industrial applications [38] and studies on costs in agribusiness are still scarce and incomplete [48]. Lips [31] proposed the use of TCO to evaluate the life cycle costs of tractors in Switzerland. Mochnacz et al [44] also used TCO in the agribusiness environment by developing a TCO model that aimed to provide significant cost savings by assessing all costs incurred in the acquisition of inputs and services.…”

“…Cost management is important for these companies and, according to Lips [31] and Degraeve and Roodhooft [21], inputs which are supplied recurrently represent the main expenses in the agribusiness sector. Nevertheless, some costs related to the acquisition of such inputs are mostly ignored, hidden or not easy to measure.…”

The Acceptable Alternative Vehicle Fuel Price

“…For agricultural tractors a service life is around 10,000-12,000 h [43,44]. According to the recommendation of experts, the economic life must not exceed 15 years [45,46].…”

Ūkininkų ūkių investicijų į žemės ūkio techniką efektyvumo didinimas

“…Muzalewski et al (2007) tyrimai atskleidė, kad Lenkijos ūkininkai neefektyviai naudojo didžiąją dalį technikos: ir purkštuvus, ir organinių trąšų skleistuvus, ir įvairių rūšių kombainus, ir sėjamąsias, ir netgi traktorius. M. Lips (2017) panašias tendencijas pastebėjo ir Šveicarijos ūkiuose.…”