Save Money By Monitoring Farm Energy Costs

Save Money By Monitoring Farm Energy Costs

Fuel and other energy expenses should be more closely monitored to help manage farm costs.

It is harvest time -- a reminder of how much fuel a farm can use. Farmers are being urged to remain cautious regarding corn and soybean prices, as crop prices have dropped considerably during the past several months in anticipation of the 2013 harvest. Farmers are also being cautioned about farm fuel and energy prices. They've come down somewhat from previous highs of recent years, but fuel and other energy are still expensive, and farmers are urged to take a more detailed look at managing farm energy costs.

IT'S YOUR MONEY: Energy management on the farm can put money in your pocket. The Farm Energy Initiative, a program of Iowa State University Extension, is helping farmers identify energy-saving measures. "Iowa agriculture spends about $1 billion annually on energy," says ISU's Mark Hanna. "That's electricity, propane, diesel and gasoline combined. If we can save 1%, that's $10 million."

The Farm Energy Program at Iowa State University provides the following suggestions and information. Dana Petersen coordinates the program, along with ISU Extension ag engineer Mark Hanna.

First, take a moment to review the past five to 10 years. Did your recorded expenses for propane, electricity, diesel or gasoline used on the farm change noticeably during any of those years? Are the increases or decreases primarily due to fluctuations in your energy consumption? Changes in the market price? Other factors?

Are fluctuations in your farm's energy costs related to changing prices or changes in the farm's energy needs?

"Fluctuating energy prices can be troublesome," says Hanna. "Knowing whether energy costs are related to changing prices or specific changes in your energy needs is a useful first step to cutting expenses."

The weather offers an explanation for some of the variations you will find, he notes. Undoubtedly, your grain drying costs the past few years will reflect the weather conditions, with fluctuations in your demand for propane, electricity or natural gas. However, adding a little more detail in your records may help you to manage the potential risks of farm energy expenses, come rain or shine.

You might begin by reviewing your monthly and yearly accounting records to ensure that they are up-to-date, says Petersen. "Many of the farmers I met this past year explained that, generally speaking, they know their total monthly electricity or diesel costs. Their bills are entered each month into the farm's financial records, but that's often as far as it goes. Once a bill is paid, well…"out of sight, out of mind" is how one farmer described it."~~~PAGE_BREAK_HERE~~~

You may want to put energy bills into a farm energy log, for easy reference

As you're getting your bills in order, consider entering the information from them into a farm energy log, advises Petersen. A simple Microsoft Excel version is available under the Farm Energy Publications link on our website. Look for the fact sheet "Tracking the Energy Use on Your Farm", PM 2089C, and the corresponding farm energy log under the Energy Consumption subheading. This form can be customized to fit your needs using formulas or additional worksheets.

When monthly energy consumption and cost are entered into the form, the cost per unit is automatically calculated. As an example, consider your farm's electric bill. By entering this month's kilowatt hours (kWh) and total cost from your statement, the energy log will calculate your cost per kWh. For fuel sources such as diesel, gasoline or propane, the form will calculate the price per gallon. Previous or future bills also can be added to show changes in cost and volume over time.

Using an energy log will help you compare energy consumption year-to-year

"Using an energy log not only shows the total energy expenses, but also how the number of gallons or kilowatt hours used is changing during the year," says Hanna. "This allows meaningful comparison of energy consumption from year to year."

Whether you use our farm energy log or create one that suits your needs, enter your information from each monthly bill and review the results, he says. Try to get a better sense of the fluctuations in your farm's energy demands from season to season and year to year. This information can help you minimize your short-term expenses with management techniques, such as adjusting grain drying temperature or hog confinement ventilation settings, to reduce propane or electricity consumption.

Observing yearly trends over the long run may also help you identify the optimal time to replace your equipment or implement energy efficiency upgrades for barns or buildings.

"Check out the farm energy log and follow us on Twitter @ISU_Farm_Energy to learn more about energy efficiency all around the farm," says Petersen.

Do you have a farm energy question? Dana Petersen, Farm Energy Conservation and Efficiency Initiative, can be contacted at 515-294-5233 or [email protected]. Mark Hanna, ISU Extension ag engineer, is at 515-294-6360 or [email protected].

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