IntroductionAlfalfa Dehydration Feasibility TemplateDeveloped
for:Ag Marketing Resource CenterDeveloped by:Phil Kenkel and Rodney
Holcomb, Oklahoma State UniversityThis templates is designed to
assist you in assessing the feasibility of a typical alfalfa
dehydration operation.The template assumes that the operation
purchases forage and hay and then sells alfalfa pellets and/or
alfalfa meal.The firms paysInput cells are shaded in blue.Each
sheet is currently protected allowing you to only input information
in the input cells.The template can also be modified and expanded
to meet your particular situation by turning off the protection.If
you choose to modify the template we would advise you to save it
under another name and retain the original for reference.To get
started go to the "Input Page"For comments or suggestions
contact:Phil Kenkel, [email protected] 405-744-9818Rodney Holcomb,
[email protected] 405-744-6272MENUINPUTSUTILITIESMARKET
PROJECTIONLOAN AMORITIZATIONPERSONNEL EXPENSESEXPENSE
PROJECTIONOPERATIONS SUMMARYDEPRECIATIONRETURN ON INVESTMENT
INPUTSUTILITIESMARKET PROJECTIONLOAN AMORITIZATIONPERSONNEL
EXPENSESEXPENSE PROJECTIONOPERATIONS SUMMARYDEPRECIATIONRETURN ON
INVESTMENT
Input ValueINPUT CAPITAL STRUCTURE ANDOPERATIONAL SUMMARYINPUT
PRODUCTS, INITIAL VOLUME, MARGIN PEREXPENSE INFORMATIONMonths of
Forage Operation5.6UNIT AND ANTICIPATED SALES GROWTH RATEPercent
Financed50.00%Months of Hay Operation5.7Product NamePelletsProduct
NameMealLong Term Interest Rate8%Hours of Operation /
Month200UnitstonsUnitstonsLoan Term10Hours of Operation /
Year2260Initial Volume18,080Initial Volume0Total Plant Property
& Equip$ 1,370,000Annual volume from Forage8960Sales
growth1%Sales growth1%Loan Amount$ 685,000Annual Volume from
Hay9120Price/unit*$ 105.00Price/unit*$ 108.50Working Capital$
1,296,939Total Annual volume-tons18080* Price/unit FOB to
plantShort Term Interest Rate6%% of Total Volume to
Pellets100%VARIABLE COST BREAKDOWN% Forage vs.
Hay47%Pellets$/unitMeal$/unitTAX INFORMATIONField Moist
(Forage)60%Maintenance$ 7.58Maintenance$ - 0Property Tax as % of
PP&E0.50%Pellet Moisture10%Custom Hauling$ 5.67Custom Hauling$
- 0Income Tax Rate60.00%Process Rate (tons pellets/hour)8Raw
Materials$ 30.98Raw Materials$ - 0Hay price/ton$40Total$
44.23Total$ - 0PAYROLL INFORMATIONTypical hay moisture10%% of
Payroll Tax to Salaries5.00%Custom Hauling cost/ ton
mile$0.18VARIABLE COST OF PRODUCTION PER UNIT% of Retirement Tax to
Salaries15.00%Average distance field to co-op30ProductUnitVC/unit%
of Employee INS Tax to Salaries10.00%Hay price/ton:dry
matter$44.44Pelletstons$ 44.23Benefits as % of Salaries30.00%Actual
Price per Ton Forage$40.00Mealtons$ - 0Wage Inflation1.00%price/ton
forage$17.78Hours of Operation2260Hay and Forage weighted
cost/ton$32.00MENU: Click Below to Move to the Indicated PageHay
and Forage wht cost/ton pellets$30.98FORWARD TO
RESULTSUTILITIESPower Req. (KW/ hour)895.2OTHER INPUTS ENTRIES ARE
INElectricity cost per Kilowatt$ 0.05PERSONNEL EXPENSESHorsepower
per hour1,200.00OTHEREXPENSE PROJECTIONSGas Cost per MCF$
3.00Expense Inflation Rate1.00%DEPRECIATIONMCF Gas
Needed/Ton13,288.80Maintenance as % of PP&E10%Electricity Cost/
Year$ 101,157.60Insurance as % of PP&E1%Electricity Cost/ Ton$
5.60Discount rate for NPV calc12%DepreciationReturn On
InvestmentWater Cost/ Year$ 3,000.00Water Cost/ Ton$ 0.17WORKING
CAPITALNatural Gas Cost/ Year$ 39,866.40WC req. for Hay &
forage Purchases$ 1,145,067Quality Percent0%Natural Gas Cost/ Ton$
2.20Additional WC as % of Sales8%Discount Rate0.00%Telephone Cost/
Year$ 2,400.00Additional WC in Dollars$ 151,872Telephone Cost/ Ton$
0.13Additional WC for Contingency$ - 0Total Utilities/ Year$
146,424.00Total Working Cap Requirement$ 1,296,939Total Utilities/
Ton$ 8.10
FORWARD TO RESULTSPERSONNEL EXPENSESEXPENSE
PROJECTIONSDEPRECIATION
UtilitiesMENUBACK TO INPUTSFORWARD TO RESULTSForage NeedsNatural
GasElectricityPellet dry matter/ton1,800.00Water
ton-harvested666.6666666667Horse Power Req./Hour1,200.00Forage
needed/ton pellet4,500.00Water/ton pellets200Electricity Cost/KW$
0.05Tons Forage needed/ton pellet2.25Water
removed/ton466.6666666667KW/HP0.746Forage needed
(tons)18,984.00BTU's/lb. water1500Electicity use per
year2,023,152.00Forage Cost$ 759,360.00BTU's
needed/ton700000Electricity Cost/ Year$101,157.60Forage Cost/Ton
Pellets42.00BTU's needed13,288,800,000Electricity Cost/ Ton$5.60MCF
Gas needed13288.8Hay NeedsGas Cost/MCF$ 3.00Variable
CostsPelletsPellet dry matter/ton1,800.00Gas Cost/
Year$39,866Custom Hauling$ 102,513.60Hay needed/ton
pellet2,000.00Gas Cost/Ton$2.21Custom Hauling/Ton Pellets$ 5.67Tons
Hay needed/ton pellet1.00MealHay Needed (tons)9,642.67Other
UtilitiesCustom Hauling$ 102,513.60Hay Cost385,706.67Water
Cost/Year$ 3,000.00Custom Hauling/Ton Pellets$ 5.67Hay Cost/ Ton
Pellets21.33Water Cost/ Ton$ 0.17Telphone Cost/Year$
2,400.00Telephone Cost/Ton$ 0.13
BACK TO INPUTSFORWARD TO RESULTS
Market ProjectionMENUBACK TO INPUTSFORWARD TO RESULTSSales
ProjectionsYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year
9Year
10Pelletstons18,08018,26118,44318,62818,81419,00219,19219,38419,57819,774Mealtons000000000018,08018,26118,44318,62818,81419,00219,19219,38419,57819,774Gross
Sales ProjectionThis sheet summaries the volume and price and sales
growth information from the input page. There is no input on this
page.Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year
10PelletsTotal
Volume18,08018,26118,44318,62818,81419,00219,19219,38419,57819,774Price/Unit$105.00$105.00$105.00$105.00$105.00$105.00$105.00$105.00$105.00$105.00Gross
Sales$1,898,400$1,917,384$1,936,558$1,955,923$1,975,483$1,995,237$2,015,190$2,035,342$2,055,695$2,076,252MealTotal
Volume0000000000Price/Unit$108.500$108.500$108.500$108.500$108.500$108.500$108.500$108.500$108.500$108.500Gross
Sales$0$0$0$0$0$0$0$0$0$0TOTAL GROSS
SALES$1,898,400$1,917,384$1,936,558$1,955,923$1,975,483$1,995,237$2,015,190$2,035,342$2,055,695$2,076,252Production
ExpensePellets$ 799,592$ 807,588$ 815,664$ 823,820$ 832,058$
840,379$ 848,783$ 857,271$ 865,843$ 874,502Meal$ - 0$ - 0$ - 0$ -
0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0TOTAL VARIABLE EXP.$ 799,592$
807,588$ 815,664$ 823,820$ 832,058$ 840,379$ 848,783$ 857,271$
865,843$ 874,502
BACK TO INPUTSFORWARD TO RESULTS
Loan AmortizationMENUBACK TO INPUTSFORWARD TO RESULTSThis sheet
calculates loan amortization and interest. There are no inputs on
this sheet.Total Investment$1,370,000Long Term Interest
Rate7.50%Percent Financed50.00%Loan Amount$685,000Loan Term10Year
1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Beginning
Balance$685,000$636,580$584,529$528,574$468,422$403,759$334,246$259,519$179,188$92,832Interest
Rate7.50%7.50%7.50%7.50%7.50%7.50%7.50%7.50%7.50%7.50%Interest$51,375$47,744$43,840$39,643$35,132$30,282$25,068$19,464$13,439$6,962Annual
Payment$99,795$99,795$99,795$99,795$99,795$99,795$99,795$99,795$99,795$99,795Principal$48,420$52,051$55,955$60,152$64,663$69,513$74,726$80,331$86,356$92,832Ending
Balance$636,580$584,529$528,574$468,422$403,759$334,246$259,519$179,188$92,832-$0Working
Capital$1,296,939Short Term Interest Rate6.00%Interest
Amount$77,816Total Interest
Expense$129,191$125,560$121,656$117,459$112,948$108,098$102,885$97,280$91,255$84,779
BACK TO INPUTSFORWARD TO RESULTS
Personnel ExpensesMENUBACK TO INPUTSFORWARD TO RESULTSThis sheet
allows you to input salaries and overtime assumptions for various
positions.Benefit calculations are based on the percentage you
entered on the "Input"
sheet.OccupationSalaryBenefitsOvertime%OvertimeTotalManager$45,000$13,5005%2250$60,750Processing/2$38,400$11,5205%1920$51,840Harvesting/
12$249,600$74,8805%12480$336,960N/A$0$05%0$0Total
Personnel$333,000$99,900$16,650$449,550Costs
BACK TO INPUTSFORWARD TO RESULTS
Expense ProjectionMENUBACK TO INPUTSFORWARD TO RESULTSThis Sheet
summarizes expenses. The only input is for "supplies and
miscellaneous" expenses.LaborYear 0Year 1Year 2Year 3Year 4Year
5Year 6Year 7Year 8Year 9Year
10Salaries$333,000$336,330$339,693$343,090$346,521$349,986$353,486$357,021$360,591$364,197$367,839Benefits$99,900$100,899$101,908$102,927$103,956$104,996$106,046$107,106$108,177$109,259$110,352Overtime$16,650$16,817$16,985$17,155$17,326$17,499$17,674$17,851$18,030$18,210$18,392Total
Labor$449,550$454,046$458,586$463,172$467,804$472,482$477,206$481,978$486,798$491,666$496,583Production
Expenses$799,592$807,588$815,664$823,820$832,058$840,379$848,783$857,271$865,843$874,502Utilities$
146,424.00$147,888$149,367$150,861$152,369$153,893$155,432$156,986$158,556$160,142Electricity$
101,157.60$102,169$103,191$104,223$105,265$106,318$107,381$108,455$109,539$110,635Natural
Gas$
39,866.40$40,265$40,668$41,074$41,485$41,900$42,319$42,742$43,170$43,601Total
Variable$1,400,061$1,414,062$1,428,203$1,442,485$1,456,909$1,471,479$1,486,193$1,501,055$1,516,066$1,531,226FixedMaintenance$
127,000$128,270$129,553$130,848$132,157$133,478$134,813$136,161$137,523$138,898Insurance$
12,700$12,827$12,955$13,085$13,216$13,348$13,481$13,616$13,752$13,890Property
Tax$
13,700$13,837$13,975$14,115$14,256$14,399$14,543$14,688$14,835$14,983Depreciation$135,039$224,328$161,659$117,342$85,615$85,699$46,416$46,416$8,974$8,974Interest$129,191$125,560$121,656$117,459$112,948$108,098$102,885$97,280$91,255$84,779Total
Fixed$417,630$504,822$439,798$392,849$358,191$355,022$312,138$308,162$266,340$261,524OtherSupplies$0$0$0$0$0$0$0$0$0$0Miscellaneous$0$0$0$0$0$0$0$0$0$0Total
Other$0$0$0$0$0$0$0$0$0$0Total
Expenses$1,817,692$1,918,884$1,868,001$1,835,334$1,815,101$1,826,500$1,798,331$1,809,217$1,782,406$1,792,7510.00%0.00%
BACK TO INPUTSFORWARD TO RESULTS
Operations SummaryMENUBACK TO INPUTSFORWARD TO RESULTSThis sheet
summaries income, expenses and net profit. There are no inputs on
this sheetGross SalesYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year
7Year 8Year 9Year
10Pellets$0$1,898,400$1,917,384$1,936,558$1,955,923$1,975,483$1,995,237$2,015,190$2,035,342$2,055,695$2,076,252Meal$0$0$0$0$0$0$0$0$0$0$0Total$0$1,898,400$1,917,384$1,936,558$1,955,923$1,975,483$1,995,237$2,015,190$2,035,342$2,055,695$2,076,252ExpensesVariable$0$1,400,061$1,414,062$1,428,203$1,442,485$1,456,909$1,471,479$1,486,193$1,501,055$1,516,066$1,531,226Fixed$0$417,630$504,822$439,798$392,849$358,191$355,022$312,138$308,162$266,340$261,524Other$0$0$0$0$0$0$0$0$0$0$0Total
Expenses$0$1,817,692$1,918,884$1,868,001$1,835,334$1,815,101$1,826,500$1,798,331$1,809,217$1,782,406$1,792,751Before
Tax
Profit$0$80,708($1,500)$68,557$120,590$160,382$168,737$216,859$226,125$273,289$283,501Tax$
- 0$ 48,425$ (900)$ 41,134$ 72,354$ 96,229$ 101,242$ 130,115$
135,675$ 163,974$ 170,101After Tax
Profit$0$32,283($600)$27,423$48,236$64,153$67,495$86,743$90,450$109,316$113,400Estimate
of Cash FlowsYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year
8Year 9Year 10After Tax Profits$ - 0$ 32,283$ (600)$ 27,423$
48,236$ 64,153$ 67,495$ 86,743$ 90,450$ 109,316$
113,400Depreciation$ - 0$ 135,039$ 224,328$ 161,659$ 117,342$
85,615$ 85,699$ 46,416$ 46,416$ 8,974$ 8,974Principle$ - 0$ 48,420$
52,051$ 55,955$ 60,152$ 64,663$ 69,513$ 74,726$ 80,331$ 86,356$
92,832Cash Flow$ - 0$ 118,902$ 171,677$ 133,127$ 105,426$ 85,104$
83,680$ 58,433$ 56,535$ 31,934$ 29,542(does not consider increase
or decrease in working capital loan)
BACK TO INPUTSFORWARD TO RESULTS
DepreciationMENUBACK TO INPUTSFORWARD TO RESULTSThis sheet
calculates depreciation. You enter descriptions and values for
buildings, equipment and other property.DepreciationBuildings39
year Straight LineSpecial Purpose Buildings10 year Straight
LineEquipment and Heavy Rolling Stock7 Yr MACRS with half year
conventionLight Trucks and Vehicles5 Yr MACRS with half year
conventionBuildingsSpecial Purpose
BuildingsDescriptionValueSalvageDescriptionValue#1Plant$
400,000.00$ 50,000.00#1$ - 0#2$ - 0#2$ - 0#3$ - 0#3$ - 0#4$ - 0#4$
- 0#5$ - 0#5$ - 0Total Buildings$ 400,000.00$ 50,000.00Total
Special Purpose Building$ - 0Equipment and Heavy Rolling StockLight
Trucks and VehiclesDescriptionValueDescriptionValue#1Hay Processing
Equip$ 270,000.00#1Forklift$ 30,500.00#2Processing Equipment$
469,500.00#2$ - 0#3Installation$ 80,000.00#3$ - 0#4Miscellaneous$
20,000.00#4$ - 0#5$ - 0#5$ - 0Total Equip and Heavy Rolling Stock$
839,500.00Total Light Trucks and Vehicles$ 30,500.00Total Plant
Property and Equipment$ 1,270,000.00Land$ 100,000.00Total Land,
Plant Property and Equipment$ 1,370,000.00Annual Total
DepreciationYear12345678910Buildings$8,974$8,974$8,974$8,974$8,974$8,974$8,974$8,974$8,974$8,974Special
Purpose Buildings$0$0$0$0$0$0$0$0$0$0Equipment and Heavy Rolling
Stock$119,965$205,594$146,829$104,854$74,883$74,967$37,442$37,442Light
Truck and Vehicles$6,100$9,760$5,856$3,514$1,757$1,757Total
Depreciation$135,039$224,328$161,659$117,342$85,615$85,699$46,416$46,416$8,974$8,974Buildings39
year Straight LineSpecial Purpose Buildings10 year with percentage
from tableEquipment and Heavy Rolling Stock7 year with percentage
from tableLight Trucks and Vehicles5 year with percentage from
tableBuildings0.0613Cost$400,000Life39Salvage$
50,000.00Period39Depreciation per year for 39 years$8,974Special
Purpose
BuildingsCost$0Life10YearDepreciationRate1$010%2$014%3$014%4$014%5$014%6$014%7$014%8$014%9$014%10$014%Equipment
and Heavy Rolling
StockYearDepreciationRate1$119,96514.29%2$205,59424.49%3$146,82917.49%4$104,85412.49%5$74,9678.93%6$74,8838.92%7$74,9678.93%8$37,4424.46%Light
Trucks and
VehiclesYearDepreciationRate1$6,10020.00%2$9,76032.00%3$5,85619.20%4$3,51411.52%5$3,51411.52%6$1,7575.76%
BACK TO INPUTSFORWARD TO RESULTS
Return On InvestmentMENUBACK TO INPUTSBACK TO INTRODUCTIONThis
sheet summaries the feasibility of the project. It provides net
present value, benefit cost ratio and internal rate of returnThe
only input is the discount rate. Page down to enter the B44results
of your sensitivity analysis+B7Discount
Rate12.00%Year012345678910Gross Margin$ 1,898,400$ 1,917,384$
1,936,558$ 1,955,923$ 1,975,483$ 1,995,237$ 2,015,190$ 2,035,342$
2,055,695$ 2,076,252Discount
Factor1.0000000.8928570.7971940.7117800.6355180.5674270.5066310.4523490.4038830.3606100.321973PV
of Income$ 19,861,464$ - 0$ 1,695,000$ 1,528,527$ 1,378,404$
1,243,025$ 1,120,942$ 1,010,849$ 911,570$ 822,040$ 741,304$
668,498Total Expense$ 1,370,000$ 1,817,692$ 1,817,692$ 1,918,884$
1,868,001$ 1,835,334$ 1,815,101$ 1,826,500$ 1,798,331$ 1,809,217$
1,782,406Less Depreciation and Interest$ 264,230$ 349,888$ 283,315$
234,801$ 198,563$ 193,797$ 149,301$ 143,696$ 100,230$ 93,753Cash
Expenses$ 1,370,000$ 1,553,461$ 1,467,804$ 1,635,569$ 1,633,200$
1,636,771$ 1,621,304$ 1,677,199$ 1,654,635$ 1,708,987$
1,688,653Discount
Factor1.0000000.8928570.7971940.7117800.6355180.5674270.5066310.4523490.4038830.3606100.321973PV
of Expenses$ 17,647,583$ 1,370,000$ 1,387,019$ 1,170,124$
1,164,166$ 1,037,928$ 928,748$ 821,403$ 758,680$ 668,279$ 616,278$
543,701Benefits Less Costs$ (1,370,000)$ 344,939$ 449,580$ 300,989$
322,723$ 338,712$ 373,934$ 337,990$ 380,707$ 346,708$ 387,599PV
Benefits Less PV Costs$ (1,370,000)$ 307,981$ 358,403$ 214,238$
205,097$ 192,194$ 189,446$ 152,890$ 153,761$ 125,026$ 124,797Total
PV of Income$ 11,120,158.26Total PV of Expenses$ 10,466,325.84Net
Present Value$ 653,832.42Internal Rate of Return22.85%PV Benefit/PV
Cost Ratio1.0625Payback Period0*Payback Period only displayed if
less than 10 yearsReturn on
Assets0.00%2.36%-0.04%2.00%3.52%4.68%4.93%6.33%6.60%7.98%8.28%(after
tax profits/PP&E investment)NPVIRRB/CNatural Gas Price$20 MCF:
Approximate Break-even PointMonthsNPVIRRB/C$ 2.50$
692,426.3623.44%1.0664Forag/Hay$ 3.00$ 653,832.4222.85%1.06256
Forage + 0 hay$ (2,498,154)N/A0.7027$ 3.50$ 615,238.4822.25%1.05866
to 1$ (1,948,091)N/A0.7795$ 4.00$ 576,644.5421.64%1.05476 to 2$
(1,398,029)N/A0.8492Hay Cost/ Ton$85/ton: Approximate Break-even
Point6 to 3$ (847,966)-7.13%0.9126$ 30.00$ 952,548.9327.38%1.09376
to 4$ (297,903)6.32%0.9706$ 40.00$ 653,832.4222.85%1.06256 to 5$
252,16016.38%1.0238$ 50.00$ 355,115.9118.09%1.03305.6 to 5.7$
653,83222.85%1.0625$ 60.00$ 56,399.4013.01%1.00515 to 6$
768,40024.61%1.0764Forage Cost/ Ton$64/ton: Approximate Break-even
Point* These would not be exact because of weekends$ 30.00$
1,168,418.2830.54%1.1174$ 40.00$ 653,832.4222.85%1.0625Discount
rateNPVB/C$ 50.00$ 139,246.5614.46%1.01278%$1,033,0111.0846$ 60.00$
(375,339.30)4.73%0.967310%$830,6051.0736Alfalfa Pellet Price$98.83:
Approximate Break-even Point12%$653,8321.0625$ 95.00$
(405,230.27)4.09%0.961314%$498,7291.0511$ 100.00$
124,301.0714.20%1.011916%$362,0301.0397$ 105.00$
653,832.4222.85%1.0625*Break-even Discount Rate: 22.85% as
reflected by IRR$ 110.00$ 1,183,363.7630.75%1.1131$ 115.00$
1,712,895.1138.23%1.1637BaselineBreak-even Points calculated with
all other paramaters at base line levels$3.00Natural Gas Cost$40Raw
Materials/Hay$105Alfalfa Pellet Price5.6Months of Operation Using
Forage5.7Months of Operation Using Hay100%Pellet to Meal
Ratio12%Discount Rate****0000000000000
BACK TO INPUTSBACK TO INTRODUCTIONBACK TO INTRODUCTION
