In common with the road transport sector, Britain’s farmers have to cope with increasing fuel costs. Whilst it may be duty free, the price of pink diesel (gas-oil for machines and off road vehicles) has more than doubled in five years from 30p to around 70p today.
Bulk supplies are a necessary part of agricultural logistics and Kingsplay Farming has a 40k litres storage tank located within its main yard facilities. This is replenished every month with deliveries of up to 20K litres. Generally this usage is fairly constant through the year with some seasonal increase during the summer harvest time.
“As well as our own usage we also provide fuel to sub-contractors, “explains Nick Tyler. We can reduce movements and save time by having fuel available on our premises. The value is reconciled against the billing in a offset arrangement.”
[quote]“Not so long ago fuel costs were simply another overhead, which was pretty well outside our control. However, the increasing price of gas-oil in recent years has escalated our fuel bill to around £150K per annum. So clearly the time has come to start thinking more about our fuel usage and what can we do to bring this back a bit.”[/quote]
In order to record fuel usage more accurately, Kingsplay Farming has installed a Merridale Auditor unit, which then uses smart keys to control access to the fuel pump dispenser.
The challenge
Nick Tyler continues. “Previously we relied on a manual log to record the amount of fuel drawn by contractors. The process was based on trust but like any paperwork procedure, it was also prone to errors. For our own requirements, staff filled up as and when necessary, without any records being kept of which machine or the amount of fuel drawn.
“If we consider that a modern tractor draws about ￡300 worth of fuel, it was clear that we needed a more effective method for stock management. To be honest if there had been any mistakes or possible abuse of this trust, there was no way this would have been detected.
“The information we need is now gathered automatically. And the Merridale fuel management software provides the tools we need for analysis and the production of reports.”
Management Reports
As well as five contractors’ accounts, Kingsplay Farming also provides fuel to a couple of neighbouring smallholders. Twelve keys have been issued for its own requirements. Typical of most farming operations these include tractors, JCB loaders, a combine harvester machine and off road utility vehicles. As fuel is drawn the data base is updated and reports can be produced as required, for each of these users.
“We had two basic objectives for this investment,” says Nick Tyler. “These are stock security and a more accurate breakdown of our usage. The cost of the Merridale installation is insignificant compared to the value of our stock holding year on year. We now have total control over usage as fuel can only be drawn by staff or contractors, by using the key allocated to a particular machine or user account”.
Comparing costs and better Informed decisions
Nick Tyler concludes saying: “The system is working very well. There is no awkwardness about trust and since the reports provide a complete record of all transactions, we do not have to waste any time sorting out queries.”
“And we now have greater awareness of how fuel is being used. Our tractors are fitted with on board computers which record actual fuel usage while running. This enables us to compare the fuel burn for light tasks such as cultivating as opposed to heavy work such as ploughing which can consume around 40 litres an hour.
“In addition to this however, I can now use the Merridale software to make better informed decisions about how we deploy the machines. For instance we have three different size JCB loader machines. The difference in running costs and fuel between the small and the largest machine is around ￡9,000 a year.
Apart from intuition, we had no means of measuring this until we started to produce a monthly report of average fuel consumption for these machines. We know that much of the work undertaken by the larger JCB is also within the scope of the smaller machines. But now we are more mindful about how we deploy these machines for different tasks, to ensure that they are used most efficiently.
In another example we found that using a lightweight ‘quad-type’ utility vehicle for general transport was far more cost effective than using a Land Rover, burning road diesel which was costing about twice as much to operate.
We also keep a User key for demonstration equipment. Whilst we look at fuel usage, this is not necessarily a cardinal factor. Our priorities tend to be the work tasks and if we needed a 200 hp tractor, I wouldn’t expect to see a great deal of difference between them on fuel consumption.
However some manufacturers are now making claims about fuel efficiency. But the new engines require the AdBlue additive, another factor which has to be taken into account when looking at the overall through-life cost of ownership.
And for most farmers, apart from price, the most important differentiator will be the back-up support offered by the local dealership. On average, most farmers will clock up a thousand hours a year on their tractors. Kingsplay Farming is above this average and the John Deere photographed has done more than 7,000 hours in three years.
