This spreadsheet may be used to analyze the investment decision of installing tile drainage in South Dakota from an economic perspective. The pre-filled items are estimates, and the spreadsheet is best utilized by inputting your own numbers and data. The yellow cells in the spreadsheet are editable and the producer can input their own information into these cells.
Using the Tile Drainage Investment Calculator
Tile drainage is usually a long-term investment, with tile systems typically lasting between 50 and 100 years. Tile drainage systems have the potential to generate additional returns from increased crop yield. Without an increase in crop yield, it is typically difficult to justify the installation of a tile drainage system from an economic perspective. This calculator makes the assumptions that the field is in a corn-soybean rotation and the tile drainage system installation is not being financed through a loan. Tax or environmental implications of tile drainage are not considered in this model.
Data
Standard numbers are input into the model based on current economic conditions, but farmers are encouraged to plug in their own estimates. The data that can be inputted are as follows:
Cost of Tile Installation ($/acre)- The total per acre cost of installing the tile drainage
Expected Yield Increase from Tile Drainage on Corn Acres (bu/acre)- This is an estimate of how much the corn yield on the field would increase from the installation of tile drainage. There is not a lot of data about the typical yield response to tile drainage in South Dakota, but some studies from other states suggest a 10-15% yield increase. Yield increase will vary depending on the characteristics of the field.
Expected Yield Increase from Tile Drainage on Soybean Acres (bu/acre)- This is an estimate of how much the soybean yield on the field would increase from the installation of tile drainage.
Corn Price ($/bu)- Long-run projection of the corn price over the life of the investment.
Soybean Price ($/bu)- Long-run projection of the soybean price over the life of the investment.
Lifespan of Tile (years)- How many years the tile is expected to last.
Discount Rate (%)- The interest rate used to discount future dollars into today's dollars to find the present value. You can input the current agricultural loan rate for this value.
Annual Maintenance Cost ($/acre)- Tile drainage may need maintenance, such as unplugging clogged tiles, so an annual per acre maintenance cost is added to account for this. If you do not want to include this cost, you can set the value to 0.
Results
The main calculation of interest is the Net Present Value (NPV), and some other metrics are also included in the results box.
Average Yearly Revenue from Yield Increase for a Corn-Soy Rotation ($/acre)- This is the average of the expected increase in corn yield multiplied by the long-run projected corn price and the expected increase in soybean yield multiplied by the long-run projected soybean price.
Net Annual Returns from Tile Drainage ($/acre)- This is the average yearly revenue from yield increased for a corn-soy rotation minus the annual maintenance cost of the tile drainage system.
Net Present Value of Investment (2025 Dollars)- This is the value of the tile drainage investment in today's dollars. Typically, if the net present value is positive, you would invest, and if the net present value is negative, you would not invest. If the net present value is 0, then there is no difference between investing and not investing.
Payback Period (years)- This is how many years it would take the tile drainage system to pay for itself based on the net annual returns the system generates.
Disclaimer
This spreadsheet is intended for educational purposes only. The authors and distributors of the template assume no liability for use or misuse of this template or the decisions which result.
