T/I B R.ARY OF THE UNIVERSITY OF ILLINOIS U<;u> ^ ->L^s :ALES z z z CD 00 m Ul I Ul "o 3* K Ul 3 K o CO o E O to 15' ELEVATOR MIXER 2 \3' 5' ELEVATOR 17- 1/2' r SCALES 15' PLATFORM PLATFORM Typical layout of horizontal- flow plants. (Fig- 4) Typical layout of combination hori- zontal-vertical-flow plants. (Fig. 5) 45' 60' UJ ^ z m m m 00 m B CO U u o i Ul o Ul Ul tr o | 1 0? o I 2 s o TOWER to CO V) E E to fe 4' 5' 15' 7WT1 15' 1-f-- LATFORM Typical layout of vertical-flow plants. ELEVATOR' -- j FLOOR HOP PER PLATFORM (Fig. 6) BULLETIN NO. 632 [June, Types of structures commonly used in horizontal (top), vertical (middle), and combination horizontal-vertical (bottom) plants. (Fig- 7) J958J FERTILIZER BULK-BLENDING PLANTS 9 The equipment usually consists of a bulk loader, platform scales, hammer mill, floor hopper, two elevators, holding bin, mixer, and en- closed auger. In some plants an inclined conveyor belt is substituted for one elevator and the enclosed auger. The bulk loader moves the materials from storage to the floor hopper. Between the storage bins and floor hopper the bulk loader stops on the platform scales, where the operator records the weight of the materials. The materials pass from the floor hopper through a hammer mill, and are then lifted by the elevator and dumped into the overhead holding bin. The materials either flow directly into the mixer or are held in the holding bin while another batch is mixing. After mixing, the blended product is forced by action of the mixer into another elevator, lifted to the overhead auger, and dumped into the truck. BULK-BLENDING FACILITIES 1 All bulk-blending plants require the same basic facilities land, shelter for materials and equipment, and equipment for storing, mov- ing, weighing, and blending materials. The kinds of facilities used depend on the type of plant. Land Bulk-blending plants usually can be built on about 1 acre of land. Desirable site features are accessibility to a railway siding, to roads, to fire protection, and to high-voltage power lines. Often the land and siding are already available because the total operation includes other enterprises, such as a grain elevator, bagged fertilizer sales, or feed sales, which do not completely utilize all the space. The cost of the land depends on its location and size. An average of several land purchases by bulk blenders indicates that an adequate plant site can usually be obtained for $1,500. Shelter Housing is necessary to protect equipment and raw materials from moisture. Fertilizer materials even under ideal conditions have a very corrosive action on equipment, and exposure to weather merely in- creases the rate of deterioration. Many of the present bulk-blending structures were not originally constructed as such. Warehouses, barns, and other buildings have been 1 The investment estimates for buildings and equipment presented in this section resulted from consultations with engineering personnel of Illinois Farm Supply Company, Chicago, Illinois; Gates Manufacturing Company, Morris, Illi- nois; and the Department of Agricultural Engineering, University of Illinois. 10 BULLETIN NO. 632 [June, remodeled for use in bulk-blending plants. This remodeling has usually taken the form of either partitioning the structure into storage bins and mixing room or partitioning the structure into storage bins and add- ing a new room to shelter the blending equipment. The use of exist- ing buildings has frequently meant an incomplete utilization of space. In recent years a few structures have been built with the primary purpose of sheltering bulk-blending equipment and raw materials. Three basic types of construction are generally used: pole-supported with metal siding, frame, and concrete block. Investment costs for the different types of construction, based on 1957 building materials and construction costs, appear in Table 2. Storage bins are fairly uni- form in shape and do not differ in appearance, although they fre- quently differ among plants in quality and quantity. The buildings usually differ in appearance, depending on the space allocated for the mixing equipment and on the arrangements for unloading materials from freight cars. Storage-bin walls are usually lined to a height of 10 feet. Material may be piled higher than the wall height. (Fig- 8) 7958J FERTILIZER BULK-BLENDING PLANTS 11 Table 2. Estimated Construction Costs, Central Illinois, 1957 Type of construction Mixing room Storage bins Wiring Pole-supported, metal siding (low quality) . (per square foot) $1.75 $2.75 $200 for entrance #5-10 per light outlet #50-300 per motor outlet Pole-supported, metal siding (high quality). . . Frame (low quality) $2.75 $2 00 $3.75 $2 00 plus 65 cents Same as above Frame (high quality) . . . . Concrete block $2.50 $2 50 per sq. ft. for non- partitioned bin walls #4.50 $4 50 Same as above Same as above Same as above The space allocated for mixing equipment is determined by the type of plant (Figs. 4, 5, and 6). Arrangements for unloading freight cars differ from plant to plant and bear no necessary relation to the equipment layout within the plant. In general, there are five types of unloading arrangements. Platform with access to back of bins. This arrangement consists of a platform at the back of the bins, equal in height to the floor of a freight car. Doors in the back walls of the bins permit access to the platform. Unloading is accomplished by a bulk loader moving back and forth across the platform between the freight car and bin. As the back of the bin is filled, boards are laid on the material to support the weight of the bulk loader. Platform with access to front of bins. This consists of a platform constructed at the back of the bins, but with a ramp leading into the plant. The platform need not extend the width of the storage bins. The bulk loader moves down the ramp from the freight car and dumps the material into the bin from the front. Floor hopper and elevator on platform. This arrangement has a platform at the back of the bins with a floor hopper resting on it. A bulk loader moves the materials from the freight car to the floor hop- per. The floor hopper feeds into an elevator, and a distributor at the elevator head dumps the materials into any of the storage bins. Where the angle between the top of the elevator and the bins is too steep for gravity feed, a cross-conveyor belt over the bins is used. Platform with access to blending elevator and floor hopper. This consists of a platform constructed at the back of the bins with a ramp 12 BULLETIN NO. 632 [June, leading down into the plant. Materials are moved from the freight car into the plant by a bulk loader and dumped into the floor hopper. The elevator lifts the materials and dumps them into the storage bins. This arrangement can be used only in vertical-flow plants with high elevators. Undcr-the-track conveyor. This is used as a supplement to the platform-hopper-elevator arrangement. It consists of a screw conveyor laid under the railway siding track. The conveyor feeds into the same elevator as the floor hopper. For the screw conveyor to be useful, hopper cars freight cars which are separated into three hoppers must be provided by the railroads. Materials flow from the bottom of the car into the open conveyor, are carried by the conveyor to the elevator, and are dumped into the storage bins. The operations of the bulk loader are thus eliminated. At the present time only a few hopper cars are available to bulk-blending plants for raw material shipments. Equipment Costs of equipment vary depending on the location of the individual plant. In order to provide a fair comparison of the equipment costs of i various plants, the costs in this report refer to f.o.b. factory prices. Frequently the installation costs on various pieces of equipment amount to 10 to 25 percent of the purchase price. These must be included in the investment cost. The equipment used in bulk-blending plants can be separated into four general categories according to its use in the blending cycle. These categories are: moving equipment, holding bins and hoppers, weigh- ing equipment, and mixing equipment. Moving equipment. Bulk loaders are the primary means of trans- porting fertilizer materials in bulk plants. These vehicles are fast, easily maneuvered, and especially efficient in handling loose materials in close quarters. The bulk loader commonly used in bulk plants has a carrying capacity of 1,000 pounds of granular material when traveling at speeds of less than four miles an hour. Bulk loaders range in price from $4,000 to $5,000. Tractors with loaders are used in place of bulk loaders in some plants. Tractors have the same carrying capacity as bulk loaders but are less efficient because they have less mobility. Tractors with loaders range in price from $2,700 to $3,200. Enclosed and open augers are used for short, horizontal movements of materials in a few plants. An 8-inch auger can move approximately 7958J FERTILIZER BULK-BLENDING PLANTS 13 30 tons of fertilizer material an hour. The open floor auger costs about $2.50 a foot plus the cost of a power unit. Augers tend to overload easily when used to transport fertilizer materials. Elevators used in bulk plants are usually of the bucket type. Chain and sprockets have been replaced by belts because of the high corrosive effect of fertilizer materials. Elevators range in height from 20 to 60 feet and in carrying capacity from 30 to 100 tons of material an hour. The price ranges from $1,200 for a 20-foot elevator to $4,000 for a 60- foot elevator. When the elevator is used to fill permanent storage bins, a distributor and spouting is necessary, adding $1,800 to $2,000 to the cost of the elevator. Belt conveyors have replaced other methods of moving materials in many plants. Two types are used horizontal and inclined. In larger plants reversible horizontal conveyors are permanently installed to fill storage bins. Fastened on tracks, they can be moved to discharge into any one or several bins. This type of belt conveyor can handle about 100 tons of material an hour and costs $1,600 to $2,000 per 30-foot section of 18-inch belt. X Bulk loaders are used in many plants to carry material from the storage bins to the floor hopper. (Fig. 9) 14 BULLETIN NO. 632 [June, Horizontal conveyor belts, situated above the storage bins, are used in large plants to fill the bins with materials. (Fig- 10) Inclined belt conveyors are used for unloading boxcars and for unloading mixers. The capacity of these conveyors is below that of horizontal sectional conveyors. Inclined belt conveyors cost $600 to $800. Electric motors necessary to power conveyor belts cost $100 to $200 each. Holding bins and hoppers. Preblending holding bins are an in- tegral part of vertical-flow plants, which ordinarily have four or five bins clustered at the top of the weighing and blending equipment. Pre- blending bins in vertical-flow plants have capacities of 5 to 25 tons. The bins are constructed with steep sides for easy materials flow r . The valves to discharge the individual bins may be hand operated or con- trolled by air pressure. These bins cost $500 to $700. Vibrating screens are frequently located above the holding bins to separate out large granules which would impede the flow of materials. These cost $1,700 to $2,000. The air compressor system necessary for air pressure- controlled valves costs $600 to $800. Preblending holding bins in combination vertical-horizontal plants have a 1- to 5-ton capacity, and cost less than $500. 7958J FERTILIZER BULK-BLENDING PLANTS 15 Postblending holding bins are used in only a few plants. The bin is situated at the end of the blending cycle, and located overhead for dumping directly into a truck. A postblending bin has a 5- to 25-ton capacity and costs from $500 to $800. Floor intake hoppers are used as dumps in bulk plants to feed materials into elevators. In the bottom of the hopper is a screw which forces the material into the elevator. Floor hoppers cost from $300 to $600. Weighing equipment. Platform scales are used mainly in hori- zontal and combination horizontal-vertical plants. There are two basic types. One type consists of a platform at floor level, with a scales dial located at the side of the platform. The bulk loader is moved onto the platform and the weight of the material is registered on the dial. The load capacity of the platform scales must be enough to compensate for the weight of the bulk loader. Scales of this type cost from $900 to $1,200. Materials are collected in the floor hopper (left) and are lifted by the ele- vator to the holding bin (right) above the mixer (rear). (Fig. 11) 16 BULLETIN NO. 632 [June, The other type of platform scale has a hopper secured to the plat- form, with a scales dial or balance at the side. The bulk loader dumps the material into the hopper until the correct weight is registered. The load capacity of this type of scale can be lower than the "drive-on" type, since the bulk loader does not have to be weighed. The hopper has an auger in the bottom which forces the material out. The price of this unit is $700 to $900, excluding the cost of the hopper. Suspended hopper scales, or batchers, are used in vertical-flow plants. The batcher is suspended below the holding bins so as to be free of vibration. Materials are discharged from the holding bins into the batcher for weighing. The scales dial or balance is located at the holding bin valve controls, where it is easily visible to the operator. These batchers are available in 1- or 2-ton capacities. The sides are. steep for easy materials flow and the discharge is air controlled for fast and easy operation. Batchers cost from $3,500 to $4,500. Mixing equipment. Drum-type mixers are used in most blending operations. The mixing principle of drum mixers is based on a turn- In platform scales of this type, materials are dumped into the hopper, weighed, and forced out by an auger in the bottom of the hopper. (Fig. 12) I958J FERTILIZER BULK-BLENDING PLANTS 17 In most combination horizontal-vertical plants, materials flow from the holding bin into the mixer. After mixing, the materials are discharged into an elevator. (Fig. 13) bling action. Ingredients are tumbled, turned, and folded by the slowly rotating drum. Closely spaced around the inside of the drum are oddly shaped blades which continuously cut out and lift up portions of the ingredients. Drum mixers can be equipped with either a force or gravity feed intake, but ordinarily have a gravity feed discharge. Rated capacities of these mixers range from 1/2 to 2^ tons of fertilizer materials. Recommended mixing time varies from 1 to 5 minutes. Drum mixers cost from $3,000 to $4,000. Converted feed mixers are used in some plants. These mixers have higher speeds than drum-type mixers and have been reinforced to handle fertilizer materials. The mixing principle of the converted feed mixers is opposite to that of the drum-type mixer the drum remains stationary while blades inside the drum rotate. Rated capacities of these mixers usually do not exceed 1 ton, and costs range from $500 to $3,000, depending on the conversions made. 18 BULLETIN NO. 632 [June, Auger-type mixers are comprised of a series of hopper units, usually three or four in a series, and a collecting auger. Each hopper unit is on a scale so that each ingredient can be weighed separately. The hopper units each have a variable-speed drive which is adjusted in proportion to the amount of material in the unit. The hopper units generally are placed under individual overhead holding bins for easy filling and, in turn, discharge into the collecting auger. In the collecting auger the materials are blended and conveyed to the truck. Each unit costs from $700 to $800. Hammer mills are located in the blending cycle either before or after the mixing process. As the materials pass through the hammer mill, lumps are pulverized. Hammer mills cost between $300 and $500. A STUDY OF EIGHT SELECTED BULK-BLENDING PLANTS Facilities Two horizontal-flow plants were included in the study. Plant A had an extremely low investment in facilities. The equip- ment consisted essentially of that used in mixing concrete. A tractor with scoop was used to carry materials from the storage bins to three holding bins situated over the batching unit. A scales hopper that could be moved below the holding bins weighed the materials. This method of weighing materials deviates from the normal horizontal-flow plant operation. The scales hopper dumped the materials into the mixer scoop, which elevated the materials into the mixer. After mixing, the blended product was moved from the mixer to the truck by an inclined conveyor belt. The batch capacity of this plant was 1/2 ton. In Plant B a bulk loader moved materials from the storage bins to the mixer, stopping along the way on a floor-level scales platform, where the materials were weighed. If the weight was not exactly cor- rect for the prescribed blend, material was either added to or removed from the bulk-loader scoop. Supplementary fertilizer was stored for this eventuality in small bins near the scales. The bulk loader dumped the materials into the mixer, and the blended product was moved from the mixer to the truck by an inclined conveyor belt. Two vertical-flow plants were included in the study. In Plant C the materials were pulled from the permanent storage bins by a portable auger and were carried by a floor screw auger to the elevator, which lifted the materials to the overhead holding bins. Before J958J FERTILIZER BULK-BLENDING PLANTS 19 the materials entered the holding bins, they had to pass through a vibrating screen; lumps not passing through the screen were circulated through a hammer mill. The operator stood in the tower and controlled the discharge of the materials into the suspended scales hopper, where they were weighed. The materials then fell directly into the mixer. From the mixer the blended product fell into the truck stationed below the mixer. In Plant D a bulk loader was used to move materials from storage to a floor hopper. The materials were lifted from the floor hopper into overhead holding bins by an elevator. Before the materials could pass into the holding bins they had to flow through a vibrating screen. The operator, working at a control center on the plant floor, controlled the discharge of materials by air-operated valves from the holding bin into the scales bin. The materials were weighed and then fell from the scales bin into the floor hopper. From there they were elevated to a holding bin over the mixer. The materials flowed from the holding bin into the mixer and, after mixing, the blended product was dis- charged into a truck located below the mixer. Since the same elevator was used to move materials to the holding bins above the scales and to move materials to the bin above the mixer, these two operations could not take place simultaneously. An additional elevator will eventually be installed to alleviate the demands on the present one. Four combination horizontal-vertical-flow plants were included in the study. In Plants E and F equipment arrangements were identical. A bulk loader moved the materials from the storage bins to the floor hopper. Between the bins and the hopper the bulk loader stopped on platform scales, where the operator recorded the weight of the materials. From the floor hopper an elevator lifted the materials to a holding bin over the mixer. A hammer mill was located between the floor hopper and elevator and the materials passed through it. The materials stayed in the holding bin until the mixer was empty. After mixing, the blended product was discharged from the mixer into another elevator. The material was then lifted to an overhead horizontal auger, which dumped the blended product into a truck. In Plant G a bulk loader moved materials from the storage bins to a floor-level scales hopper. After the correct amount of each material was dumped into the scales hopper and weighed, an auger in the bottom of the hopper moved the materials to an elevator, where they were 20 BULLETIN NO. 632 [June, elevated to an overhead mixer. After mixing, the blended product fell from the mixer into the truck. In Plant H the elevators were higher than those usually found in combination horizontal-vertical plants, and the mixer was located above floor level. A bulk loader moved the materials from the storage bins to a floor hopper, stopping along the way on platform scales where the weights of the materials were recorded. From the floor hopper the materials were elevated to a holding bin above the mixer. The materials flowed into the mixer from the holding bin and, after mixing, fell from the mixer into a bagging machine hopper. Here it was either bagged or allowed to pass through into another elevator. After being elevated, the blended product was moved by an overhead conveyor belt to a postblending holding bin. This bin dumped directly into the truck located below it. Estimates of cosfs Investments. Using the equipment and building costs previously described, the investments of the eight selected bulk-blending plants were computed and compared (Table 3). The horizontal-flow plants averaged the lowest total investment, and the vertical-flow plants the highest, while the combination horizontal-vertical-flow plants had in- vestment totals averaging between the two. Of the average total invest- ment, equipment cost accounted for 48 percent, building cost for 49 percent, and land cost for 3 percent. Table 3. Investments of Eight Selected Illinois Bulk-Blending Plants, 1957 p, , Equipment Building Land Total cost cost cost investment Horizontal-flow plants Plant A 911,100 $ 3,936 1,500 16,536 Plant B 10,574 15,347 1,500 27,421 Vertical-flow plants Plant C 39,832 61,196 1,500 102,528 Plant D 34,561 20,219 1,500 56,280 Combination horizontal-vertical-flow plants Plant E 22,207 28,120 1,500 51,827 Plant F 22,207 25,465 1,500 49,172 Plant G 12,667 7,667 1,500 21,834 Plant H 49,500 45,108 1,500 96,108 Average 25,331 25,882 1,500 52,713 J958J FERTILIZER BULK-BLENDING PLANTS 21 Fixed costs are those costs which remain constant regardless of the total output or the use of equipment. In bulk-blending plants fixed costs include depreciation, interest on the investment, property taxes, insurance, administrative and maintenance labor, and rent. Depreciation. Because of the corrosive action of fertilizer materials on metals, equipment in the fertilizer industry depreciates rapidly. Although it is not known exactly how long the equipment will last with proper care and repair, plant operators in general use a ten-year de- preciation rate. The length of life of plant structures varies according to the type of construction. Pole-supported metal-siding structures have the same corrosion problem as equipment; on many buildings low-quality metal siding has rusted in less than five years. For this reason, depreciation rates vary according to the type of structures housing the bulk-blending operation. Probable rates of depreciation are: pole-supported metal siding (low quality), 8 years; pole-supported metal siding (high quality), 12 years; frame (low quality), 12 years; frame (high quality), 16 years; and concrete block, 20 years. The straight-line depreciation rate was used in computing depreciation charges. Interest on the investment was computed at the annual rate of 5 percent of the total original cost. Property taxes are based on the assessed valuation of the total operation. The average tax rate in Illinois is 3 mills on each assessed dollar of valuation. The assessed valuation is approximately 50 percent of the current market value. Insurance. Liability insurance was charged at $120 a year for each man working in the plant. Fire insurance rates in Illinois depend on the location of the plant. Within city limits, rates are much lower than in rural areas. An average rate of 80 cents per $100 current market value was assumed for plant facilities and equipment. Administrative and maintenance labor. The plant manager's labor was charged at $300 a month. Secretarial workers and full-time labor- ers were paid $240 a month. Rent. In some plants rent is paid to railroads for the use of land along the track siding. This charge is usually minor, approximately $50 a year. The total annual fixed costs for the eight selected plants ranged from a low of $6,423 in Plant A to a high of $20,106 in Plant H when the operator and supplemental labor were used (Table 4). 22 BULLETIN NO. 632 [June, Table 4. Annual Fixed Costs for Eight Selected Illinois Bulk-Blending Plants, 1957 Fixed cost Horizontal- flow plants Vertical- flow plants Combination horizontal- vertical-flow plants A B C D E F G H $1 ,448 827 248 240 300 3,600 6,363 6,423 2,335 1,371 411 327 387 3,600 8,044 8,104 7,043 5,126 1,538 120 180 5,040 18,867 18,927 5,140 2,814 844 570 630 7,080 50 16,498 16,558 3,978 2,591 777 523 583 3,600 11,469 11,529 3,812 2,458 738 501 561 3,600 11,109 11,169 2,225 1,091 328 283 343 3,600 7,527 7,587 7,882 4,805 1,442 877 933 5,040 20,046 20,106 Interest on investment. . . . Property taxes Insurance Operator only Operator and supple- mental labor* Administrative and mainte- Rent Total Operator only . . . Operator and supple- mental labor a When labor is hired to supplement the plant operator, an additional liability insurance cost of $60 is added to total fixed costs. Variable costs are those costs directly related to output and the use of equipment. They are also called operating costs. Variable costs in bulk-blending plants have been divided into six categories: materials, operating labor, power, inventory losses, repair and maintenance, and unloading materials from freight cars to storage bins. Materials. Costs of fertilizer materials differ somewhat among plants, depending on freight charges, but the f.o.b. price is assumed to be constant. For comparative purposes, the costs of shipping materials to Decatur, Illinois, were used. Illinois law requires a tonnage tax of i 10 cents a ton to be paid on all fertilizer sold in Illinois. Costs per ton (including tonnage tax) of the three primary raw materials were: 1 Material Ammonium sulfate (21% N) Triple superphosphate (46% P 2 5 ) Muriate of potash (60% K 2 0) F.o.b. shipping point Total cost (including Freight tonnage tax) F.o.b. price Chicago, Illinois 32.00 4.30 36.40 Tampa, Florida 47.08 15.74 62.92 Bonneville, Utah 21.60 15.12 36.82 1 The f.o.b. price and freight costs are those which were effective in Sep- tember, 1957, for bulk plants in the Decatur, Illinois, area. Costs do not include brokerage fees. I958J FERTILIZER BULK-BLENDING PLANTS 23 In 1 ton of a 10-10-10 blend 1 the amounts of each of the three raw materials used, and the costs of each were: Material Pounds Cost Ammonium sulfate 953 $17.34 Triple superphosphate 435 13.69 Muriate of potash 334 6. 15 Total 1,722 #37.18 Operating labor. Although most labor costs in bulk blending do not vary directly with volume, supplemental labor can be considered a variable cost. Supplemental labor is needed when it is desired to increase output beyond the point where the plant operator alone can handle the work. Variable labor costs were charged on the basis of $1.25 an hour. The hourly labor costs were then converted to labor costs per ton. Power. Power and fuel costs were estimated from engineering studies and from various machine requirements. 2 Utilities were sup- plied from outside sources, and charged on an hourly basis. Bulk- blending plants were assumed to pay an average of 2.4 cents a kilo- watt hour for electricity. A gasoline expense of 25 cents a gallon and an oil expense of 30 cents a quart were assumed to be incurred. Power costs per hour of blending time were converted to power costs per ton of blended material. Inventory losses. Losses of material in transit and during plant operations annually cost 1^4 percent of the total materials handled. Repair and maintenance. Lubrication, replacements due to wear, and painting or cleaning are considered a function of use. Allowances for repair and maintenance varied from plant to plant, depending on the amount and quality of equipment. The allowance was ordinarily lower in plants with high equipment investments. These plants usually blended larger tonnages of materials than low-investment plants, and, since the more the equipment is used the less susceptible it is to cor- rosive deterioration, their maintenance costs per ton were thereby reduced. 1 For comparison purposes, plant outputs are presented in this bulletin in terms of equivalent tons of a 10-10-10 mixture. This analysis is representative of blends used throughout the state. 1 Henderson, S. M., and Perry, R. L., Agricultural Process Engineering (New York, 1955), chapter 14. 24 BULLETIN NO. 632 f June, O ro O\ OO O O < O D lO^OOOs -^OO OOO coco^Or^ OOOO '-i >-i O O t Tf O co-* PU o ^ t^ OO OO r-; > CO CO CO e 25 691 1 |1 b O -- 1 O\ OO O O tN T-I --H oOOv irjiO-^^fCN *ico co CO co J*! u aj 3 O"^ cOfSOOfN lOON PQ w *-i O OOt^fOO ro-* u tfl t^ 00 OO ^ rt r* co ^O co _O O . u iE; O fN ex ^ i O O t-~ Os O h GO OO C^ fX ^t^ ^* CN ^O CX rt -o (/> Q '-H ^^ ^^ fO t~^ C^l ^^ <^ ^O ^ v (^ OO 00 rt ll co co co 69. a 'v "C V c/3 K^ ^ O ^ -* 1 * O O ^* cc > N U- o '1 'C |s ^^ OO *-~* O co ^t^ CN --H !O Os T i -~ O1 * ' ^ "f * vO vO g w t-~ 00 CO o'o co co CO U OH O . f s f~i '. '. . . . . C ^ & J2 ' ' _rtO QJ "E 1 ^ *-W o bfi >>1 C 2 ' ' : ' o : : "is o CJ U o : : Irt Hi u k ^ w 2 a 4- t .8 8 -2 T3 IA c rt Z u +j w (. ~~ J= ^ S E O ^ _! o. 2 J > 1 vo 0 8'3 ^T3 -1|1 S a! u u, ' ? s - b cnofl 00 xg ^ SS ll^lSl-Bl ss |!lM|illM So .S^^H o O GE .2 o B| ^^ HW a A 7958] FERTILIZER BULK-BLENDING PLANTS 25 Annual repairs Investment and maintenance in equipment cost per ton (cents) $ 8,000-12,000 45-40 12,000-20,000 40-35 20,000-30,000 35-30 30,000-40,000 30-25 Unloading materials from freight cars to storage bins. This opera- tion is not part of the blending cycle. It is performed during slack periods or at night. The cost of unloading materials includes power and labor costs, both of which were computed at the rates previously mentioned. Table 5 shows a comparison of operating costs for the eight selected bulk-blending plants. Normal operating conditions assume a 5-minute delay between each 7-ton load of materials blended. This delay allows for the positioning of a different truck and for checking equipment. An 8-hour working day is also assumed, with enough orders to keep the plant in continuous operation. The operating cost of blending depends on the blend used; different blends require different materials in varying quantities. Using a 10- 10-10 blend, total operating costs of the selected plants varied from $38.25 to $38.70 an equivalent ton, including the cost of supplemental labor. The costs were approximately the same for all plants because the inventory losses and costs of materials ($37.92) remained constant. Vertical-flow plants had the lowest variable costs per ton, while horizontal-flow plants had the highest. Estimates of output capacities In estimating output capacities for bulk-blending plants, consider- ations must be given to both the equipment and the storage capacities. Both depend on the supply of raw materials and on the demand for blends. Supply of raw materials. Raw materials are not always in plentiful supply; at certain times it is difficult to have an order filled quickly. In addition, the in-transit times of raw materials vary. Ammonium sulfate, shipped from Chicago, Illinois, to Decatur, takes at least 5 days in transit. If shipped to Decatur from Youngstown, Ohio, another pri- mary supply location, it takes 10 days. The in-transit time for triple superphosphate, usually shipped from Tampa, Florida, is about 8 to 10 days. Decatur plants obtain their muriate of potash from Carlsbad, 26 BULLETIN NO. 632 fJune, New Mexico, or Blair, Utah, and the in-transit time is from 8 to 9 days. These figures represent actual in-transit times experienced by bulk-blending plants in the Decatur area. The uncertain supply of raw materials and the differences in in-transit time sometimes complicate the scheduling of orders. Demand for blends. Equipment and storage capacities must be large enough to provide for the busiest bulk-blending periods. The busiest periods for bulk blenders occur in the spring and fall. In the first three years of operation, from 1954 to 1957, one blending plant had the following average sales distribution: Month January Volume of material (tons) 5 Percent of total .1 February 28 .5 March 1,003 20 9 April . . . 545 11.4 May 1,491 31.1 June 10 .2 July August 36 .8 September 675 14.1 October 804 16.7 November 164 3.4 December 39 .8 Total . . 4.800 100 Nearly 95 percent of the three-year sales volume took place within five months: 63.4 percent in March, April, and May, and 30.8 percent in September and October. 1 Sales were low in November, December, January, and February because during those months the ground was usually too wet to support the weight of the spreader trucks. The materials that were distributed in the winter were spread when the ground was frozen. Equipment capacities. The speed and ease with which materials move through the plant depend on the equipment arrangement within the plant. The eight selected plants, each with different equipment arrangements (except Plants E and F), required different operating times. 1 Because the volume during these five months is essentially the same as for the whole year, estimates of volume capacities are presented in this bulletin on a five-month basis instead of a yearly one. 19581 FERTILIZER BULK-BLENDING PLANTS 27 Consecutive operations. The plant operations were divided into six categories. If each operation were to be performed consecutively, it would take from 4 to 12 minutes in the selected plants to blend 1 ton of 10-10-10 (Table 6). Operation 1 is the combination of starting, adjusting, and stopping equipment. Under continuous operation the blending equipment runs constantly; under discontinuous output Operation 1 is repeated several times. Ordinarily this operation takes very little time less than half a minute as most plants use electric motors for power. Plant A had a high operating time because of occasional difficulty in starting a gaso- line engine on the mixer. Operation 2 consists of filling temporary storage bins (holding bins) with material from the permanent storage bins. This operation is normally performed only in vertical-flow plants. However, Plant A had a concrete blending unit which used temporary storage. The operating time of filling holding bins varied from 1 to 3 minutes a ton, depending on the method of moving materials. Operation 3 consists of moving materials from permanent storage bins or holding bins to the scales and weighing the materials. In the vertical-flow plants this consisted of gravity flow of materials from the holding bins into the batcher, and took approximately 0.8 to 1.4 minutes a ton. In all plants other than vertical-flow this operation consisted of moving materials by bulk loader from the storage bins to the scales, and took from 1.5 to 2.3 minutes, depending on the distance between the storage bins and scales and on the efficiency of the bulk loader operator. Operation 4 is the moving of materials from the scales to the mixer. In horizontal-flow plants, such as Plant B, this operation takes about half a minute. Plant A, because of its equipment limitations, took longer than is usual for horizontal-flow plants. In the combination horizontal-vertical-flow plants, materials could move directly from the scales through the holding bins above the mixer into the mixer. This took from 0.8 to 1.9 minutes, depending on the size and speed of the elevator. Or Operation 4 could have two parts: (1) moving materials to the holding bin, and (2) moving them from the holding bin to the mixer. The first step took 0.8 to 1.9 minutes, and the second 0.4 to 0.5 minute. In Plant C, where materials moved by gravity from the batcher into the mixer, Operation 4 took less than half a minute. Plant D, although a vertical-flow plant, had a holding bin incorporated into the blending cycle, and materials could not pass directly from the scales to the mixer. As a result, its operating time was longer than is usual for vertical-flow plants. 28 BULLETIN NO. 632 [June, t~- co NO NO OO if) OO O* NO O CN CM rf OO OO NO TH ir> OO OO re OO CM NO 15 ^ ^^ +-> tn o c ^-H ' fM l/^ ' ' CO CO ^* N _cd o OO O O * ON CN T^H ON CM ON ce ON 13 a IS tl CM * I ^~* CM CM ON ) E U CO IO ' 1 ^^ CO CO CO CM Q CO CO ^* ^* V O OO IO ^t* w -wco OO ON ON ^f i ON CM ^ ^-l ^i ,-H CM CM ON O. en -M 3 NO O OO -rocO^HCOTti tn Q C \o OO ^O CO NO ON co CM 1 J "S fe NO O NO 00 NO NO CM ^ O vO t~~ M"5 OO ^f ^* t^* : i 3 > S* - * IO CM ^t* CO OO ! o _i en 03 ^2 : ^5 ' '-^^o^ b ^ 2 c TH T 1 T^< i T = J2 4 rt N " 11 < O O OO CO O co NO NO ON ^t "> CM CM * O O CM ON O 00 T-H CO CM CM CM *-( ! -2 "* 1 cy o> o 5,6 bfl . -^ ....... SS ' S cu : ' -^ >*" O . .S X j 1- 3 4 4 -w E i.cf o be E 2 S^ :|S ~.Eo ^ 3 ^ 3~c5 i- o js .S a! 3 r g"'| : E 2"So 1 > S ) C O" ^ * fcyQ ^-, U O *^ o 2 ; >S "y p"f H 2 H i ^O *-* . "^ ^~* *" ^ C u c rt O rf ~ -2 "^ -en !** rtrtrt C bo c > ~4= - r 'C'C ^ 3 C'S '^2bX)a)OJci3en u L) 'S j.. S' ^ ts "S"* 8j S a nhs :-? ^M E 'i's H |i. : |||||||| ^-< CM CO ^ "5 NO 1958] FERTILIZER BULK-BLENDING PLANTS 29 Operation 5 consists of the mixing. Since no standards are set as to how long the materials should remain in the mixer, the time varied greatly among plants. The mixing time does not depend on the type of plant, although it was noticed that those plants (primarily horizontal- flow plants) not having the ability to perform operations simultan- eously tended to reduce the mixing time to increase the hourly output. Because of their extremely high speeds, converted feed mixers need only about 0.5 to 1.0 minute to do an adequate blending job. Drum- type mixers need a longer mixing period about 1.5 to 2.0 minutes. Operation 6 consists of unloading materials from the mixer and moving them to the truck. When the mixer is located above ground level, the operation consists merely of gravity flow directly from the mixer into the truck. This was the case in Plants C, D, and G, where 0.4 to 1.2 minutes a ton were needed to complete the process. Opera- tion 6 was performed by an inclined conveyor belt in Plants A and B (1.6 to 2.0 minutes), by an elevator and auger in Plants E and F (2.5 to 3.0 minutes) and by an elevator and conveyor belt in Plant H (1.3 minutes). Continuous operation. Since some operations can be performed simultaneously, the summation of all operating times given in Table 6 does not indicate the capabilities of various plants under continuous operation. Further, a delay between truck loads is not included. The total potential output of bulk-blending plants under continuous opera- tion depends on how much equipment and labor flexibility they have. Under continuous operation, all the plants had some equipment flexibility, that is, more than one operation could be performed at the same time. The degree of equipment flexibility depended on the amount and arrangement of the equipment. In the horizontal-flow plants one trip was made with the bulk loader between the storage bins and mixer for each material included in the batch. While the materials were mixed and unloaded into the truck, the bulk loader could make a trip to the storage bins and be prepared to dump one of the materials into the mixer as soon as it was emptied. This was the extent of the equipment flexibility in the horizontal-flow plants. The vertical-flow plants, with gravity flow of materials to the mixer, had additional equipment flexibility. While one batch was mixed and unloaded into the truck, another batch could be moved from storage to the holding bins or from the holding bins to the scales bin. For in- stance, in Plant C the total blending time was reduced because Opera- 30 BULLETIN NO. 632 [June, ^ \f) OO < c TJ T ' cO OO t^- cfl 3n r-l T t O T 1 O NO > "a CO Tf O O -i CM o o Ifl CM CM *-H CM 3 rt O 3 C CO ON .S . ^ NO c o 'C o fe CMCO ONON 't 1 '^ OO T i i ON O **~ CO t^- t-^- ^ 10 00 00 T^ B O o 5- (M CM CM rt< Q. _o T < T-H U O O CMCM CMCM OO ^^ ^CN T^t-. NONO T-I T-I ON T-I IO OO X U C U jj 3 "a CM CO * "^ ^ PQ (U o T-I T-I 1 ' V i l-~ co 3 o 15 '"I ^ .2 '""' '-5 O T-I T-I T-I O t- CO 5 Q C3 .S ^ > CO IO tO IO T-I CM a a 3 13 U C TJ .22 01 CM 00 O NO C 2 CQ "-" O C 3 o en O I T-I CM t^- T-I V O g 3 ^ c a, >, 3 2 OT3 O '^' T 3 S 3 3 a |J.2 g 3 S-2? tl i 1-11 ill S|i gOH ^OH oOH gOH r?. H K Q ^ A 1958] FERTILIZER BULK-BLENDING PLANTS 31 tions 5 and 6 could occur simultaneously with either Operation 2 or Operation 3. In the combination horizontal-vertical-flow plants, the holding bin over the mixer was added to increase equipment flexibility. For ex- ample, if there were no holding bin in Plants E and F, the total time to complete Operations 3, 4a, 5, and 6 would be about 9 minutes. The addition of the holding bin permitted Operations 3 and 4b to be per- formed simultaneously with Operations 5 and 6, requiring that only the time to complete Operation 4c about half a minute be added to the total time of processes 5 and 6. Thus the total time of Opera- tions 3 through 6 was reduced from about 9 minutes a ton to about 5.5 minutes. Besides equipment flexibility, under continuous operation all the plants had some labor flexibility, that is, ability to divide operations between two men. For instance, Operation 2 could be performed independently of the other processes in Plants A and C, and the addi- tion of supplemental labor would increase the potential output of Plant A by 65 percent and of Plant C by 61 percent (Table 7). In Plant D, potential output could not be increased greatly with additional labor. This is because the elevator used to fill the holding bins above the scales was also used to fill the bins above the mixer. Supplemental labor in the other plants slightly increased potential output. The usual procedure in most plants with two men was to have one operate the bulk loader, and the other the blending equipment controls. With two men working, the total potential outputs of the selected blending plants ranged between 11.1 and 24.4 tons an hour (Table 7). If mixing times were standardized among the plants, the horizontal- flow plants would have had the lowest hourly outputs, the vertical-flow plants the highest, and the combination horizontal-vertical-flow plants between the two. Storage capacities. The maximum storage required by a blending plant is that which is adequate to maintain continuous operation for the period of time necessary to obtain materials to refill the storage bins, plus a safety factor. For example, if materials normally require six days transit time after ordering, then a blending plant with an equip- ment capacity of 100 tons a day would need at least 600 tons of storage capacity. If the operator desired never to be without materials, then storage capacity in excess of 600 tons would be needed. This extra space would also protect him against the possibility of bad weather during peak periods preventing the spreading of fertilizer on farms, thus causing a backlog of materials at the plant. 32 BULLETIN NO. 632 [June, The storage capacities in the selected plants varied considerably (Table 8), although in general the vertical and combination horizontal- vertical plants had higher storage capacities than the horizontal plants. The ratio between daily potential output (two men) and storage capacity ranged from 1:2.7 in Plant A to 1:14.9 in Plants E and H. Prior to the spring and fall fertilizer seasons, all the plants sent a tentative schedule of orders to the suppliers of raw materials. This tentative schedule stayed in effect throughout the season, but could be changed at any time up to the actual shipment date. During busy blending periods Plants A, C, D, and G had to check their tentative schedules very closely, for these plants, because of their low storage- output ratios, required more materials en route to them than their storage bins could hold at one time. Some plant managers used a scheduling method which kept their bins full at all times. They operated on the principle of always having materials available for blending, risking adverse price changes of mate- rials in order to reduce the risk of losing revenue because of empty storage bins. Table 8. Raw Materials Storage Capacity of Eight Selected Illinois Bulk-Blending Plants, 1957 Plant Number of bins Storage capacity Total storage capacity of plant in terms of ammonium sulfate Ratio between daily potential output (2 men) and storage capacity* Ammonium sulfate Triple super- phosphate and potash A. . ... 3 (tons) b 70 200 144 274 248 174 167 195 78 63 340 (tons) b 80 230 165 315 284 200 190 224 90 72 390 (tons) b 210 800 720 696 1,336 1,170 390 2,040 1 to 2.7 1 to 8.5 1 to 4.3 B . 4 C. . . 5 D. l c l c 4 1 to 6.6 1 to 14.9 1 to 12.5 1 to 4.8 E. . . 8 F 6 G 5 H 6 1 to 14.9 a The ratio between daily potential output (two men) and storage capacity is computed by multiplying 1.161 by the total storage capacity and dividing the product by the daily potential output. b Ton here refers to a short ton (2,000 pounds). Since an equivalent ton of 10-10-10 weighs 1,722 pounds, 1 short ton = 1.161 equivalent tons of 10-10-10. c These bins were used primarily for rock phosphate storage. 7958J FERTILIZER BULK-BLENDING PLANTS 33 Other plant managers used a different method of scheduling. They ordinarily began the season with full bins but tried to maintain a level of 50 to 60 percent of capacity in the bins for the remainder of the season, thereby reducing losses from price changes but increasing the possibility of losing revenues because of inadequate supplies. This type of inventory control requires much more accurate scheduling. Some managers kept records of the daily volume of materials blended in past seasons, and based the future seasons' scheduling on the past distribu- tion of sales. Cost-output relationships In deciding on the size of plant and method of operation to be used, it is important to consider the expected level of demand and the costs involved in meeting that demand. This cost-output relationship is greatly affected by the facilities and equipment used in the plant. The objective, therefore, is to choose facilities and equipment that will enable the expected output to be produced at the lowest possible cost per unit. Investment-output relationship. Facing a continuously low de- mand, the plant manager would need to construct a plant with minimum output capabilities, requiring a low investment. Facing a high con- tinuous demand, the plant manager would require a plant with high output capabilities, necessitating a high investment. With an anticipated variable demand, additional investment in equipment would be neces- sary to allow for flexibility of output. Variable costs-output relationship. As has been indicated pre- viously, variable blending costs per ton and potential output both de- pend on the materials-flow system used. The relationship of variable costs to potential output in the three types of plants was as follows: Under operating conditions using only the plant operator, horizontal- flow plants had the highest variable cost per ton and the lowest poten- tial output, while vertical-flow plants had the lowest variable cost per ton and the highest potential output. The variable costs and potential output of combination horizontal-vertical-flow plants fell between those of horizontal and vertical plants. When supplemental labor was added, the above relationships also held true (Fig. 14). Supplemental labor helps increase output but it also increases variable costs, with the ratio of the increased output to the increased variable costs depending on the degree of labor flexibility in the plant. For instance, if Plant C, where labor flexibility was high, were to add 34 BULLETIN NO. 632 [June, VARIABLE BLENDING COSTS AT POTENTIAL 5-MONTH OUTPUT CO UJ n l t 1 1 1 1 1 1 1 l 1 1 8 10 12 14 16 THOUSANDS OF TONS 18 20 22 24 26 At maximum output with either one man or two men, vertical-flow plants averaged the highest potential output and lowest variable costs; horizontal- flow plants had the lowest potential output and highest variable costs; and combination horizontal-vertical-flow plants had averages between the other two types of plants. (Fig. 14) J958J FERTILIZER BULK-BLENDING PLANTS 35 an extra man, its variable costs would increase by 5 cents a ton and its output for five months would increase by 9,620 tons. On the other hand, in Plant E, where labor flexibility was low, an additional man would increase variable costs by 9 cents a ton and output by 650 tons. However, even in this case the increased variable costs would be more than offset by the additional revenues (at September, 1957, ferti- lizer prices) gained from the increased output. Fixed costs-output relationship. The relationship of fixed costs per unit to annual output is: Total annual fixed costs Fixed costs per unit output = ; Units produced per year Since the total fixed costs remain constant regardless of output, it is evident from this equation that as the output increases the fixed cost per unit of output decreases. Total cost-output relationship. At maximum output with one op- erator, the average total cost per ton was lowest in combination horizontal-vertical-flow plants (Table 9). In these plants, average fixed costs were relatively low, and a high degree of equipment flexibility with one man resulted in low variable costs per ton. The average total cost was higher in vertical plants because the high fixed costs per ton offset low variable costs. Horizontal plants had the highest total costs, mainly because of their high variable costs. Because of its speeded-up mixing process, Plant B had lower variable costs and a higher potential output than it would have had if mixing times were standardized among the plants. With the addition of supplemental labor, the vertical-flow plants had the lowest total cost per ton (Table 10). This is because the high labor flexibility in vertical-flow plants increases the potential output relatively more than it increases variable costs, and the resulting in- creased output reduces the fixed costs per unit. Plant D was an exception only because of the lack of labor flexibility; when an addi- tional elevator is installed in the plant, the total costs of blending will decrease and potential output will increase. Under operating conditions using two men, it can be assumed that, if mixing times were standardized for all the plants, the horizontal plants would have the highest total costs per unit of output, the vertical plants the lowest, and combination horizontal-vertical plants between the two. 36 BULLETIN NO. 632 [June, ^ CN od _u T3> fN fO fC rt* ON t~- s 00 _U "> -H -^ O 'O "0 ON OO l^ r*5 rO CN CN I/O IO C/} C J2 "a ^ o tn 8 OO 00 OO CS O ON ON PO t^ LO rj< *t ro PO r-j V}. NO ON LO i-H O * t*5 * OO O O fO ^i CN O CO 1-1 -H NO ro I-H S t t t^- t^ ON lO ON 00 ic O ON O <* rr> tn C rt a o c gj 0- OO **? od a a> X to U "3> BOO "* CN ^H ^H *CN CN * ir> ^ > i ON <*3 CN \O * O\ 00 ^H O 4 3 3 3 __ i ^B o I en ji O f*5 V> II aJ U r ) o^- H . -4-* cn 8 vO "1 1 * i O ON ON CN t-~ 10 ^f ^ f*5 f5 C^l &9. J l-~ t^- t^ t^ ON 10 ON NO PO OO t-~ OO CN i-l al-vertical-l Si II U > o o_- H .l tn o o PO r<5 irj ON Ov ON ^-i 10 Tf *5 r*5 <*3 6 t^ \O PO '-H >O Tf CN O "~> IOI-- \O ant operator on tn 4-1 C rt E ^ "^ od "S X to U "> OO t 00 !^3 i-l i-H i-H 00 f) *-i 69. OO fN OO 1T> ^ OO OO "1 * O es O ination horizont 4-J c CO _. ^ c*5 00 T3 1 to U aj> IO 1^5 t~ '-I t^ ^ ( 6* ro vO 10 \O ir> > i ^ 10 -^< ir> Tj< CN j a > j= M S c r n ^ 4-1 C Rj "5. o CC ro 69. II 6 > cc o_- H . en O O OO -^t 1 NO O ON ON i uo T^/H TJ< ro ro 6* ^ 00 * ^H o^f 1 Tj< O O NO OO NO JD 8 Uc _O c t*3 6V II 6 > to SJ tn 8 ON O O\ O ON O\ * NO <* * ro PO S ON CN ri 3 5 g- H o O ^H 3-6 H ^-H for horizonta 4-1 a! OH tO~ ^0 00 "8 X to _U 15> ONO 00^ OO i-i 69. OO t i I fS "0 f^J ro O ON tn . 1_ OJ a en tn O U 'S eg E ^f od X to ^u 1 15> ^-i fN TH CN T ^-H CS i-l S rO 00 1-1 PO ON tN O tN OO NO 'f CM 2 2 2 ca s ff L> -^ t c V c o u < o _ H . X 8 rvl i i "> ON ON O 10 * PO PO 69. PO M NO l~~ O NO t- ro CN ON sv II 6 -^ u o H | in O u *5 '-i ON O ON ON iO NO rf * ro PO s ON "^ t~~ ON "5 OO NO ON ^ Ol ^H OO 3 CC i ' ^ 3 N U 4-> c8 OH T3 tu X to PO CM NO ^H NO -H 6V s: cS E *o 4> X to ^ CS 1-1 (M *-+ r* CS rt 5> J ) ^ j ^ ^ ^- ) ^ *H O ; ; , v O O O O O O O ^ . o o o o o o o !S> O O O O O O O C MiOOOOOO *- 10 o o o -H <>] 4-1 ^H irj O "5 O v ~' r~i J958J FERTILIZER BULK-BLENDING PLANTS 37 CN rc 00 73 > O <^5 t-~ >O Os CN \O Os "* OO \O Os * fj o" ro od U rt> \O -H 1-1 CN *-H Tf *-" * ro 10 ^t ro PO vo m CN C n} "a > o 13 69. II 6 > Q H i en O CJ <*> -H * "^ ON Os Os O t iO Tt* ro ro f*5 CN 69- J3 oo '-H to t o ^ if) *- 1 ir> fr) \o i O 69^ II el U > IT! H| M 8 ONOOOOCNOONO\O\ fOl^>OT^iTtitr)ro<^ CN 69. vO^-H'-HCVIi-l-^^-lP- . O CN r-( O O PO O O\ m for vertical "c rt E IO (M OO T3 | b _U 73 > ir5 ro \O ro T-I ^H ,-1 \O CO '-H 69. CNTHOO^I"* O\OOs ir)'-i'-iO-HiO-^OO\ e/ C K "5. ^ o 'c rt E o7 "t 06 S X (In _u 73 > r-H O O * CM ~H ^H O *< 0) CN 6* MD O >O i-( 10 '-i fO >O OO CM ^H . . U- s, to en O U 69. II 6 u 2| o o !^\Ol^CSOOvO\OvoO fNf-iOTti^rOPOrOrO fN 69. l^vOPOOsO\\OTj-t^ al-vertical- 69. II 6 > e> o Hj en 8 *f CO \O O ON O\ ^H 10 ^ ^f ro ro 5 -: t-~ *- O\ CN \O CN . in t^ \O en j c 03 PL, CN 06 4) X UH _U 73> O\t~~ OO ro ^-H ^H 00 ro ^n 69. vO CN CN Tj< ro O\ iO^ VO ^H ro O ination horizont M 03 D- ro* ^t< 00 o a> X it, _u 73 > lO lOt^- '-H t^ -i-l 6* N t^ O vO "1 '-H T-U-^. \O \O iO , m HJ x P ON -* \O O O\ O\ '-i >O rf * PO ro 69. J3 * O O UH j C/) 8 O O ON O O\ ON iO MD -^ T^I ro co 5* J3 ON -^ t^ ro CS OO vO (TS T-I CN 1-1 1-- . . . i for horizontc ts 03 E o" t~ 00 T3 0> X fc U 75> -H VO 00 -H 00 ~H 69^ ro T(H CN OO Tfi t- O\ "0 ^H o\ ro CN CN ^ CN ^H CN -H 5*5. CN ON *O TJH OO OO t rj< Ov <~ IO CN o & tn en O 6* II 6 < H l to 8 tN ^ 10 ON O\ O\ O 10 ^ ro ro ro 69. J3 ro **< CN OO ^f J~- . CN OO <*< CN \O IO 6* II U > U S| -M en O O <5 -^f -^ i ir> ur> tN O 10 ro ^-H oo U 03 E 8 X 32*=- 69. c rt CL, *O CU X lOcr, ^ (M ^ ^-l CN T-I 69. 3 D. 3 O ^ v ^^ ^5 ^^ ^^ ^)OOOOOOO 3 a. 3 '-H 10 o ") o 10 o 1-1 *-H CN CN ro -H to o too 10 o --I >-i CN P^l PO 38 BULLETIN NO. 632 [June, Revenue The main source of revenue to bulk blenders is the retail price of the blended product. Spreading operations offer another source of revenue, but, since costs and income of spreading are independent of those of blending, they are discussed in a separate section (page 43). The September, 1957, retail price of 1 ton of bulk-blended fertilizer was calculated to be $48.12. 1 It includes the following charges: Cost of raw materials $37 . 18 Margin between cost and retail price of raw materials 8 . 09 Blending charge 2 . 85 Total 348.12 The sum of the raw materials margin and the blending charge is $10.94. This amount must cover all fixed and variable costs other than raw materials. The remainder after these costs are paid is profit. Cost of raw materials. The costs per ton of the three primary raw materials used in a 10-10-10 blend were estimated on page 22. Margins between the cost and retail price of materials differ slightly among blending plants because of different competitive condi- tions and different freight rates. For Decatur plants, the costs and retail prices per ton, and the margins between them, of the three pri- mary raw materials in 1957 were: Retail Material Cost price Margin Ammonium sulfate (21% N) #36.40 #48. 00 #11.60 Triple superphosphate (46% P : O 5 ) 62 . 92 70 . 00 7 . 08 Muriate of potash (60% K 2 O) 36 . 82 43 . 00 6.18 In 1 ton of 10-10-10 the costs, retail prices, and margins were: Retail Material Cost price Margin Ammonium sulfate #17.34 #22.87 # 5.53 Triple superphosphate 13 . 69 15.22 1 . 53 Muriate of potash 6.15 7.18 1.03 Total #37.18 #45.27 #8.09 1 This figure is based on costs of materials to bulk-blending plants in the Decatur, Illinois, area. Because materials costs change according to locality, the average retail cost of bulk-blended fertilizer for the whole state of Illinois (Table 1) is different from that used in the calculations in this bulletin. 7958J FERTILIZER BULK-BLENDING PLANTS 39 Blending charges depend on local competitive conditions. In areas where blending plants compete only with bagged-fertilizer plants, blending charges are normally higher than in areas where blending plants compete with each other. The method of charging for blending varies. Some plants make allowances for the number of materials included in the blend, the charge being higher for three materials than for two. Other plants have a flat charge per ton blended, regardless of the number of mate- rials included in the blend. In a sample of fifteen plants, the charge for blending 1 ton of 10-10-10 ranged from $2 to $5, with the average charge being $2.85 (Table 11). This average is the charge used in revenue computations in this bulletin. Table 11. Blending Charges of Fifteen Selected Illinois Bulk-Blending Plants, 1957 Charge for Number Method of charging blending one of plants for blending equivalent ton of 10-10-10 5 $2.00 per equivalent ton 2.00 1 1.50 for blend containing 2 materials 2.00 for blend containing 3 materials 2!oo 1 2.50 per equivalent ton 2.50 3 1 .00 per material included in the blend 3.00 2 3 . 00 per equivalent ton 3.00 1 4.00 per equivalent ton 4.00 1 . 25 per 100 pounds of materials 4.31 1 5.00 per equivalent ton 5.00 15 Average 2.85 Farmers tend to object to the blending charge, and many plant managers have yielded to this protest by eliminating the blending charge. However, the total price per ton of blended product is usually not lowered; to compensate for the eliminated blending charge, the margin between the cost and the retail price of raw materials is increased. Break-even outputs A knowledge of cost-output relationships and of sources of revenue is useful in determining at what point a plant will produce enough to furnish income adequate to cover all costs. Outputs above this break- 40 BULLETIN NO. 632 [June, even point would indicate a profit, and outputs below it a loss. The break-even outputs for the eight selected plants were deter- mined by setting the per-ton cost of blending a 10-10-10 mixture equal to the retail price per ton. The blending cost includes the price of materials. The retail price ($48.12) was based on the wholesale and retail prices of materials in effect in September, 1957. With only the plant operator working in the plant, the break-even outputs for the eight plants were between 672 and 2,031 equivalent tons of 10-10-10 (Table 12). The lowest break-even outputs were required in the horizontal-flow plants while the highest were required in the vertical-flow plants. The days of operation necessary to produce the break-even outputs ranged from 8.49 to 17.51 days, with the horizontal-flow plants averaging the smallest number of necessary operating days and the vertical-flow plants the largest. When supplemental labor was used in the blending plants, variable costs per unit increased only slightly, because the increase due to addi- tional labor costs was partially compensated for by the decrease in power costs per unit. Fixed costs also increased somewhat with addi- tional labor because of increased insurance expenses. These increases Table 12. Break-Even Ouputs for Eight Selected Illinois Bulk-Blending Plants, 1957 (Blending a 10-10-10 equivalent) Plant operator Plant operator and supplemental labor Plant Days Break-even "'blending ""P- breTeven output Break-even output Days of blending to reach break-even output Horizontal-flow plants Plant A (tons) 672 12.44 8.76 15.72 14.91 11.85 11.48 8.49 17.51 (tons) 682 844 1,918 1,690 1,189 1,153 783 2.047 7.66 7.74 9.84 13.85 11.43 10.58 8.24 12.87 Plant B. 841 Vertical-flow plants Plant C. 1 902 Plant D.. 1 670 Combination horizontal-vertical-flow plants Plant E. 1 173 Plant F 1 136 Plant G 773 Plant H.. 2.031 J958J FERTILIZER BULK-BLENDING PLANTS 41 in costs were so slight that the break-even outputs were approximately the same whether or not an additional man was used (Table 12). However, the number of days of operation necessary to break even was reduced in all the plants by the addition of supplemental labor. The largest reduction in days of operation occurred in Plants A, C, and H because of the large increase in output resulting from the additional labor. Horizontal-flow plants in general still had the smallest number of necessary operating days and vertical-flow plants the largest. Table 13. Break-Even Outputs for Eight Selected Illinois Bulk- Blending Plants, if 1957 Retail Prices of Materials Increase or Decrease (Plant operator and supplemental labor) Break-even output, 10 percent Plant increase in retail price of materials Break-even output, 10 percent decrease in retail price of materials Horizontal-flow plants Plant A (tons) 461 574 1,314 1,155 811 785 535 1,401 (tons) 1,313 1,598 3,544 3,142 2,234 2,164 1,486 3,801 Plant B. .... ... Vertical-flow plants Plant C Plant D Combination horizontal-vertical-flow plants Plant E Plant F Plant G Plant H . . . A change in the retail price of materials, because of local competi- tive conditions, can alter considerably the cost-output-revenue relation- ship which determines the break-even point. To illustrate the effect of a price change on the break-even point, outputs necessary to break even were estimated for conditions under which a 10-percent decrease and a 10-percent increase in the September, 1957, prices would be in effect (Table 13). An increase in the retail price of materials would result in a decrease in the output necessary to break even. The reverse would be true with a decrease in the retail price. In all eight plants the outputs necessary to break even were con- siderably below the potential outputs of the plants. 42 BULLETIN NO. 632 [June, COSTS AND OUTPUTS OF THE THREE TYPES OF BULK-BLENDING PLANTS On pages 3 through 9 of this bulletin, a description is given of three hypothetical bulk-blending plants, each representing one of the three general types of plants. Using the cost analysis in this bulletin of eight actual bulk-blending plants as a basis, it is possible to analyze the costs and outputs of each of the three typical plants (Table 14). The differences in costs and outputs among these three types can be attributed solely to the fact that they have different amounts and arrangements of equipment. To indicate only the effect of plant type on output and costs, it was necessary to standardize operating times. For example, it was assumed that the same type of mixer would require the same mixing time in all three types of plants. Actually, in the eight plants studied, plants with identical equipment frequently had widely different operating times. Table 14. Comparison of Different Types of Bulk-Blending Plants* Type of plant Horizontal Combination horizontal- vertical Vertical Investment Equipment #10,500 Building b 12,900 Land 1,500 Total 24,900 Potential daily output, tons One man Two men . . 80 88 Potential five-month output, tons One man 10 ,400 Two men 11 ,440 Annual fixed costs One man # 7 ,381 Two men 7 ,441 Variable costs per ton One man Two men . . Break-even output, tons One man Two men . . 38.492 38.593 767 781 22,200 21,575 1,500 45,290 105 110 13,650 14,300 #10,504 10,564 38.342 38.435 1,074 1,091 #42,205 28,150 1,500 71,855 128 168 16,640 21,840 #14,930 14,990 38.220 38.280 1,508 1,523 * Costs and revenues are computed on the same basis as in previous tables. b Plant structures are assumed to be of frame construction (high quality) and to con- form to the plant layouts shown in Figs. 4, 5, and 6. I958J FERTILIZER BULK-BLENDING PLANTS 43 The basic differences in costs and outputs among the three types of plants are as follows: Vertical-flow plants have the highest building and equipment invest- ments and the highest potential output of the three types of plants. Further, the relative increase in potential output from adding labor is greatest in this type of plant because the greater investment permits more flexibility in using labor. The break-even outputs those neces- sary to cover all costs are highest for the vertical type of plant, mainly because of the higher initial investment cost. Costs and outputs of the horizontal-flow plants follow a pattern which is the reverse of that of vertical-flow plants. Horizontal-flow plants have the lowest investments, lowest potential output, and lowest break-even outputs of the three types of plants. Costs and outputs of the combination horizontal-vertical-flow plants fall between those of the horizontal and vertical types. DELIVERY AND SPREADING OF FERTILIZER Many bulk-blending firms own and operate spreader trucks in con- junction with their blending operations. The spreading operation offers two possible kinds of revenue: (1) revenue from the spreading charge and (2) increased revenue from the blending operation due to expan- sion of the market area. Equipment. The delivery and spreading equipment consists of a truck with a spreader bed. A continuous conveyor belt in the truck moves fertilizer to the rear of the spreader bed, where it is dropped on either one or two rapidly rotating spreader disks or fans. Both the speed of the conveyor belt and a sliding gate in the rear of the spread- ing bed control the flow of materials to the spreader fans. The sliding gate can be adjusted for a minimum of 100 pounds an acre. A hood attached to the rear of the truck covers the spreading disks. It is built of metal and has a canvas drop which reaches to the ground. The width of the spread is controlled by the width of the hood, with most spreader trucks using a hood width equivalent to the turning radius of the truck. The width of the hood may vary from 20 to 25 feet, but a width of 24 feet seems to be preferred by many truck operators. The spreading pattern (the distribution along the width of the hood) of the blended fertilizer varies, depending on the moisture con- tent, condition, and texture of materials used in the blend. The spread- ing pattern can be regulated by changing the point at which materials BULLETIN NO. 632 [June, Table 15. Variable Cost per Ton to Operate Spreader Trucks" (Spreading rate 300 pounds an acre) 1 ' Size of load (tons) Distance to point of deliver}' (miles) 3 5 10 15 20 25 30 2 3 4 5 6 7 2.09 1.99 1.94 1.91 1.89 1.88 2.29 2.13 2.05 2.00 1.97 1.85 2.78 2.47 2.31 2.23 2.16 2.12 3.28 2.82 2.58 2.45 2.35 2.29 3.77 3.16 2.85 2.67 2.54 2.47 4.27 3.51 3.12 2.90 2.74 2.64 4.75 3.85 3.38 3.13 2.93 2.81 a In computing variable costs in this table, labor costs were charged at $1.35 an hour, and gasoline at 30 cents a gallon. b Source: Agricultural Experiment Station Special Bulletin 408, Michigan State Univer- sity, June, 1956. fall onto the spreader fans. The most uniform spreading pattern is obtained when the raw materials in the blend are all of the same particle size and density; granulated materials perform best in blends. Fixed costs. Trucks used in spreading fertilizer range in cost from $3,000 to $3,500. A 12-foot 3-inch spreader bed with a belt feed and two spreader fans costs from $2,800 to $3,000. The common deprecia- tion rate for both truck and spreader bed is five years, making the maximum annual depreciation cost $1,300 for each complete spreading unit. Other fixed costs are estimated at $140 a year for insurance, and $200 a year for licenses and other fees. Total annual fixed costs are $1,640, excluding storage costs. Many bulk-blending plants do not have truck storage facilities. Variable costs include gas and oil, repairs and maintenance, tires, and labor. Variable truck costs incurred in spreading and delivering fertilizer are related to (1) distance to point of delivery, (2) size of load, and (3) spreading rate. 1 The variable truck cost per ton decreases both as the load size increases and as the spreading rate increases; the variable truck cost per ton increases as the delivery distance increases. The combination of these relationships determines the variable cost per ton of fertilizer delivered and spread (Table 15). Labor costs for the truck driver assume that the driver is paid only for the time actually engaged in hauling and spreading. If labor is hired by the month there must be other uses for the driver when the 1 Sorenson, Vernon, and Hall, Carl, Handling Fertilizer in Bulk, Agricultural Experiment Station Special Bulletin 408, Michigan State University, June, 1956. ?958J FERTILIZER BULK-BLENDING PLANTS 45 truck is not operating, or an extra allocation must be made for the additional labor expense incurred. Spreading charges. Both the method of charging and the spread- ing charge itself vary greatly among those plants owning and operating spreader trucks. In a sample of thirteen plants, seven different meth- ods of charging for spreading bulk-blended fertilizer were noted (Table 16). The charge for spreading 300 pounds of 10-10-10 an acre ranged from $1.00 to $1.50, with the average charge being $1.16. A majority of the plants reported no increase in the spreading charge for increased applications an acre. These plants were willing to accept less return from the spreading operation in order to increase the sales volume of blended materials. Expanding the market area. The main determinant in deciding whether to increase the market area is the net effect this expansion will have on spreading and blending operations. An expansion of the Table 16. Spreading Charges of Thirteen Selected Illinois Bulk-Blending Plants, 1957 Number of plants Method of charging for spreading Charge for spreading 300 pounds of 10-10-10 4 $1 .00 per acre with no limitation on quantity applied $1.00 2 1 .25 per acre with no limitation on quantity applied 1.25 3 1 . 25 per acre for less than 700 pounds applied 1.25 3 . 35 per ton for over 700 pounds applied 1 1 .50 per acre with no limitation on quantity applied 1.50 1 1 . 00 per acre on unplowed ground with no limitation on quantity applied 1.00 1 . 25 per acre on plowed ground with no limitation on quantity applied 1.25 1 1 .25 per acre for less than 300 pounds applied 1.25 1 . 50 per acre for more than 300 pounds applied 1 1 .00 per acre for less than 400 pounds applied 1.00 1 . 25 per acre for 400 to 600 pounds applied 3 . 60 per ton for more than 600 pounds applied 13 Average $1.16 46 BULLETIN NO. 632 [June, market area may result in a reduction in the profit from spreading operations because of the relatively large increase in truck costs. How- ever, expanding the market area may also result in increased revenue from blending operations. Neither the reduced spreading profit nor the increased blending revenue is of value in itself in determining whether it is worthwhile to expand the market area; rather the two must be considered jointly. For example, Plant E might be assumed to be serving a market area with an annual demand of 1,400 tons, of which 700 are spread by the firm's spreading truck and 700 are spread by the farmers. Assum- ing that Plant E's truck spreads at a rate of 300 pounds an acre, at an average trip distance of 10 miles, and with an average load of 10,000 pounds (approximately 6 equivalent tons of 10-10-10), it would take between 30 and 35 full days of continuous spreading to spread 700 tons in a year. If the spreading charge were $1.00 an acre, the net income from the spreading enterprise would be $793. Based on the costs and revenues computed in the preceding analysis, the net income to Plant E from the blending operation would be $2,030. The net income from both the spreading and blending operations would be $2,823. To increase the market area, an additional truck might be pur- chased. In order to obtain an additional demand of 500 tons the aver- age trip distance is assumed to be increased to 20 miles. One result of this is that, because of the increased time each trip takes, during a 30- to 35-day period of continuous spreading, 600 instead of 700 tons a truck could be spread. The effect of the market expansion on the spreading operation would be that the profit from the spreading enter- prise would be reduced from $793 to $364. However, at the same time, the income from the blending plant would increase from $2,030 to $6,878. The total net income would be $7,242, as compared with a net income of $2,823 before the market area was increased. It is evident that the reduction in blending costs per ton would be more than enough to offset the increased hauling and spreading costs per ton. SUMMARY The practice of local mixing of straight fertilizer materials (bulk blending) has expanded greatly in Illinois. Since the first plant was established in 1947, the number of bulk-blending plants has increased to 92. In 1956 bulk blenders distributed 27 percent and blended 18 per- cent of the total fertilizer materials (excluding rock phosphate) sold 7958J FERTILIZER BULK-BLENDING PLANTS 47 in Illinois. The retail price of bulk-blended fertilizer is generally less than that of cured fertilizer containing equivalent plant food. Based on the primary direction in which materials flow in the blend- ing cycle, bulk-blending plants may be divided into three general types: (1) horizontal flow, (2) vertical flow, and (3) combination horizontal- vertical flow. In the horizontal-flow plant the equipment is fixed to the plant floor, while in the vertical-flow plant the equipment is placed in a tower arrangement. The combination horizontal-vertical-flow plant contains certain features of each of the other two plant types. All bulk-blending plants require the same basic facilities: (1) land, (2) shelter for materials and equipment, and (3) equipment for stor- ing, moving, weighing, and blending materials. In general three types of construction are used: (1) pole-supported metal siding, (2) frame, and (3) concrete block. This bulletin reports the results of a study of eight bulk-blending plants. Buildings ranged in cost from $3,936 to $61,196, with an average cost of $25,882. Equipment costs ranged from $10,574 to $49,500, with an average cost of $25,331. The total investment (in- cluding site) for the eight plants varied from $16,536 to $102,528, with an average of $52,713. For a comparison of costs and revenues, plant outputs were as- sumed to be in terms of equivalent tons of a 10-10-10 mixture. Annual fixed costs in the plants were directly related to total invest- ment, and ranged from $6,363 to $20,046. Variable costs per ton were related to plant type, and varied from a high of $38.65 in the horizontal- flow plants to a low of $38.20 in the vertical-flow plants, when only the plant operator was working. The variable cost per ton increased by 5 to 10 cents when additional labor was included in the plant operation. If each operation in the blending cycle were performed succes- sively, the blending time per ton would range from 4.3 to 11.8 minutes. By performing some of the operations simultaneously, it is possible to reduce blending time per ton, thus increasing daily output per plant. Under continuous operation the daily output varied among the plants from 89 to 195 tons when labor in addition to the operator was utilized. Storage requirements are dependent on the daily output and in- transit delivery times for raw materials. The ratio between daily potential output and storage capacity ranged from 1:2.7 to 1:14.9. The minimum in-transit delivery time for any material was five days, creating scheduling problems in many plants. In Illinois more than 90 percent of all blended fertilizer materials is sold during a five-month period. Assuming that the plants studied 48 BULLETIN NO. 632 operated continuously for a five-month period, the total cost of blend- ing (including variable and fixed costs) with two men working in the plant ranged from a high of $39.39 a ton to a low of $38.99 a ton. The main source of revenue to bulk-blending plants is the retail price of the bulk-blended fertilizer. This price includes: (1) costs of materials, (2) margins between costs and retail prices of materials, and (3) blending charges. The September, 1957, retail price in the Decatur area was $48.12 a ton. Of this, $37.18 was the cost of mate- rials, $8.09 was the raw materials margin, and $2.85 was the blending charge. Some plants also deliver and spread the fertilizer. This addi- tional operation offers two kinds of revenue to the bulk-blending enterprise: (1) revenue from the spreading charge and (2) revenue due to an expanded market area. In 1957, on the basis of a 300-pound- an-acre application, spreading charges averaged $1.16 an acre spread. Profitable expansion of the market area depends on the net effect of increased delivery costs per ton and decreased fixed blending costs per ton. Break-even outputs for the various plants were considerably lower than potential outputs. At a blend selling price of $48.12, with only the plant operator, break-even outputs ranged from 672 tons to 2,031 tons; the days of blending required to produce the break-even outputs ranged from 8.5 to 17.5. Small increases in the retail price of materials decreased break-even outputs extensively in all plants. Standardization of process times among the three plant types per-i mits comparisons to be made based solely on the differences in amount and arrangement of equipment within the three types of plants. These comparisons show that vertical-flow plants have the highest potential outputs as well as the highest outputs necessary to break even. Hori- zontal-flow plants have the lowest potential and break-even outputs, while in the combination horizontal-vertical-flow plants, the potential and break-even outputs are between those of the vertical-flow and horizontal-flow plants. 5M_6-5S 66606 UNIVERSITY OF ILLINOIS-URBAN*