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I’ll share my baler if you share your combine

Jennifer Bradley Published on 06 May 2014

Crop prices have been good the last few years. This year’s harvest is predicted to take a different direction, however, and the trend of equipment sharing is looking to re-surge. The practice was strong after the recession in 2008 and waned in recent seasons.

“The interest tends to rise and fall opposite of the grain prices,” says Dr. William Edwards, an emeritus professor at Iowa State University College of Agriculture and Life Sciences. “I’ve had two emails in the last week from people wanting information about sharing machinery.”

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One of those was Brian Espensen, who lives just 10 miles east of Iowa City, Iowa. He and his neighbor are venturing into the realm of equipment sharing and needed some advice.

While Espensen says the two do not want to co-purchase equipment, they want to develop an effective financial formula for each to own some machinery and share it with each other.

Between the two farmers, they work 2,400 acres and have two full lines of equipment. “The ultimate goal is to not each own a $300,000 combine,” Espensen says.

“Machinery has gotten so expensive; there’s a half-million dollars sitting on each farm in combines alone when one machine can harvest the 2,400 acres. Then we don’t have this tremendous investment sitting there for 11 months of the year.”

Picking a partner
Edwards has dedicated time to Iowa State University Extension studying and helping farmers who want to pursue equipment sharing. He says traditionally the smaller producers will hire a person to do custom crop work and the larger ones can’t afford to share equipment.

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“This practice is for the in-between people,” he says of equipment sharing. Those who struggle to afford a full line of machinery and yet use it enough to justify a purchase of some sort are the ones most apt to consider such an agreement.

Espensen is in his late 50s and simply looking to scale back a bit, but he realizes it’s not time to call it quits in the farming business quite yet. His full-time help has been turning over every two years, and he decided to seek a different way of maximizing money and labor.

Espensen says co-owning is not the route best suited to his situation, as he doesn’t want to put another person at risk if something were to happen to him. “I’m not 30 anymore,” he jokes.

“You really need to be in it with somebody you trust,” Edwards lists as the most important line item in equipment sharing. He’s seen purchase agreements dissolve because there was a big repair bill, even if it was an accident, and one owner felt the other was mistreating the machinery.

Others argue over the amount of time each is taking, and prime weather can lead to disagreements on who gets to go first. These types of things can become real issues and break up friendships or families.

This doesn’t mean equipment sharing doesn’t have benefits or can’t be a blessing to a financially strapped farmer. It can and is for those that definitely want to make it work and are able to be flexible, says Edwards.

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Espensen agrees and says he is fortunate to have found someone who thinks as he does. A previous opportunity didn’t come to fruition because he just knew management styles and goals would clash. “You have to have the right person,” he says. “We talk a lot, and when I say something, he’s in total agreement.”

Time and money
Edwards says scheduling is always the biggest challenge when people use equipment jointly. “It always comes down to what happens when two or three people need to use it at the same time,” he explains and says that this is especially a sticky situation during planting season.

Sharing a planter, then, may not be the most feasible equipment piece to co-purchase, as the season gives farmers a short optimum window to get seeds in the ground. Haying equipment works a bit better for this endeavor. “You have a little longer window and can spread the tasks out over the summer,” Edwards says.

Forage harvesters and combines are also popular in the equipment-sharing world because they are big-ticket items, he explains. The economics of sharing them is also easier. Farmers have said they enjoy the ability to have newer, more modern machines instead of hanging onto the same equipment for 10 or 15 years and putting large amounts of money into repairs.

Edwards reiterates farmers just can’t decide ahead of time when they will use the machinery on their fields. Weather dictates that. “You have to be able to make decisions on a very short time frame and be flexible about it,” he advises.

One purchasing option he’s seen work for some farmers is through forming a separate legal entity for those that own the machinery. While it’s a formal way of doing things, Edwards says farmers that share a complete line of farm equipment like the legal protection.

One of the biggest benefits he says these groups have seen is the flexible scheduling and shared labor. “It was a surprise to them, but they liked having three or four or five people available to operate the machinery if one needs to be away,” he explains. This way, the field work is getting done efficiently for all farms involved.

Others he’s talked to have appointed a “field boss” each spring and fall. The position is rotated, and whoever is the boss makes the decision about the fields that were planted or harvested or tilled each day. “The other people just agreed to go along with that,” he explains. “Again, you have to give up some independence, certainly, and have trust.”

Records and repairs
Any dairy farmer knows record-keeping is an important business task. For those who share equipment, it is even more vital to maintain accurate and up-to-date logs. These things should be discussed in advance. Edwards recommends farmers track data, such as:

• When the machine was acquired

• Who pays what and when

• How payments will be handled if a loan is involved

• Insurance

• Usage from each party (acres, hours)

• Repairs performed

• Who will pay for repairs and how

“Then, when January comes, and you’re going to settle for the year, you’ve got some records to go back and look at,” he says. “That’s pretty important.”

Espensen says he wants to form an agreement that is mutually beneficial and doesn’t leave either side with a large bill in December. This is why he originally reached out to Edwards for advice.

“I want a formula to share machinery and have the cost at the end ideally be zero,” he says. He hasn’t gotten to it yet but is optimistic the magic numbers will be within reach. The end goal is to eliminate one planter, one combine and share labor, he says.

Resources
Six years ago, Iowa State University Extension was given a grant to do a variety of special workshops on this topic. Edwards says a number of case studies on equipment sharing were written and revealed interesting findings, as discussed above.

The loss of independence was the most difficult thing for farmers, but in order to gain economies, they found it worth it, he explains.

Many farmers tend to work alone, and equipment sharing also gives them a “management partner” of sorts, someone to discuss ideas with and help make business decisions that might not even involve machinery. “This is valuable and one of the benefits they don’t necessarily think about in advance,” Edwards says.

Another result of this grant was a manual entitled “Farm Machinery and Labor Sharing” which can be found online (www-mwps.sws.iastate.edu). Edwards says this is a valuable document for anyone looking to pursue equipment sharing and discusses both operational and organizational issues.

The case studies that discuss the various types of equipment sharing arrangements are in the manual, as well as sample agreements and worksheets for fair cost allocation.

Worksheets can also be found online at Iowa State University Extension’s website . Edwards says these give examples of recording and calculating each person’s contributions and obligations. It can be modified or expanded but helps growers get a good start.

As the season moves forward, the shift toward equipment sharing is likely to increase. When all is said and done, to make a go of it requires trust, flexibility, a mutual appreciation for agriculture and passion to run a profitable business. PD

Jennifer Bradley is a freelance writer in East Troy, Wisconsin.

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