During these tough economic times, people are taking measures to save money in ways they never would have considered before. And though farmers may not be feeling the negative impacts as much as other industries, they can take a nod or two from their innovative cost-reduction tactics.
“Farmers need to hold down their fixed costs,” says Palle Pedersen, Extension soybean agronomist at Iowa State University (ISU). And one way of doing that is by sharing equipment with their neighbors.
“It can really help farmers who don't have the very large-sized operation,” Pedersen says. “If they want to be more efficient and productive, this is really a way that can help. If they have a neighbor or relatives who live close by, they can cooperate and help each other.”
WILLIAM EDWARDS, professor of agricultural economics at ISU, agrees that teaming up can make a big difference — especially for the medium-sized farmers who have 400-600 acres. Large farmers are so big they can get all the economies of scale out of the way, Edwards says, while the smaller farmer hires out much of these things, since they cannot afford to purchase their own equipment.
“I think there's a lot of potential cost savings there,” Edwards says.
And that's exactly what two farmers from northeast Iowa discovered. Alan Karkosh, a grower near Hudson, and Ted Hamer, a grower from nearby Traer, IA, recognized an opportunity when they took inventory of all their equipment and the potential for splitting the workload.
“We've taken three farm entities and are farming as one operation — a farm operation that my dad and uncle own, one that I have and the one that Ted has,” Karkosh says.
Karkosh and Hamer were old high school classmates. Karkosh moved away after high school, and Hamer stayed farming. At the time, Hamer and Karkosh's father and uncle had partnered together in their hog operations.
So when Karkosh moved back to his hometown and began farming, there was already a working relationship between the two families.
“We just started talking and doing more things together and going to more meetings together,” Hamer says. “Both his dad and uncle were getting older. We decided maybe we could make things work together.”
Karkosh agrees that it made sense.
After much discussion, they moved forward, forming Cardinal Farming, LLC. This official partnership made it a little easier to buy equipment together and do some custom farming on the side.
And the savings were quite nice.
“We've dropped a tractor in each operation,” Hamer says. “We had four planters, now we're down to three.”
Because of this, they were able to take advantage of better technology, Karkosh says. “We've been able to get bigger sprayers, bigger tractors and get more done with less.”
And that is one of the greatest advantages of all by sharing equipment, ISU's Pedersen says. The bigger equipment means less time in the field. And fewer passes means reduced fuel costs. The cost savings alone of shedding two tractors is significant, considering the upgrades both Hamer and Karkosh would have put in their tractors individually, such as GPS technology. Hamer says they both would have upgraded to injection tanks on individually owned sprayers, as well.
AS SHARING EQUIPMENT went well, they realized they could also split the workload.
“Alan loves the agronomy side of farming,” Hamer says. “He loves looking at seed, determining which hybrids and varieties are the best. I enjoy the marketing side. That always intrigues me. If Alan comes to me and says, ‘We ought to plant this and this,’ I know he's done his research. And if I say, ‘I think we ought to put this spread in the market,’ he says, ‘Let's do it.’ Because he knows I've done my research.”
It helps simplify the ever-changing ways of farming, they say.
“Life in farming gets more complicated all the time and it's harder to keep up on all those things,” Karkosh says. “If Ted can concentrate on what's going to influence grain marketing, and I can concentrate on agronomics, it's a win-win.
“We can be focused on our area of expertise,” Karkosh adds, pointing out times when he is scouting fields while Hamer is reading market commentary. “Everybody involved is looking out for the total good — and not the individual. Maybe someday you're planting somebody else's field. You just don't worry about it. It's all going to get done.”
ISU's Farm Machinery and Labor Sharing Manual is available at www.mwps.org.
HOW TO START SHARING EQUIPMENT
Interested in sharing equipment to save money and enhance your profits? There are a few things to first consider, Extension experts and growers say.
“Be sure it's someone who you can get along with and that everything is down on paper before you start,” says Palle Pedersen, Extension soybean agronomist at Iowa State University (ISU). “I think that's the most important thing.”
Trust and similar farming philosophies are also key.
“It really comes down to the relationship,” says Hudson, IA, grower Alan Karkosh. “Make sure you have trust, similar values and the same goals in mind. Make sure you're on the same page. It's a business relationship.”
But farmers must realize that going from a one-man show to a team changes the dynamics.
“The things you were doing will have to change,” says Traer, IA, grower Ted Hamer. “Maybe your time isn't as much your own as it used to be. You'd better be willing to give that up. You will lose some independence, but I think the benefits far outweigh the costs.”
Karkosh agrees. “It works better to work as a team. It gives you another person to bounce ideas off of - it's always good to have diversity of opinions and thoughts.”
William Edwards, ag economist at ISU, says focus groups provided similar conclusions. “We heard multiple times that the work just went more efficiently when there were two or more people together than working alone.”
“Maybe it's not easy to identify who you can work with,” Karkosh says. “Maybe just start doing some things together and see if it's going to work. And be willing to walk away from it, too, if it's not going to work.”