Two farmers with two complete lines of equipment spelled too much idle investment for Andy Schmitt and Curt Eischens. The west-central Minnesota growers decided they didn't each need a yard full of equipment to farm — if they could learn how to amicably share.
Nine years later, they've become pros at sharing each other's equipment and wouldn't farm any other way.
“We get to run newer equipment. Everything is less than five years old so we can keep up with the latest technology,” says Schmitt, who farms 1,100 acres with his wife, Jane, at Boyd, MN. “In fact, the type of equipment we can run now has improved our operations.” Eischens and his wife, Wendy, farm 900 tillable acres at nearby Minneota.
The technology they now can use results in grid sampling, fertilizing based on the grids, variable-rate planting, precision spraying and harvest yield data.
Across the country, farmers are exploring ways to cut costs; sharing equipment is one popular solution. In fact, machinery sharing appears to be on the upswing, experts say.
“All economic signals are in place to do it because of the economies of size,” says Terry Kastens, farm management specialist at Kansas State University. “The big question is whether it's here to stay or if it's transitional. It's definitely a way for smaller farms to use bigger equipment. I see it as a stop-gap method for survival that might help you exist into retirement. But I don't view it as a long-term thing.”
The arrangement for the Minnesota farming duo started when Schmitt bought a new combine and needed to generate a little extra cash from custom work.
“Curt's combine was getting old, so I started custom combining for him. That's when we talked about sharing,” Schmitt recalls. “At the time, my son was in school and I didn't have any extra labor. So I really liked the labor sharing idea, too.”
The next year, they went full swing into liquidating their existing equipment and trading up.
Schmitt and Eischens initially worked with their county agent to establish working guidelines and set custom rate prices. They've split their ownership like this:
Schmitt owns the combine, tillage equipment and a sprayer. Eischens provides the planting tools (a variable-rate planter and a drill for beans) and a stalk chopper. Jointly, they own a grain cart, two cultivators, a rock picker and a pressure washer. They each have their own semi tractor/trailer and grain storage setup.
In addition, each piece of equipment has a per-acre custom rate attached. They say their rates run on the low side of average.
- Planting: $7/acre
- Harvesting: $15/acre
- Tilling: $5/acre
- Stalk chopping: $3/acre
Of course, the sticky part of equipment-sharing arrangements is when both partners want to get something done at the same time. But that's not been much of a problem for Schmitt and Eischens. Their land is about 15-18 miles apart. “That's a plus for us,” Schmitt says. “Since I have lighter soils, we can get in the fields earlier here.”
At the end of the year, they use custom rates to see who owes whom. Until last year, Schmitt paid more at the end of the year because he had more work. But last year Eischens doubled his acres, so they now both come out a little more even.
Schmitt and Eischens hire extra labor at planting and harvest and share the cost.
Until this past year, the total amount of money that changed hands was $5,000. And that's been about average over the years, Schmitt says.
The arrangement works well for these two independent-minded farmers. “We like sharing our equipment, yet still run separate operations,” Eischens says. “By working together we could take on more land and are always looking to do that. We also have family members who we'll be working into the operations.”
The two believe it's made their operations more efficient, too. “Having the extra manpower at peak times, like harvest, really helps,” Schmitt says.
When four farmers at Nemaha, IA, decided to join forces and share equipment, it saved them all labor and equipment costs.
“Separately, we're not big enough to buy high-priced machinery. But farming together allows us to use more modern equipment without having to get so big,” says Russ Davis, who farms 670 acres.
Besides Davis, Damon Mooney (750 acres), Roland Schmidt (1,100 acres) and Matt Quealy (400 acres) make up a partnership called Ag Share. Talk of joining together began in the fall of 2001.
“We all know each other and understand each others' operations. And we live in close proximity — our farms are 13 miles apart from east to west and 6 miles from north to south,” Davis says. “Plus, none of us wanted to hire a full-time hired man because it would be hard to keep him busy year-round.”
The group admits that each person has his own style, but they've always gotten along well off the farm.
“It's like a marriage. You have to give and take,” Mooney says. “Two of us have a common landlord, so it made it a more natural fit. Then we talked to another machinery sharing group with five farmers north of us, at Newell. That group owns everything together.”
Now, the Ag Share group has evaluated its equipment needs and more efficiently organized its operations. “We've gotten rid of four combines, three planters, one sprayer and a few wagons,” says Mooney. All equipment use rates are based on Iowa State University custom rate schedules. The group calculates costs and settles up with each other twice a year.
The new working relationship requires extra bookkeeping, but Mooney says it's probably something they should have been doing anyway.
The group started by taking a plat book listing all 2,900 acres they farm. They then color-coded each field and divided the book into four sections, one for each member of the group. Each field has a code number that's entered into an accounting system run by Mooney's son, Marc, a banker at George, IA.
“We're recording everything we do to that land, like pesticide use, in case we're ever audited,” Mooney explains. “Once we have that complete, we'll only have one set of books instead of four.”
Since most of the members of this group have livestock, they also need more of their own equipment. Here's the equipment each member contributes to the group:
Mooney: Front-wheel assist Case IH 7130 tractor, International 1066 tractor, stalk chopper, field cultivator, sprayer and gravity-flow wagon.
Davis: International 1086 tractor, Fiat 160-90, 500-bu. wagon, 1,000-gal. high-wheel sprayer.
Quealy: International 1086 tractor, several gravity-flow wagons, a 600-bu. grain trailer and semi tractor.
Schmidt: John Deere 4555 front-wheel assist tractor, John Deere 4440 tractor, field cultivator and two gravity-flow wagons.
As a group, they own a 16-row Kinze interplant planter, a corn head, grain cart and auger. They also lease a John Deere 9650 STS combine through www.MachineryLink.com.
“Our biggest concern with the arrangement was keeping the planter and combine rolling in the spring and fall,” says Schmidt. “We had 28 rows of planter capacity before, and now we're at 16 rows. But we now have the labor to keep the 16 rows moving.
“We're also getting more efficient by getting one guy's entire farm planted at once so we don't have to clean out the planter as often,” he says. “We've even consolidated our fields some and tried to remove fences where possible.”
The group is currently working on buying inputs at a discount using their acreage as leverage.
“It's just a lot more fun to work with someone than alone. I really like the camaraderie,” says Quealy. “Although we started for economic reasons, the social aspect has been a byproduct. We usually talk as a group at the end of the day and plan for the next day.”
The group won't confidently say the arrangement will save them money, but at this stage of the game, they think so. “We have newer and better equipment with better technology, so we think it's going to come back to us in yield,” says Mooney.
Six Steps To Sharing
If you're thinking about working together with neighbors or relatives, here's advice from Terry Kastens, farm management specialist at Kansas State University, on how to make that arrangement successful.
- Get along. Learn tolerance, people skills and look for allies to farm with, not competitors.
- Don't overstate what you think you can do. “Often farmers set their sights too high on what they can do, for example, with a single machine,” Kastens says. “Have group approval to use custom work if needed.”
- Maintain meticulous bookkeeping, right down to keeping track of repair time. “Use custom rates as some sort of benchmark, especially when there are different-sized farms involved,” Kastens advises. Often, he says, farmers will set up a separate checking account or even form a business entity, like a subchapter S corporation.
- Have regular, planned meetings and don't leave anyone in the group out. It's all about communication, he says.
- Enjoy the social part of the arrangement. “It could be a lot of fun,” Kastens says. “I've seen sharing put a whole new spark into farming again, especially for someone who's been farming alone. Once you learn to compromise, you're able to share the good and the problems, and that can be a joy.”
- Be mindful that the sharing arrangement may not last forever.