It's a case where 1 + 1 does indeed equal 3. Or, as Illinois farmer Paul Taylor likes to say, “There's a synergy.”
He's talking about his farming partnership with Paul Schweitzer. They share equipment and labor to make their mid-size farms more profitable.
Before they joined forces, both men had roughly 1,000 acres and a line of equipment to farm those acres. The last few years, however, they've bought and leased equipment big enough to farm all the land as one unit.
“I did some custom combining for Paul in 1997,” says Schweitzer. “We started talking about how similar our farms were. That led to talking about owning a combine together.”
As a result, the two farmers bought the combine, which was cheaper than leasing, in 1998. “It made sense for me to be able to run more acres through my machine, and Paul could own half a combine, rather than pay to have his crop harvested.”
The combine then led to a tractor. “We both had older 4WD tractors and were concerned about their dependability,” Schweitzer adds. “So, in the fall of 1999, we leased a 240-hp FWA tractor. We're thinking about selling both our 4WDs and leasing a second tractor. Our biggest worry is major repair bills on the old tractors.”
Taylor and Schweitzer decided to lease the tractor because that option was cheaper. “With the leased tractor,” Taylor says, “we use 3.5 gallons/hour less fuel and get more productivity. And it's a lot nicer equipment to farm with.”
The next step was buying a used 24-row planter and completely rebuilding it — together — to replace their two 12-row units. “We're willing to do some things together that we might not feel like doing by ourselves,” admits Taylor.
For less than $30,000, the nearly new planter easily handles the combined acreage. And, with bigger equipment, they plant more slowly and do a better job.
“I wanted a 24-row unit so I could plant at 4.5 mph,” says Taylor. “Last spring we were still able to plant all of our corn in just four days.”
Both make their own decisions on seed and chemicals, but double check with each other to mix maturity dates. They belong to different buying co-ops and buy seed, chemical and machinery from whichever is cheaper. They hold a joint account as well as individual ones at their local implement dealer.
“We farm as if it's a 2,000-acre farm,” says Schweitzer. “We keep track of tractor and combine hours, and the hired man keeps track of his hours for each farm. At the end of the year we're usually within $1,000 of each other. If one of us expands, it's not a problem. It just changes the ratio.”
Neither has enough dryer capacity to run continuously. So, just like at planting, they move equipment between farms, depending on what fields are ready to go. With a 12-mile spread among their various fields, it's rare that they can't harvest somewhere.
Machinery efficiency isn't the only advantage of farming together. “I used to wonder what would happen if I got laid up,” says Schweitzer. “Knowing that Paul is there relieves a lot of worry. And now I can take a day off if I need to.”
Taylor credits the duo's success to several factors. “We developed a relationship through Farm Bureau activities before working together. And we're still careful to not overdo the social side of our friendship,” he says. Plus, they're both interested in new technology and are computer literate, he adds.
The partnership's future has to stay flexible. “We both have sons in college, so we've kept the operations separate in case either wants to come back and farm,” says Schweitzer. In the meantime, the two men have the flexibility, and equipment, to add acres either individually or together.
Trust Runs Deep
After five years, a simple handshake still cinches a partnering deal for three farmers in central Minnesota.
In 1996, Mike Yost, Murdock, MN, sat down with his good friend and neighbor, Bill Cain, to map out a plan to share their farming expertise. They both needed additional labor, but didn't want to hire full-time help.
“That's how it all started,” Yost says. “I already had one full-time employee I couldn't keep busy enough in the winter. So I didn't want to hire more help.”
For Bill Cain, the equation was more complex. Besides the labor issue, he no longer wanted to own the high-priced equipment it took to continue farming. Yost had the full line of equipment.
So the negotiating began. “Bill and I figured out what our time was worth,” Yost explains. “Bill was farming and driving a truck in winter. He knew what he needed to make in a day. With that and the use of the University of Minnesota's and Doane's custom rates, we figured out our rates.
“These days, everyone is trying to cut costs of production. We're the same,” Yost says. This year, another neighbor, Chuck Walsh, entered the arrangement. For almost 20 years he'd been custom combining in the neighborhood. Now the three landowners have figured out rates for his part — including the combine — of the partnership, too.
From a business perspective, here's how the arrangement works:
Cain provides labor from when fieldwork begins through harvest. He gets paid an agreed-upon amount per day.
Walsh provides labor in spring and fall, not summer, when he's busy with a side business. He also provides a combine for bean harvest and is in charge during planting and harvest, getting the equivalent of about $18/acre for his labor and use of the combine.
Yost provides equipment and makes agronomic decisions, like fertilizer, seed and chemical purchases, for all three. He does not advise anyone on marketing. He also coordinates daily operations and applies most of the chemical. As an added benefit, Mike's dad, Bill Yost, helps out.
Bill Yost and the full-time employee do most of the tillage. Cain and Walsh plant, and all help during harvest.
“It works great for me,” says Cain, who sold his equipment five years ago. “After the kids and their friends were gone, I just couldn't find good help. This is a good mix now, and I really like the trust I have with these guys.”
Walsh agrees. “It works fine for me, too, especially since labor is harder to come by. And I really like not having to work alone. I need the camaraderie.”
With volume discounts, Yost says the group saves about 3-4% on input costs. “When it's all cut and dried, we probably save almost $10/acre with this arrangement. That's enough to send one of my kids to college for a year.”
Except for a few written notes, the only formal part of the deal is an annual fall meeting — with wives — where they settle up for the year and plan for the next.
“We're known quantities; we know what to expect from each other,” Yost says. “The guys have confidence in my selections and I have confidence in them. Everyone is willing to compromise and go a little more than half way.”
Walsh sums the arrangement up best: “After 30 years of friendship, our trust level runs deep.”
The Value Of Sharing
“Machinery-sharing arrangements are gaining popularity and may be a necessity for survival in the years ahead, especially if farm programs change significantly,” says Moe Russell, Russell Consulting Group, Panora, IA.
“It's not a new concept. My father did this with his neighbors 45 years ago, and for the same reasons. Then farming got too good and we could all afford our own machinery.”
Remember, he adds, that not all arrangements work. “I recommend written agreements, although having things in writing won't make all arrangements work either. More importantly, you need to have compatible philosophies on equipment care and handling and be willing to give and take to meet long-term goals of the agreement. What can go wrong usually does, and the problems need to be worked out.
“If an agreement doesn't work out, get out of it. But don't give up. There is potentially a $20-50/acre savings with these arrangements,” he adds. “No other industry invests the amount of capital in machinery and uses it for only several weeks or months in a year.”