The run-up in cash rents prompted two Red River Valley farmers to join forces to stay profitable. Gaylen Affield and Jared Nordick raise corn and soybeans in the rich glacial soils of ancient Lake Agassiz, along the Minnesota-North Dakota border. The Wilkin County, MN, growers also operate two successful farm-related businesses together – a Precision Planting dealership and an excavation service. After both men lost leased cropland to rising cash rents, they teamed up on their farming operations, too.
By pooling their equipment and labor, they’ve lowered their machinery costs and increased their labor efficiency, they say. Affield gets access to a full line of recent, fuel-efficient equipment, which he couldn’t afford on his 500-acre farm. Nordick gets the skilled help he needs to run his family’s 1,500-acre operation. And for Jared Nordick’s father, Gerald, the team approach lets him concentrate on his Pioneer seed customers.
“By joining forces, I think we’re doing a better job of farming,” Jared says.
“I see quite a bit of cooperationoutside family groups,” says Keith Torgerson, a farm-management instructor at North Dakota State College of Science at Wahpeton. He advises half a dozen groups of non-related farmers who work together, including Affield and the Nordicks.
Common ways that farmers team up include sharing combines and harvest labor, lifting sugar beets, and going together to buy larger planters, he says. “They might go from a 12-row to a 24-row planter. They get the newer technology, they can finish planting quicker, and they free up a man to do digging or other tasks.”
In fact, Torgerson adds, “A lot of equipment sharing is done just as much for labor efficiency as for equipment efficiency.” Skilled labor is a critical need for farms he calls “’tweeners” – mid-sized operations that are too large for one farmer working alone, but not big enough to employ full time help.
Working with another professional farmer can be a good way to solve this labor crunch, and get reliable, experienced help, too, Torgerson says. “These days, a screw-up can cost a lot of money.”
Gaylen Affield and Gerald Nordick, both 61, have been friends since high school. Gaylen helped Gerald occasionally at harvest, and “we talked about joining forces back in the 1980s and again in the 1990s,” Gaylen says, but the circumstances were never quite right.
In the winter of 2000, Gerald’s son, Jared, was finishing up his college degree in farm management and looking for opportunities. For some time, the Nordicks had been dissatisfied with their planter’s performance. That led them to a new line of after-market planter attachments from Tremont, IL-based Precision Planting, which promised greater accuracy in seeding depth and spacing.
“We got interested in being a Precision Planting dealer,” Jared says. “Gaylen and I decided to start a business together. We figured it would be a good fit and give us something to do in the winter to supplement farming.”
The two men enjoyed working together on the new venture. Jared took on the main sales effort, and both men handle equipment installation and troubleshooting. Over the past decade, they’ve grown the business into a year-round enterprise. This partnership set the stage for future collaborations.
In fall 2006, as Midwest farmland values and cash rents began to climb, Gaylen lost 800 acres of leased cropland. “I didn’t want to pay the rent they were asking,” he says. His farming operation shrank from 1,300 acres to just 500 acres. “I needed more income. Jared said, “Let’s buy a full swing backhoe together.”
The two launched their second partnership, Meadows Excavating, to do ditch cleaning, farmstead demolition, site preparation and foundation work. The business quickly took off.
In 2008, just two years after Gaylen lost his rented ground, Jared also let a half section of leased land go to higher bidders. “I’d only been farming for a few years.” His dad, who lived through the Farm Crisis years in the 1980s, advised Jared to be cautious about taking on higher land rent. “I decided to let the land go.”
A partnership is formed
At that point, neither grower had enough acreage to make the most profitable use of a full set of machinery, so it made sense for them to start working together on their farm operations, too. “It was forced on us, to some extent,” Jared says.
The two farmers pooled their equipment. Gaylen no longer needed a planter and combine. The Nordicks traded their older combine for a fuel-efficient 585R Lexion with tracks, which has been really helpful during the recent string of wet falls. The Nordicks also own two John Deere planters and two Cat tractors, plus a DMI tillage tool. Gaylen supplies a Cat tractor, grain cart, tractor-trailer rig “and my labor.”
Sharing machinery lowers each farmer’s total equipment investment. It also holds down their per-acre machinery costs, despite the loss of more than 1,000 acres between them. “This enables me to keep farming,” Gaylen says.
Machinery costs account for some of the biggest differences in farm profitability, Torgerson says. According to FinBin, a farm financial database of nearly 5,000 farms in Minnesota, North Dakota, Missouri and Nebraska, 2010 machinery costs for corn on the top 10% of farms were $60/acre lower than the group median of $122/acre. That’s largely a function of acreage, Torgerson says, which shows the importance of matching machinery investment and acres.
Today, Jared’s farm shop serves as operations headquarters for both the Affield and Nordick farms, which are seven miles apart, plus the team’s Precision Planting, excavating, and seed businesses.
Working together lets them specialize to a degree, spending more time doing what they like best. Gaylen generally does the planting and combining for both farms and runs the excavator.
Jared manages tillage and fertility, and handles logistics, delivering fuel, seed and fertilizer for both operations. “I see that everything is all set to go every morning. Efficiency is my No. 1 thing. I don’t want to see the tractor or combine idling.”
Each farmer buys his own inputs and fuel, does his own machinery repairs and maintenance, and keeps his own farm books.
But they don’t keep track of shared machinery hours or contributed labor and have no written agreements.
“We’re pretty loose,” Jared says. They feel their informal working arrangement is fair all around, and they don’t want to worry about “dividing up every penny,” Gaylen says. The two men confer daily and rarely disagree, they say. “We think a lot alike,” Gaylen says.
In some ways, Jared and Gaylen are quite a contrast. Jared, 33, is a young father beginning his career; Gaylen, nearing retirement age, has nearly 40 years of farming experience. Jared is intense and talkative; Gaylen is easy-going and quiet. Jared enjoys sales; Gaylen prefers running machinery.
Yet despite these differences, their goals, work habits and values are well matched, they say. “We’re compatible,” Gaylen says. “We get along.” Quips Jared: “It’s almost like being married.”
It’s Like A Marriage
The comparison of machinery sharing to marriage is apt, says economist Georgeanne Artz, co-author of a handbook on farm machinery and labor sharing. Artz, currently a visiting professor at Iowa State University, has studied both successful and failed groups.
Farmers who inquire about sharing arrangements are usually focused on crunching the numbers, “which, in a way, is the easiest part,” Artz says. The bigger challenge is finding a good match between farming operations and personalities, she says. “More and more, I’m struck by how much it’s like a marriage.”
Keith Torgerson has seen partnerships founder on seemingly trivial personality differences: “If I polish my equipment before it goes in the shed, and you put it away dirty, sharing ain’t gonna work.”
Artz says, “You have to be flexible to do this. If you’re too rigid, it won’t work.” Deciding whose farm gets worked each day requires some give and take, Gaylen and Jared agree, especially in a wet year. The soils on their two farms range from “cold, wet sand, to dry sand, to gumbo,” Jared says, so it’s usually pretty clear which fields are fit. “We haven’t had any issues with that,” Gaylen adds.
“The key to any of these sharing arrangements is common objectives and good communication,” Torgerson says. Gaylen and Jared, who work together year round, are a good match, he says, and their handshake partnership works fine for them.
In most cases, though, he and Artz advise farmers to have a formal, written agreement, “especially if you own equipment together, or even if you are doing just one or two operations together,” Torgerson says.
One of the groups he works with, for example, owns four pieces of machinery in a joint venture. Their agreement specifies hourly rates for each implement. They record usage all season and settle up at the end of the year. The agreement also stipulates a buyout procedure if a partner wants to get out of the joint venture.
Artz and colleagues William Edwards and Frayne Olson have put together a guidebook for farmers who are interested in working together. “Farm Machinery and Labor Sharing Manual,” published by Midwest Plan Service (www.mwps.org), offers nuts and bolts advice, including:
• Sample agreements,
• Ways to structure agreements and allocate expenses and labor,
• Spreadsheets for allocating machinery investments and ongoing operating expenses,
• Tips for choosing compatible partners, and
• Exit strategies.
Going beyond machinery and labor sharing?
Equipment sharing is the most common way that unrelated farmers work together, says Iowa State University Extension economist Georgeanne Artz, author of several case studies on sharing arrangements.
Family groups usually go together to buy inputs and supplies, too, she says, but collective buying seems to be less common among groups of unrelated farmers who work together. Her surveys suggest that loyalty to local dealers trumps volume discounts.
“Personal relationships with dealers and suppliers are really important to farmers.”