How to Save Money by Sharing Machinery

November 27, 2015 05:00 AM
 
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Cutting costs without sacrificing yield might seem like a dream, but six Minnesota farmers have found a way to do just that by sharing farm equipment. 

“Six of us run our own ground separately with one line of equipment and five owners,” says Tim Malterer, farmer of Janesville, Minn., and member of Malterer Schultz LLC. “We have an established a way to share equipment in an LLC.”

By joining together, Malterer and five other farmers were able to sell off older equipment and upgrade to a newer line of technology. New technology, paired with the equipment running across more acres has increased their machinery efficiency and decreased costs. Machinery cost decreased $20  per acre, Malterer explains.

One additional benefit of a farming group is insight from six different farming operations run by farmers of varying ages and perspectives. 

“What he (Tim) brought for me was great agronomic recommendations for the crop itself,” says farmer David Schultz, who belongs to the machinery-sharing group. “I lend my experience on the financial part. I advise whether or not I think we should upgrade machinery.”

So how does their machinery sharing work? The group  worked out a system that allows them to bill each member by the acre while taking into account equipment ownership, labor and hours on the machine.

This will require some extra time and consideration when it comes to management, teamwork, and tracking machinery usage, so you'll want to choose your partners carefully. Here's what Malterer and Schultz suggest:

1. Look for similar mindsets. “It comes down to personalities, and if you have  the similar farming philosophies to make this successful,” Schultz says. If you have one person who is a cost cutter and another person who is a yield chaser, making purchasing decisions can be tough. 

2. Look for farming partners who can be flexible. If you're establishing a machinery share, it’s likely that the group will end up making adjustments to the arrangement to make it work. “You can’t sweat the small stuff,” Malterer says. 

3. Look for people you can trust with your farm financials. One of the benefits of  a machinery share is the potential cost savings for the members, so you'll need to know your numbers and be willing to discuss them with the group. “Before we buy new equipment, we talk about how it affects our cost per acre,” Malterer says. The group needs to decide if the investment makes sense for everyone.

4. Get legal advice. For tax and liability purposes, you may want to consult with a lawyer on the details of the machinery share. 

Have you or anyone you know shared machinery, either formally or informally? How did it go? Let us know in the comments. 

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