Farmers share farm machinery to save costs

During these tough economic times, small- to mid-sized farmers are reducing their machinery costs by owning equipment jointly to save money.

“Teaming up can make a big difference — especially for small-to mid-sized farmers whho have 400 to 600 acres,” said William Edwards, professor of agricultural economics at Iowa State University. “Large farmers are so big that they can get all the economies of scale out of the way, while smaller farmers hire out much of these things since they can’t afford to purchase their own equipment.”

According to Ohio Ag Manager, joint ownership of farm machinery offers medium and small farmers a chance to reduce costs per acre and increase labor efficiency. Potential savings exist in several areas, including:
  • Greater annual use of large-ticket machines
  • More efficient use of labor during peak fieldwork times
  • Fewer weather delays because fields are more spread out
  • Opportunities to do custom work for other operators or landowners
  • Greater use of individual operator skills and specialized labor
  • More efficient use of repair and maintenance tools and facilities
  • Volume discounts on purchases of inputs and supplies
A recent study estimated that three medium-sized grain farms (1,500 acres each) could combine their equipment and reduce their total machinery costs per acre from $44.66 to $28.75 using conventional seeding technology, as well as reducing costs from $37.93 per acre to $25.36 per acre using direct seeding technology. (Harris and Fulton)

The key to successful joint ownership is for the partners to be able to agree about when and how to use each piece of equipment. Depending on weather and crop conditions, decisions may have to be made on a day-to-day basis. The objective is to complete fieldwork for all farmers in a timely manner while minimizing the time spent transporting machinery.

Farmers who are interested in learning more about joint farm machinery ownership can read the Farm Machinery & Labor Sharing manual written by the North Central Farm Management Extension Committee. It details both operational and organizational issues and provides sample sharing agreements and worksheets for allocating costs fairly among farmers.

What are your thoughts about sharing farm machinery? Do you or do you know a farmer who shares his/her farm equipment with another farmer? Has the experience been beneficial or has there been pitfalls?

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1 comment:

allisonmarks said...

Hello guys!!
It is really a great idea for small to mid sized farmers by reducing their machinery costs by owning equipment jointly to save money. I think if farmers will go with this idea they can earn huge profits and save money.
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