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?

Photo obtained from: www.kellyharrows.com

What experts, advisers need to know about farmers

This week, I’m featuring a guest author. Dr. Val Farmer, a clinical psychologist specializing in family business consultation and mediation with farm families authored the following piece, which is a great reflection of the mindset of the American farmer.

*As originally printed in Farm & Ranch Guide, May 4, 2011
Author: Dr. Val Farmer


Which occupational group rivals physicians in receiving unsolicited mail? Which occupational group consumes a substantial portion of our nation’s industrial output and is the focus of persuasion from scientists, economists, financiers, legal and tax advisors, policymakers, extension agents and representatives of agribusiness?

If you are a regular reader of this column, you probably guessed it. Farmers and ranchers are the targets of intensive efforts of persuasion and education. But how well do people trying to influence them understand their motivations and needs? What do they need to know about farmers to be successful?

Long-term view. Farmers love their profession. Curiosity about life and growth, internal standards of excellence and a continued commitment to improvement offer a creative challenge. Farmers are applied biologists trying to manage the forces of nature and fashion a livelihood for their families.

Experience on the land gives them an understanding and appreciation of its productive capacity. Farming is never done. Tomorrow and the children’s tomorrows depend on wise stewardship of natural resources.

Farmers are committed to the continuity of their operations and take a long-range perspective on innovations. They can’t afford serious mistakes. Farmers gather information from many sources and are conservative in risk-taking. The vagaries of weather, cost of production and market conditions add to their reluctance to expose themselves to high-risk situations.

No cushion. Agriculture as a whole is an industry under stress. The farmer operates in one of the freest segments of a global market economy. There is no fixed or guaranteed income. There is no employer to take the risks or smooth over the shortfalls. Living with uncertainty and stress is the price they pay for freedom.

The freedom and control farmers experience is greatest when it comes to decisions about the use of the human, financial and natural resources at their disposal. Farmers resist control from outside but are usually amenable to influence. Within their span of control, the fabled independence of farmers is real.

Making a profit is crucial. Why should a farmer adopt a new idea or product? Experts often lose sight of the fact that their primary objective ought to be the economic success of the farmer. Convince a farmer that he or she can materially benefit from an innovation and that the costs of implementation are affordable, and it is likely they will do it.

Technical experts such as scientists and economists have to bridge the gap from theory to practical application. The expert with the security of a fixed income may forget about the bottom line.

There is no shortage of creative ideas or potential improvements, but there is a shortage of resources. If resources were abundant, action-oriented farmers would look hard at changes they would like to make.

Communication and relationships. As much energy needs to be put into presentation and communication as is put into basic research. Technical experts often neglect communication and persuasion and then are mystified why their work isn’t appreciated or adopted. Purists enamored with the technicalities and the ideal quickly lose their audience. They can’t see the prairie because of the grass.

Many excellent ideas are developed in another context. They have to be adapted to specific conditions. A good idea for one particular operator may not be a good idea for everybody.
Part of being an expert is to know a lot about a small part of the total system. A technical expert would do well to read and study broadly in related fields so that the information fits a context. The race they are running may be in their own bathtub.

Some of the experts are also inclined to be parochial to their institution or their school of thought instead of championing an idea because of its merit. What makes people persuasive is the honesty they bring to the entire discussion rather than selling a particular product.
The expert who comes on too strong forgets that his job is to influence, not control. The farmer doesn’t forget who actually makes the decisions and who has to live with the consequences.

Farmers respect results. They respect their peers. If four or five esteemed operators from a given community try an innovation and make it work, then it won’t be long before the rest will want to try it. Educational efforts can be directed at those farmers who are progressive and in an economic position to experiment.

Helping someone else succeed is a tremendously satisfying experience. The people supporting the farmer will succeed in their effort when they, along with the farmer, are able to look at the prairie instead of the grass.

Some people have too much pride to accept an idea if they don’t have it first. They prefer to hang back and criticize the others. They are not secure enough in themselves to entertain an outside idea on the basis of its value instead of judging its source.

Timing is everything. The timing of a new idea may be poor. A person under intense pressure may not be objective about new ideas. Similarly, a person who has already decided on a course of action or just mastered a skill will not want to change horses in midstream, no matter how good the other horses might be.

Photo obtained from: projectwordpress.org

What does the Colombia Free Trade Agreement mean for U.S. farmers?

U.S. farmers and ranchers have been losing market share in Colombia to competitors who have trade agreements with the country. Colombia has duty-free access to the U.S. market, while U.S. products face excessive tariffs to sell to Colombia’s market.

When implemented, the Colombia Free Trade Agreement (FTA) will level the playing field for U.S. farmers and ranchers by eliminating these tariffs.

After months of negotiations, congressional talks about a free-trade deal with Colombia are now moving forward, setting the stage for lawmakers to move ahead with similar agreements with South Korea and Panama.

Yahoo News reports that in a letter to lawmakers, U.S. Trade Representative Ron Kirk said that while Colombia has more work to do, the country was effectively putting in place the initial phases of the labor agreements, therefore, the administration felt confident in starting talks with lawmakers.

While agreements have been settled with Korea and Panama for awhile, lawmakers threatened to block them unless the White House also finalized agreements with Colombia.

“The Colombia, South Korea and Panama agreements will create expanded markets for American farm and ranch products and boost the overall economy, said Bob Stallman, American Farm Bureau president. Together, the three agreements represent nearly $3 billion of additional agricultural exports from the United States and could generate as many as 27,000 new U.S. jobs.”

But what specifically does the Colombia FTA mean for U.S. farmers?

According to an article in Ohio’s Country Journal, the Colombia FTA will benefit soybean farmers immediately by eliminating soybean, soybean meal and soybean-flour tariffs ranging from 5 to 20 percent, as well as phase-out the 24 percent tariffs for crude soybean oil throughout 10 years and refined soybean oil throughout five years. The agreement will provide immediate duty-free access for crude soybean oil with a 31,200-ton quota with 4 percent annual growth.

The National Corn Growers Association states that the Colombia FTA would provide immediate access for U.S. corn growers to Colombia’s roughly 2.1 million metric-ton market for corn at 0 percent duty.

During the 2007-2008 marketing year, the U.S. exported 114 million bushels of corn to Colombia, with an estimated value of nearly $627 million. U.S. corn exports declined dramatically during the 2009-2010 marketing year, with only 36 million bushels exported, valued at $152 million. The decline in exports reflected a loss of $475 million to the U.S. economy.

As for wheat farmers, they face a potential loss of sales currently valued at about $100 million per year without the Colombia FTA.

These free-trade agreements have an obvious importance to the agriculture industry; it will be a great day for celebration when they are effective. What are your thoughts about these trade agreements? Will you or any farmers who you know benefit from the agreements?

Photo obtained from: csmonitor.com