Despite the ever-rising cost of agricultural equipment, Steve Swigert said shared purchase arrangements are not necessarily on the rise.
Swigert, an agricultural economist consultant with the Ardmore, Okla.,-based Samuel R. Noble Foundation, said there may be more equipment sharing in places where farmers are laying out huge cash outlays for big tractors and combines. “
“I would say as these farms get bigger, the ones that are successful are not going to share with somebody else,” he told Ozarks Farm & Neighbor. “They’re using their equipment to the extent that they can, and really don’t have extra time for that equipment to run on somebody else’s place.”
Many times, he noted, the planting window farms are now putting into practice is pretty narrow.
West Central Region Agriculture Business Specialist for University of Missouri Extension Wesley Tucker told OFN while sharing equipment can be a great alternative, “You have to carefully discuss who gets to use it when. Depending on the type of equipment, there may be a high likelihood that everyone wants to use it at the same time. So discussing this upfront and developing a plan is essential.”
Tucker said it’s always a good idea to have a written agreement; for one thing, it forces the parties to consider all the details of the equipment sharing agreement, like who will be responsible for care of the machinery.
“Will the group designate one individual to do regular maintenance on the machine?” Tucker explained. “If so, how are they compensated for that responsibility? Or does everyone take their turn? If the equipment needs repair, is it because of normal wear and tear or a result of negligence by the partner using it? And who is responsible for fixing it in such cases? These are issues that all need to be addressed in the beginning.”
Swigert agreed on the need for a written agreement, and pointed out it can address what would happen if one of the individuals could no longer meet the terms of the agreement.
“You need a paper trail on what the expectation is for future generations or additional family members,” he said. “The difficult part about sharing equipment is you have to have producers of like mind. They need to be able to take care of the equipment correctly and to each other’s satisfaction; they have to have similar needs… You have to have a really good relationship with the individual you’re going to share with.”
In this part of the country, Swigert said custom arrangements are probably more common than the more complicated sharing agreements. Under a custom arrangement, an individual is hired to bale hay at a fixed price per bale, or disk or till acreage at a price per acre. He noted the hired party is responsible for both equipment expenses and labor.
“Another one of the complications of sharing is the quality of the equipment or the driver on both operations,” he said. “Do you hire somebody that’s going to operate the equipment on both places to get equal use and opportunities?”
Tucker said the question whether to lease or purchase equipment is not influenced by whether the equipment is to be shared. Instead, it comes down to which option would be more cost-efficient long term. “If you are only going to use a machine one week a year and you can lease one when you need it, that can be a good option,” he said. “But for equipment that you are going to use throughout the year, whoever leases the machine to you will have to cover their costs plus some for giving you that right, so leasing may be more expensive long term if you are going to have repeated use of the machine.” And, he added, he’s doubtful a leasing company would lease something to more than one individual.
