The average combine runs only 20 to 30 days a year, but 50% of combine depreciation occurs in the first three years. MachineryLink's new Farmer to Farmer machine sharing program gives growers the chance to keep returns flowing, even during off-season idle time.
"It's a result of what producers are experiencing in Texas, Oklahoma, Colorado — the devastation of the weather," says Dan Alcazar, vice president of sales and marketing.
Knowing many producers have underused equipment, Farmer to Farmer lets growers maximize usage by moving newer combines between farmers harvesting at different times.
"I use my machines 90 to 110 hours in the summer and then 70 to 80 hours in the fall on my crops," says Darrell Kuhn, a Lakin, Kan., farmer and custom harvester who is signed up for the program. "I want to be able to harvest my crops with late-model machines."
It works like this: A farmer signs a lease, and after harvest, MachineryLink packs up the machine, after the farmer has made appropriate repairs to bring the machine into field-ready condition. Then the company transports the combine to a producer in a different part of the country, assuring the owner that he'll have a combine back well ahead of his next harvest.
"It allows us to create cash flow for the farmer," says Alcazar. "A grower could get $40,000 to $50,000 a year for the program – well over 1,000 acres of profit."
"It's good because the machine is running and collecting revenue," Kuhn says. "What I like about it is that I can own the combines I need to cut my crops in summer and fall, and then [MachineryLink] will go through the logistics of moving machines."
Trickle-down benefits of combine sharing >>
The benefits trickle down, Alcazar says. MachineryLink gets access to newer machinery at better rates. The local dealer benefits because the producer has cash in his pocket to afford another machine. The cooperative benefits with its customer having more money on hand for inputs.
The program will operate on late-model-year combines. A 5-year-old model, for example, won't work. "It allows growers to get into newer technology than they would otherwise be able to," says Alcazar.
At its core, the idea isn't new. Back in 2012, Farm Futures reported on four farmers from three states who are sharing combines to boost efficiency and lower fixed costs.
That program, however, requires a leap of faith, from four guys who met at an industry conference and decided to embark on mutually beneficial venture.
Relax with guarantees
MachineryLink knew that to make their program appealing to the general farmer populous, they'd need to put some guarantees in place.
Unlike our four farmers' neighbor-to-neighbor program, Farmer to Farmer doesn't require that you place your trust in the other farmer. You sign a contract with MachineryLink, giving you the assurance that your combine will return in as good if not better condition than they received it.
MachineryLink mechanics work only on combines and run a 300-point checklist on all returning machines.
Traveling combines have a timeline >>
"They take care of all the service work and warranty work — that's part of the deal — so once they come get my machines, the only thing I need to be concerned about is getting the hour reading," says Kuhn. "Then I should be able to unload it off the truck and go directly to the field."
A typical cycle might start after the Texas wheat harvest ends, with combine pickup in early July. The machine may travel to Indiana for corn and soybean harvest, and then be renewed and back in the original farmer's shed by January, well in advance of harvest.
"Initially, we're targeting the wheat states: Texas, Oklahoma, Colorado, Kansas," Alcazar says. "We have interest from large growers with extra combines, where if they consolidate their combine use, they don't have to use their fifth combine."
The program will pilot this year, paying farmers on an hourly basis, based on the potential hours they can run the producer's machine. A minimum payment (200 separator hours for a new combine, 100 hours for used) is guaranteed. If a new machine is rented for 320 hours at $125 per hour, a producer would receive $40,000.
It's an alternative inventory source for MachineryLink, and added cash flow that resonates with growers. Says Kuhn: "It'll more than make payments on a machine."
Hohenstein writes from Decatur, Ill.