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Sharing Machinery and Labor to Reduce Costs and Manage Risk

William Edwards

Summary

Small and medium-sized farmers can reduce their capital investment and increase their labor flexibility by sharing ownership and operation of machinery. Sharing arrangements can vary from two people jointly owning one machine all the way to multiple operators forming a separate legal entity and completing all their field work as a team. Having multiple operators working together reduces the risk of field work being delayed due to illness or other emergencies. Down time due to unfavorable weather can be reduced by spreading machinery use over a large area. Beginning farmers can obtain the use of a complete line of equipment with a smaller capital investment. The sharing arrangement also can be used to eventually transfer ownership from the older to the younger generation.

A Risk Management Education grant helped fund a series of workshops in Iowa and Missouri for producers interested in sharing labor and equipment. Ten case studies of actual machinery sharing agreements were developed and used to stimulate discussion in the workshops. An 87-page manual containing the case studies and other workshop materials was produced and published by the Midwest Plan Service. Two electronic spreadsheets for summarizing and allocating costs of jointly owned equipment were developed and made available. A follow up survey of 37 workshop participants showed that 76% shared labor and 68% shared machinery as a result of attending one of the workshops. The average savings obtained in the past year from sharing was $7,162 per producer.

Details

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