Equipment Utilization

[WVBartMan]

I have been thinking of getting into the large tractor (200+ hp) rental with an operator business. Such as pulling plows, cultivators, etc for farmers in the Ohio valley. The cost for these farmers to maintain a large tractor that they use once or twice a year may make this a nice niche business.

The average farms are under 250 acres so a large 400 hp tractor would not be practical (mobilization & cost). My question is, do you think farmers would be open to this idea, much like contract harvestors do? The second question would be what would you charge an acre for plowing or by the hour?

I know there are many factors to consider such as:
Mobilization Cost
Fuel Consumption
Equipment R & M Cost
Captial Expense on Equipment
Short window of work (spring/fall)

Any other things to consider?

I appreciate all advise and opinions, I'm merely thinking outside the box and looking for advise. Thank you for responding.

 

[cowboydoc]

I don't know about Ohio but I know it wouldn't work in Iowa or Idaho. If you're going to hire someone out to do that work then you'll just rent the ground out. Most of the guys farming that small of acreage are doing it because they love to do it. If they're farming much ground at all then they're going to have their own tractors and equipment. Plus it's like custom baling hay. When it's time to go in the field it's time to go. How are you going to be able to do enough to pay for the equipment? What I mean is unless you have some awful efficient equipment you can't spread fieldwork out over several months. You've got about six weeks to get it done and then that's it. That's why so much equipment sits for long periods. I'm not not sure what else you would be doing for farmers?? Also if they are going to hire you to do the fieldwork then they still have to have a big tractor to pull a planter and other equipment. If they have to have the tractor for that then why pay you? LIke I said I don't see where you're going to find the market but Ohio may be different than things here.

 

[btolle]

</font><font color="blue" class="small">( Any other things to consider?)</font>

Labor, labor taxes, insurance, both workman's comp and insurance on tractor and liability insurance, and the "time value" of your money.

Time value of your money is that amount of money you would earn if you invest the same amount of money in savings or a CD.

Their is also "overhead", such things as advertising, telephone, office expense, storage facilities, a large enough truck and trailer to deliver/pick up the tractor, depreciation and replacement cost of the tractors, trucks, trailers, etc.

Your best source of information might be someone who runs a wheat (or other product) harvesting crew who does contract work for farmers. Another source of information would be the farmers themselves to see if they would even consider such a service.

I would think that you would need GPS equipped tractors so the farmer would get straight rows. You are never sure about the people you hire to run the tractor. A bad driver could cost you serious money very quickly. Had some friends go bankrupt in the trucking business because (among other things) drivers would not check the oil in the engines as they should. A blown 200 HP diesel engine would put a real dent in your profits.

I have been in business for myself for 25 years and I believe that you should overestimate the potential expenses and underestimate the potential income when setting up a business so that (hopefully) you will cover anything you missed in you initial calculations.

A lot of small businesses fail to set money aside for equipment replacement.

On my Kubota B7100 I figured out that it cost me approximately $10 an hour to operate and only $1 an hour of that was for fuel. $9 was for depreciation, repairs, maintenance, etc. Does not include the time value of my investment or my labor or insurance since it was covered by my homeowners insurance.

Bill Tolle

 

[Bird]

I agree with the others that you likely would not succeed in such a business, primarily for the reasons Cowboydoc gave. There are, of course, some things that many farmers do not own the equipment to do themselves. One that comes to mind is the wheat harvest. I think very few wheat farmers harvest their own, and there are people in the business who contract to do that, starting in the south and working their way north each year.

I do know of one guy in the farming area I lived in whose business card said "Custom Farming" and he did basically what you're talking about. When I first bought my place in the country, I once hired him to come over with one of his John Deeres with a front end loader (I can't remember the model, but it was a MFWD of about 100hp). He moved a 14' x 52' mobile home into position for me and then moved 3 bucket loads of dirt about 1000' feet. He charged $100 an hour from the time he left his place. However, he made good money because he and his dad owned one of the larger farms in the area and had a lot of equipment, and also owned a country combination gas station/grocery store/hardware/used tractor/feed store on a state highway. /forums/images/graemlins/laugh.gif

 

[Hysyde]

I would agree with most of what's been said here. Cultivation is usually not something people will hire out for.

They key is to have a niche (or two spread out over the season) that you can fill. I have friends in the custom business. These are the niches they work in:

Combining (grain, corn, beans)

Spraying (eithr pull type or self-propelled)

Baling (not many people have big sqaure balers)

Manure Spreading (A guy I went school with recently borrowed $750,000 to start a liquid manure business, several have popped up in this are and they seem to be doing very well, either with big tired trucks or big tractors pulling spreaders/tanks)

Snow Plowing/Blowing in the winter

 

[Cliff_Johns]

Seems to me that if you did get a lot of business it would tend to be all at the same times of the year and the rest of the year would be fallow.

Cliff

 

[Soundguy]

I can't speak for your area.. but here in florida.. many peopl ethat have large farms ( for florida.. say..80-300 acers ) Generally have 2 tractors. Something int he 40-50 hp range for 90% of their work, and then some early model 60's or 70's ag tractor in the 90-130 hp range.. like an old ford 8000/tw-30 or case 1xxx series.. etc. The big old units pull the 20' mower, or the 18' discs, multi plows.. etc their once or twice a year stuff.. Thos old agg jobs go cheap.. ford 8000's go for 4000-6000 bucks down here. Last one I looked at was on dual rears, average shape.. and was 5K... I have looked at two case 1xxx series lately.. one was 4000 bucks.. the other was gonna need a clutch soon but otherwise operated.. asking 2500$ Lotsa hp for dollar on those old machines...

good luck!

Soundguy

 

[Egon]

Do a survey and find out if their is a market for custom cultivating.

The farming regions I'm familiar with have almost no custom work except for the ocasional combine and that usually happens after the owners crop is in. They may hire an operator for peak periods but have their own equipment. Two combines for one farm is not uncommon. They sit for 50 weeks of the year. Almost everyone has a large baler.

As others have stated renting land out seems to be the prefered method rather than custom machine work.

Also take into consideration transportation of equipment to different jobsites and living expenses when out and away.

Note: I'm talking specific area and do not know what happens in the rest of the agricultural word.

Egon

 

[HayDR]

I have to agree with the other guys here.
In the 1950's you could own a WD-45 Allis and it would do everything on any farm. Times have changed and technology has given farmers more capacity and yields. All this cost money. The key is to stay where you know there is a profit. Row crop farming costs more per acre than grass-land farming and livestock husbandry.

 

[WVBartMan]

Gentlemen: Thank you for your post and I agree with each one of you and wondered if there was even a market for it. I presently have the tractors and the farm and do some of this work for surrounding farms but wondered if venturing out may be an option. It sounds like most everyone that has a farm, has a tractor and would not be interested in contracting that portion of farming out unlike harvesting. I wonder why people contract harvesting out but not plowing/planting?

They key issue many of you brought up has to do with the small window of time available for this type of service. I'm trying to think outside the box to find ways of utilizing some of this big iron (NH8970). I do some plowing of the mountain ridge roads in the winter due to deep drifts for the state but other than that the equipment is left in the barns and only really used during spring and fall.

I do find a lot of hay work in this area for my NH TS135A and the Kubota L5030 but other than that the equipment just sits. I have been thinking of purchasing a 15 cy eject scraper to pull behing the NH8970 and do some pond construction along with minor dirt work. Any suggestions would be appreciated and thank you for taking the time to respond.

The motto my wife lives by: If it can't be done from the seat of the tractor, it dosen't get done.