Machinery Co-Op Lowers Costs By More Than Half

2002 - Volume #26, Issue #4, Page #33

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Four Canadian farmers have decided the best way to deal with the ongoing cost-price squeeze in agriculture is to take a lesson from history and form a machinery co-operative. Their decision has led to lower costs and higher profit margins.
  In the winter of 1995, Kipling, Sask., farmer Gordon Sproat approached three local farmers with the idea of forming a machinery co-op as a way to deal with the challenges of updating and increasing the use of the latest technology on their farms.
  "Technology comes with a price," says Sproat. "Sometimes the only way to justify the cost is to spread it out over more acres of land. Allocating our acres to a co-operative was the best way to do it."
  Sproat admits the idea is not new. "Farmers have been doing these kinds of things for a long time. Sharing equipment is what brothers and sisters and families have been doing for years. But we're not related."
  Sproat says prospective members for the co-op were chosen carefully. "We wanted people who were interested in farming progressively, and were open-minded people who could get along together."
  Gordon Sproat, Lorne Rych, Russell Roberton, and Fred Cunningham worked out the details of their arrangement in the winter of 1995, putting their plan into action in the 1996 crop year.
  Equipment from the four farms was pooled together and used as equity to leverage a loan at the local credit union. They used the loan to upgrade the equipment that was needed to more effectively manage their collective 7,000 acres.
  "Between the four of us we were able to justify owning a high-clearance sprayer, which none of us had. That has been one of the biggest benefits we've had out of it," says Sproat.
  "As individuals we've dropped our costs to the point where most people find it hard to believe. In my case, I lowered my total costs from about $35 per acre down to about $15," says Lorne Rygh. "As smaller farmers, we'd never have had access to the sort of equipment we have as a group: large, effective, new and the latest technology," he adds.
  The farmers are quick to note that independent decision-making and management of the farms isn't hindered by this partnership. "We share machinery and machinery only," explains Sproat. "Individually, we provide the fuel for the equipment when it's on our farm. It's full when it arrives on your farm and full when it leaves. It's our responsibility as individuals. The machinery co-op handles the maintenance."
  Since not all four co-op members have the same amount of acreage, maintenance costs are shared on an acre-by-acre basis.
  "Since I have 40 to 45 percent of the acreage, I pay 40 to 45 percent of the costs. That's also the way the capital cost was handled. It's simple and straightforward. It's pretty tough to hammer it out to a fine line because there's nothing that is a fine line in farming, but it works quite well," says Sproat. "The question is always asked at the meetings I speak at - who gets to do their work first, and how do you address the fellow who has to wait?" says Rygh. "Well, the equipment is large enough that relative to what you would have on your own farm, you accomplish the task so much quicker that time isn't a major factor. It used to take me about three weeks to do my own seeding, but now I'm done in only about six days. Those six days may occur over the same 21-day period, but in the meantime we have seeded two other farms.
  "Generally, the idea is that when you're at your own place you operate the equipment and the other fellows may fill in for an hour or two while you go and get seed, or they may bring out a load of fertilizer for you. So, in the spring it isn't steady at everybody's place like it is at harvest. We just fill in a couple of hours now and again to keep things going. Because, of course, the more we help out there, the quicker we get the machine back."
  During harvest, co-op members work more closely together. The equipment goes to whichever crop is ready first. The person whose farm they are at hauls his own grain and the other individuals drive the harvesting equipment. This

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Machinery Co-Op Lowers Costs By More Than Half SPECIALTY/SERVICES Specialty/Services 26-4-33 Four Canadian farmers have decided the best way to deal with the ongoing cost-price squeeze in agriculture is to take a lesson from history and form a machinery co-operative. Their decision has led to lower costs and higher profit margins. In the winter of 1995, Kipling, Sask., farmer Gordon Sproat approached three local farmers with the idea of forming a machinery co-op as a way to deal with the challenges of updating and increasing the use of the latest technology on their farms. "Technology comes with a price," says Sproat. "Sometimes the only way to justify the cost is to spread it out over more acres of land. Allocating our acres to a co-operative was the best way to do it." Sproat admits the idea is not new. "Farmers have been doing these kinds of things for a long time. Sharing equipment is what brothers and sisters and families have been doing for years. But we're not related." Sproat says prospective members for the co-op were chosen carefully. "We wanted people who were interested in farming progressively, and were open-minded people who could get along together." Gordon Sproat, Lorne Rych, Russell Roberton, and Fred Cunningham worked out the details of their arrangement in the winter of 1995, putting their plan into action in the 1996 crop year. Equipment from the four farms was pooled together and used as equity to leverage a loan at the local credit union. They used the loan to upgrade the equipment that was needed to more effectively manage their collective 7,000 acres. "Between the four of us we were able to justify owning a high-clearance sprayer, which none of us had. That has been one of the biggest benefits we've had out of it," says Sproat. "As individuals we've dropped our costs to the point where most people find it hard to believe. In my case, I lowered my total costs from about $35 per acre down to about $15," says Lorne Rygh. "As smaller farmers, we'd never have had access to the sort of equipment we have as a group: large, effective, new and the latest technology," he adds. The farmers are quick to note that independent decision-making and management of the farms isn't hindered by this partnership. "We share machinery and machinery only," explains Sproat. "Individually, we provide the fuel for the equipment when it's on our farm. It's full when it arrives on your farm and full when it leaves. It's our responsibility as individuals. The machinery co-op handles the maintenance." Since not all four co-op members have the same amount of acreage, maintenance costs are shared on an acre-by-acre basis. "Since I have 40 to 45 percent of the acreage, I pay 40 to 45 percent of the costs. That's also the way the capital cost was handled. It's simple and straightforward. It's pretty tough to hammer it out to a fine line because there's nothing that is a fine line in farming, but it works quite well," says Sproat. "The question is always asked at the meetings I speak at - who gets to do their work first, and how do you address the fellow who has to wait?" says Rygh. "Well, the equipment is large enough that relative to what you would have on your own farm, you accomplish the task so much quicker that time isn't a major factor. It used to take me about three weeks to do my own seeding, but now I'm done in only about six days. Those six days may occur over the same 21-day period, but in the meantime we have seeded two other farms. "Generally, the idea is that when you're at your own place you operate the equipment and the other fellows may fill in for an hour or two while you go and get seed, or they may bring out a load of fertilizer for you. So, in the spring it isn't steady at everybody's place like it is at harvest. We just fill in a couple of hours now and again to keep things going. Because, of course, the more we help out there, the quicker we get the machine back." During harvest, co-op members work more closely together. The equipment goes to whichever crop is ready first. The person whose farm t

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