April 1998
Machinery Link Helps Make Seasonal Equipment Affordable
By Stephanie Sorensen
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Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
Hundreds of advertising dollars later, they were successful. But they decided there must be a cheaper, more reliable way for farmers to network with other farmers across the nation. So they founded Machinery Link Company, a clearinghouse with a database to match farmers who want to co-own or lease seasonal equipment together.
Ray Fegley is one farmer who used Machinery Link, with success. Fegley and his brother, Clayton, farm together near Berthold, ND, and were looking to buy a combine last year. After reading about Machinery Link, Fegley called the Goverts and added his name to the database, which currently has about 550 listings by 170 members across 18 U.S. states and Canada.
Shortly after that, Fegley received a list of 50 potential matches, and contacted about a half dozen. He found Dean Dambroten, a corn, soybean and sugarbeet grower in Sacred Heart, MN, who also farms with his brother. After a few months of discussion by phone, the Fegleys and the Dambrotens decided to jointly purchase an R72 Gleaner combine.
Keeping clear of legal sand traps
On the recommendation of the Goverts, Fegley and Dambroten hired a lawyer to make their business transaction as clear and formal as possible. This gets a thumbs up from NDSU extension ag economist Dwight Aakre as well; part of the downfall of co-owning equipment in the past may have been due to ambiguous, informal contracts between some farmers.
To keep their operations separate except for joint-ownership of the combine, the Fegleys and Dambrotens formed a Limited Liability Partnership, or LLP. With this, not only would each partner be protected from any potential mishaps related to the other's farm, but they could sort out the possible difference in number of hours that each used the combine.
Fegley and Dambroten each keep track of hours spent on the combine and pay a per-hour rent to the LLP. At the end of the year, they pay in to the partnership according to the number of hours they used the machine. Then they divvy up the total amount in the LLP equally among them. At tax time, the partnership necessitates filling out only one form.
Storage and transport was also negotiated in the agreement. Fegley and his brother harvest wheat in August and September; Dambroten begins his corn and soybean harvest just after that. Fegley agreed to deliver the combine to Dambroten by September 20 each year. Fegley hired a local custom hauler to haul the combine from North Dakota to Minnesota. After harvest, Dambroten stores the combine until April, when he hauls it to Fegley to store until fall.
Savings compensate for hassle
Fegley estimates that he saved 40% off the price of buying a combine by himself by partnering with Dambroten. That includes the costs of setting up the LLP (about $800) and hauling the machine back and forth (about $2,000). The two men are thinking of buying a tandem grain truck with a combine trailer to save on transport costs and for use during harvests.
"You also have access to a new combine and can control your repair costs," says Dambroten. He and Fegley plan to trade in the combine every two years to keep repair costs down.
Divvying up repair costs is just one of the potential pitfalls in co-owning machinery, cautions Aakre. He urges growers to have as many details as possible worked out before entering into a partnership.
Ask your potential partner what specifications he needs on the piece of equipment you want to buy. The combine bought by Fegley and Dambroten needed to have dual tires for Dambroten's narrow-rowed crops and a return-to cylinder for Fegley's wheat.
The speed of your success in finding a partner depends on the type of equipment you're looking for, says Govert. Combines and tractors are the most popular pieces of equipment to share, while a specialized piece, such as a sweet corn harvester, may take longer. Machinery Link offers a money-back guarantee to growers who feel that they haven't gotten the results they wanted.
Joint equipment ownership isn't for every farmer, says Jerry Warmann, Kansas State extension ag economist. "e;But most producers should look at this opportunity. This is something you can do with your neighbor or with someone in another part of the country."
New contact an added benefit
Govert, who co-owns a combine with a corn grower in Nebraska, says he and his partner often make the 220-mile drive to transport the machine rather than hire a custom hauler, so they can get together and discuss their operations.
"I've cut corn on his farm once, and he's cut wheat on mine. At a recent conference for Machinery Link members, other farmers told me they did the same thing. It's a unique opportunity to get to know someone else's farm," says Govert.
To find out more about Machinery Link, call 1-800-789-4908, or check out their web site at http://www.machinerylink.com. You can search their database or add your name to it for free. Other farmers are identified by a client identification number, and if you're interested in pursuing a lead, there is a one-time $95 application fee. n