Last winter Jim Tepe and his wife Dorecia mulled over buying a new combine and taking advantage of all the new technology available since they had bought their last one, more than a few years ago.
They also considered other factors that come with ownership of a new piece of farm equipment: interest payments, insurance and upkeep for a machine they'd use for about three weeks to harvest wheat on their Lone Wolf, Okla., farm.
They reckoned that wheat prices had improved a bit but hardly enough to pay for a new combine. “For 11 months the combine would gather dust in the barn,” Dorecia says.
After a lot of soul-searching and pencil-pushing they decided not to rely on their old machine, so they harvested their wheat with a new combine.
But it's not gathering dust in the barn now that harvest season is well over. They're not saddled with high interest rates and insurance costs. They don't own it.
In fact, the machine they used to cut their wheat last summer may be winding down harvest somewhere in North Dakota. It may have completed its rounds by now and is setting, cleaned, oiled and in top repair in someone else's storage facility until next harvest season.
The Tepes are among a growing number of Southwest and Midwest grain farmers who have decided the pride of ownership can't make up for the high cost of buying equipment that has limited use.
They leased a combine, just for the time they needed it to harvest their wheat, 42 days, from MachineryLink, a relatively new company that contracts with farmers to provide harvesting equipment for a specified period.
“Shared utilization of expensive farm machinery spreads costs between a number of farmers,” says MachineryLink president David Forsee from his Kansas City, Mo., office.
“We take responsibility for maintenance and logistics of getting equipment where it needs to be. The service allows farmers in the ‘chain’ to use new equipment with less capital expenditure.”
“We saw a lot of difference between this service and owning a combine,” says Jodi Busenlehner, who farms with his brother Justin near Rowena, Texas. “We got new machines (three leased 9650 STS units), and we didn't have to work on them.”
Jodi says the combines had some factory defects that would have set them back several days if they had owned the equipment.
“Service was unbelievable. We had a technician repairing a machine at 12 midnight and he stayed until he got it running. You just can't beat that. They also had an ample supply of parts, so we didn't have to wait for replacements.”
Forsee says farmers will save from 25 percent to 60 percent of their annual harvester costs, depending on length of time the equipment is needed. “They pay only for the period of use, so they don't have the capital expenditure of buying a new machine. And since it's new, they have less down time.”
Tepe says a new machine, a John Deere 9500, financed over a seven-year period, would come with $22,000 per year in payments. He leased and went a step up, to a 9650 STS.
“We paid $13,000,” he said, “and we got money back because we turned it in early. I'm very pleased with the service.”
Jodi says the three machines he and his brother leased came with a $40,000 price tag. “That seems like a lot of money, but if we had bought the combines, that would have equaled the annual payment on one. And owning them would have meant we had $600,000 worth of combines we used for three weeks and then put into the barn for the rats to chew on.”
Tepe says the program does not limit the number of hours a farmer used the machinery. “If we had to keep it a few days longer than the established period, we'd pay extra,” he says.
“We actually got the combine early and used my uncle's 9500 along with it and finished harvesting 3300 acres of wheat early.”
He says good weather and a less than bumper crop made harvest go quickly.
MachineryLink evaluates each farm operation to determine the most opportune harvest window. “We consider the size of the farm, the crops and other factors that might affect use,” Forsee says. “Then we draw up a multi-year contract that includes that specific harvest window.”
“They guaranteed we'd get the equipment early,” Busenlehner says. “We can't afford to wait, and at harvest time we need to be flexible. Things don't always run the way we'd like.”
Jodi and Justin harvest 3,500 acres of their own wheat and custom combine another 5,100.
He says a hotline was a big help. “We had never run combines like these before and we could get in touch with someone 24 hours a day, seven days a week. And they got us the information we needed in a matter of minutes.”
MachineryLink works with local dealers who take care of service and maintenance.
Farmers select the brand of equipment they prefer. “It's their choice,” Forsee says. “We work with all manufacturers and can deliver what the farmer wants.”
“When the farmer finishes harvest, we pick up the combine, clean it and move it north to the next user in line.”
Forsee says the concept began some 10 years ago when company founder David Govert, a Kansas wheat farmer, needed to replace a combine but balked at shouldering the entire cost of a new one.
“He found a partner in Nebraska. and they bought a combine together. He developed a network of farmers who shared equipment ownership.”
The business started in those two states, but for the past three years the company has owned a fleet of harvesters serving 13 states, from Texas to North Dakota and Minnesota, Forsee says.
“We've developed strong relationships with producer groups in a number of states, including the Texas Corn Producers and Grain Sorghum Producers associations. We also work with the Oklahoma Wheat Producers and the National Grain Sorghum Producers.”
He says MachineryLink currently owns the largest harvester fleet in the country.
“The business is farmer-focused and it's working,” he says. “We're committed to the farmer and take seriously our promise to provide equipment on his specified delivery date.”
“I think this is a service more farmers will consider,” Tepe says. “It reduces our capital expenditures and we work with a new combine. We were not pressed to get our crop in.”
Busenlehner agrees. “I think this will be a trend, and I think companies like MachineryLink will offer other kinds of machinery that farmers use a few weeks out of the year and then store. We can't own it all, and if we try to, we can't keep it new and under warranty. Upkeep is expensive.”
He says farmers routinely invest from $5,000 to $10,000 in parts to get harvesting equipment in the field each year. “With a leasing service, we'll get a new combine every year and these machines are ready to go when they get to the field.”