Crop harvest, Thanksgiving, deer hunting and Christmas have come and gone. So, what keeps a custom harvester busy between now and spring?
I find this time of the year goes faster than the harvest. We have lots of equipment and truck repairs to get done, and it always seems there are too many last minute projects right before the harvest cycle starts again. I never understand how this happens, but it’s always the case.
The other job that fills my time during the “off” season is analyzing the financials. My wife is great with accounting, but I know if I delegated this job to her, there would be nothing but coal in my Christmas stocking next year. Because we farm a few acres around home, our exact cost of harvesting can get a bit cloudy. Tractors, trucks and miscellaneous support equipment get used in both operations.
We try to track expenses and determine a cost per ton on all of our jobs. Getting these numbers close is very important for upcoming customer visits and setting next year’s prices. We do not trade lots of equipment every year and have to rely on estimated equipment values to determine this year’s costs. With the buildup of used harvesters on dealer’s lots, our break-even numbers will be bumped higher by a lower harvester value this year.
Know your costs
If time and effort isn’t taken to calculate operational costs, you will never know for sure if you’re harvesting as a business or a hobby. I always find it interesting how wet, muddy conditions affect the costs of harvesting a silage crop. Tons per hour go way down, and extra tractors and employees force costs higher. If you have to fight mud every year, then you will just look at these as normal expenses. We have a job where side dump carts are used every year without exception.
What the guy down the road tells you about his machine operation expenses is of little use to you unless specific details are shared. If you take the time to track your numbers yearly, it will be much easier to explain to your customer why you need a rate increase. Good data will also allow you to understand that not all customers should pay the same amount for harvesting.
Some customers will work very hard to improve conditions for ease of harvest; others just choose to pay more for harvesting every year. If we lose a high-cost customer to a low-price cutter, it’s pretty easy to smile and walk away knowing how much money that cutter is going to be losing.
Once costs are determined, it’s time to visit last year’s customers and any new possibilities for next year. The obvious questions of how many acres, tons and distance to fields should be covered first. Work the discussion to help you highlight what differentiates you from the competition. Do not take a page out of the political arena and smear the other cutter, but point out your strengths. What was your run-time percentage last season? What are your silage processing scores? If you packed the bunker, what are the density numbers? Is there a different benchmark that this customer is focused on?
If you did not reach a goal that was established last year, work out a plan to get it this year. Up sell your service as the best silage cutter available and then back it up with the performance during the season. Take notes during this meeting and revise the agreement from last season. If you did not have a written agreement, then make sure you talk about what both parties think needs to be in the contract and get it taken care of before you move forward.
Take a break
Work hard and play hard. We can all agree we have been doing lots of the “work” part, now what do you have planned for the “play” component? My wife and I made time for the Agritechnica show in Hannover, Germany, back in November. We experienced lots of great sights, fun with friends and had new experiences.
Many of us are guilty of not taking the time to relax and regenerate. Try to find a way to turn off the business and unwind somewhere during the winter months. If you need to justify it to yourself, think of all the things we miss out on during the harvest season.
If nothing else, make plans to attend a winter farm show or harvesters’ convention. The U.S. Custom Harvesters Convention is mid-January in Omaha, Neb., and Wisconsin’s Custom Operators meeting is in late January in Wisconsin Dells. Either one provides great networking with other harvesters. Neither one will provide sun and sand, but it could be just the first stop on an extended vacation.This article appeared in the January 2016 issue of Hay & Forage Grower on page 12.
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