May 16, 2018
By Beth Loberg-Lutter
With narrow profit margins in recent years, analyzing investments in areas such as equipment makes sense to best strategize where to spend money and where to cut it. For some growers, owning a sprayer and applying their own chemicals and fertilizer provides a favorable return compared to paying custom rates. However, with lots of factors at play, ownership isn't for everyone.
Joel McAfee, a grower from Wakefield, Neb., says it would take a considerable change in numbers to make him think about paying custom rates. McAfee, who farms about 2,500 acres with his father-in-law, Gaylen Fischer, says that when he last ran the numbers in 2016, spraying with his own machine saved the operation around $20,000 that year.
But beyond the financial numbers, McAfee says he also puts a value on peace of mind. "I know things are being applied properly, and I know it's getting done at the right time," he says. "That helps me sleep at night."
McAfee says he helps justify the cost of ownership by custom-spraying and spreading close to 2,000 acres for growers in the area and using the sprayer for everything he can.
"I have section control and GPS, which minimizes overapplication, and I put on a multiplier box," he says. "This year we also set up a system with our neighbors so that we can change our dry-liquid system ourselves. We put I-beams on top of the frame of our bulk bin with winches, so we can just drive the machine under, unhook everything, lift it up and set it on the trailer. Then we pull either the liquid or dry, and lift that up and place it on the machine. We switch back and forth three or four times every year, so it's saving a lot of time and money versus paying the dealership to do that for us."
New this year for McAfee, who's also a Channel seed dealer for the area, is distributing chemicals. "There was a local chem dealer that closed down last year, and I thought it made sense. I have the retail space and can grow that at my own pace, so that, plus the potential product cost savings, made it work," he says.
Where custom applications make sense
Thirty-five miles to the northwest, Randolph-area grower Jenny Gubbels-Dickes also ran a financial analysis in 2016, but hers confirmed her decision that custom-application made the most sense. "When you factor in my time, storing and transporting chemicals, liability and the labor, which is just me, the intrinsic value of custom-spraying makes it favorable for our operation. I try to weigh all the variables, not just the cost to have the acres sprayed," she says.
Gubbels-Dickes took the helm of the 1,200-acre operation after her father's death in 2013. "My mom is a physical therapy assistant in Randolph, and she's really good at her job. My husband works full-time for FedEx in Norfolk. It just made sense to have me manage my parents' ground, plus the contracts we have to farm the acres my aunt and grandparents own."
She points to the cash-back dividends she receives from the cooperatives she pays to custom-spray, plus the product guarantee offered with most of the chemicals she chooses as additional advantages she takes into consideration.
"I've had several times where I've called the co-op after a product didn't do a great job, and they've come right back out to re-spray, and it was covered," she says.
Another advantage Gubbels-Dickes sees to paying for custom spraying is what it does for her community. "I think about the fact that I'm playing a part in helping our small town survive and provide job security for some folks in the community," she says. "That means something to me, especially since I had some things to learn after Dad died, and a number of folks in the area have been there to help me figure things out."
CUSTOM MAKES SENSE: Jenny Gubbels-Dickes ran a financial analysis in 2016 that confirmed her decision that custom-application made the most sense for her operation. " I try to weigh all the variables, not just the cost to have the acres sprayed," she says.
Gubbels-Dickes says to buy a planter or sprayer, commodity prices or health insurance costs would need to change. "I'd love my husband to be able to farm with me or bring someone on full time so that we can pick up planting and spraying," she says. "But with the current health insurance costs and price of corn, this is what makes sense for our operation."
Custom-spraying vs. self-application
Jim Jansen, ag economist with Nebraska Extension, shared four main criteria to consider when deciding whether to own your own sprayer or have crops custom sprayed.
1. Amortization over acres. Are there enough acres to justify self-application with the current cost of spraying equipment? When you break the cost of ownership over the acres you farm, what does it do to your breakeven costs?
2. Labor and timing. Do you have enough time and labor to cover the acres you need to in a timely manner without letting other areas of your operation fall behind?
3. Maintenance. Are you prepared to do tank cleanouts, oil changes, nozzle change-outs, etc.? If you're not, are you factoring someone else doing it into your farm budget?
4. Liability. Insurance coverage on the sprayer is one thing, but covering potential oversprays and drift issues is another. If you're going to own, make sure you're up to date with farm liability insurance and have the appropriate application licensing. Making sure your farm liability insurance policy covers drift-related accidents remains critical in 2018 with concerns related to drift onto neighboring fields.
Loberg-Lutter writes from Carroll, Neb.
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