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Farmers lower costs and improve crop quality with farm equipment and storage partnership

Mike Wilson, Senior Executive Editor

March 3, 2015

6 Min Read

You never know what can happen when three farmers put their heads together to solve a mutual business problem.

In the case of Garrett Riekhof, Mark Nuelle and Kevin Schemmer, the results have been nothing but positive.

After using the local co-op spray services for many years, the neighboring Missouri farmers collaborated on a high-end sprayer and took weed control matters into their own hands.

It all began 15 years ago when Garrett was still a college student and part-time farmer on the family's home base near Higginsville, Mo. His father, Gary, had a sprayer and was well-versed at buying and mixing herbicides. "When we wanted a field sprayed we just called dad," says Garrett.

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But Gary was soon headed for retirement. Two of the three farmers at the time were using custom or co-op services – and not always loving the results.

"I had trouble with custom operators getting in too big of a hurry and not doing a good job, mainly in skips," says Mark.

Related: A quick guide to asset utilization

The Riekhofs, Mark and Kevin came together and looked at principal and interest payments on a new self-propelled sprayer. They compared figures against yield losses from poor weed control timeliness, and savings from shopping their herbicide needs to different vendors.

"We determined we were willing to pay more for the cost of ownership for that sprayer than what we would otherwise pay to the co-op to spray our acres, because we fully realized the advantage of having complete timeliness control," says Garrett.

Kevin couldn't agree more. "Sometimes wet springs can be very stressful, and knowing that we have a sprayer ready to go when the time is right helps us deal with those times," he adds.

Agreement advantages >>

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Herbicide savings really helped seal the deal. "We're able to understand now how much cheaper we can buy chemicals by shopping around," says Garret. "When you buy the co-op's spray service, you're also buying the co-op's chemicals at their price. We realized we could be more in control of our destiny and save money on chemicals by not buying from the co-op."

Thus was born RNS Ag, a farm partnership set up as a limited liability company focusing on equipment and grain storage.

"The timeliness factor is what got them excited about working together," says Cara, Garrett's wife. "They were able to take away the competitiveness and independent nature, their ability to let go of those things and work collectively for this common goal."

New approach
The agreement has big advantages in timeliness, quality control and lower costs. But this approach does take more thought and management compared to an individual operation. The farmers meet regularly to hash over spreadsheets and equipment use; they believe good communication is a must, "so that everyone knows what is going on," says Mark.

It also takes an open mind.

"You have to check your ego at the door and realize that you might not always have the best idea on how to do something," Mark says, "or acknowledge that there is more than one way to get something done."

Kevin and Mark are closer to Garrett's father's age, but the partners don't see that as a weakness – in fact, just the opposite.

Related: Success in business: Become a life-long learner

"That gives them two different perspectives," says Cara. "Mark and Kevin have adopted technology and use it, but their ability to problem-solve is not as good because they don't understand the guts of the technology, and that's where Garrett can help them."

Likewise, Kevin sees value in sharing opinions on important tasks like marketing. "We can talk about different marketing strategies and area grain bids to try to make the best decisions we can," he says. "I'm not saying three heads are better than one when it comes to marketing, but it helps to hear other farmers' opinions."

Added services >>

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Next steps
With initial success in spraying, the three partners again decided five years ago to drop custom services in favor of owning their own anhydrous applicator.

"Until then, we had to wait our turn working with the co-op," says Garrett. "We weren't happy getting the applicator when it came our turn in the batting order. We want things done today; that's just how we operate."

Two of the farmers had a tractor big enough to handle the bigger applicator; the third farmer rented the needed horsepower.

That decision proved a money saver, but the partners had to be creative not long ago when acreage on one farm outgrew the other two. Now Mark farms as much as the other two together, so his need for more anhydrous application capacity grew as well. Meanwhile, Kevin wanted his anhydrous spread in early fall with N-serve.

Kevin ended up buying a bigger applicator on his own and sold his share of the partnership's applicator to Mark. The result added flexibility for everyone, says Garrett.

"Now, if one of the three of us adds acres, then voilà, we not only have a 17-knife applicator at our disposal but also a 13-knife applicator, because Kevin is willing to let us use his if we need it," he says. "And of course, we compensate each other and keep the equipment in good condition."

Once they worked through those changes, the farmers decided to collaborate on grain storage. They built two bins to add 90,000 bushels of partnership grain storage on some land near Kevin's house with three-phase capability. Kevin wrote RNS Ag a 25-year lease for the land, and the partners bought an old platform scale used to quantify stored bushels.

"It made more sense at the time to go together and put up joint storage, as the bigger bins were cheaper per bushel," says Mark. "Also, the large truck scale was a good addition, as I personally could not have afforded to do it by myself."

The added storage came in handy last fall with a bin-busting crop. "I needed extra storage, and Garret and Kevin did not need all of the partnership storage, as they had contracted a fair amount for fall delivery," says Mark. "I was able to use the excess room and pay them for their share of the space."

Individual decisions >>

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Individual decisions
"We like the partnership, but there are certain parts where we want individual choices, such as crop insurance and grain marketing, and leases to rented farms," explains Garrett.

Related: Build efficiency into your farm business

The grain itself is owned by the farmers, not the partnership. If farmland is rented, each person writes a check to the landowner. If Mark wants to buy an 80% crop insurance policy, he can, but the others don't have to. If one wants to sell grain at a particular price, he can, but the others can market on their own. All those decisions are communicated to landlords upfront.

Getting different personalities engaged and working together is not simple or easy. But the payoffs can be huge.

"We all three have learned to be selfless about sharing the equipment when needed," says Garrett. "In the end, you come up with a consensus. We're willing to work as a team.

"Most farmers say, 'That will never work.' But for us, it's worked for 10 years. And I think it has allowed each operation to grow."

About the Author(s)

Mike Wilson

Senior Executive Editor, Farm Progress

Mike Wilson is the senior executive editor for Farm Progress. He grew up on a grain and livestock farm in Ogle County, Ill., and earned a bachelor's degree in agricultural journalism from the University of Illinois. He was twice named Writer of the Year by the American Agricultural Editors’ Association and is a past president of the organization. He is also past president of the International Federation of Agricultural Journalists, a global association of communicators specializing in agriculture. He has covered agriculture in 35 countries.

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