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Agrivision: Dairyman asks if he should hire custom harvester or buy equipment

Agrivision: Dairyman asks if he should hire custom harvester or buy equipment
The Agrivision panel answers a question about buying machinery vs. custom harvesting.

Question: We have been hiring a custom operator to chop haylage and corn silage for our 300-cow dairy. We are not always first on their list, and our first cutting of alfalfa has suffered a bit in recent years. This year they got our corn silage half done before the rains came. The cost for these services isn’t cheap, and we are starting to think we should buy a self-propelled chopper and wagons and do it ourselves. Used machinery prices have dropped in the past couple of years. Would it be wise to buy our own chopper and wagons? Please advise.

FORAGE PRODUCTION: Dairy farmers want haylage and corn silage harvested in a timely manner.

Hodorff: The investment in equipment is one part of your problem. I think the more important question is, who will operate this equipment? How many people will you need to do your harvesting? This “people” issue is often overlooked. When you take employees from the dairy, the dairy suffers from a labor standpoint. Would you have had your corn silage done before the rains came in September? At your size, I would not support the major investment in equipment and put stress on your dairy. I see many dairies your size being very successful having their crops custom harvested.

Miller: This is a common rent vs. buy dilemma. Evaluate your options by completing a partial budget. Compare the cost for custom-harvesting your crops with the cost of owning the equipment and operating it yourselves. Don’t forget to include the additional labor for mowing, chopping, packing and covering forages in this comparison. Used equipment may be cheap now, but replacement costs should also be factored into this equation. Don’t forget to consider any quality differences by operating the equipment vs. relying on a custom harvester. Work with an Extension ag agent, farm technical college instructor or your banker to complete this partial budget analysis and help you evaluate the alternatives. Good luck examining your options.

Wantoch: There are advantages to having your own cropping equipment, but there are disadvantages, too. You’ve mentioned several advantages, including timely harvesting, potentially increased feed quality and reduced custom work expense. Disadvantages of not hiring a custom operator may include that you will need to manage another enterprise, hire more employees, and have a large capital investment that will require repairs and maintenance over time.

I would encourage you to work with an Extension agent or consultant, or calculate your own partial budget to compare your custom-operating costs versus the potential savings you expect to see. You may want to discuss your situation with your banker to see if financing would be available for this cropping enterprise. After you have completed this analysis, you can then determine if the payoff of investing in your own equipment would equal or more than provide for the increase in feed quality you are looking for, and a larger return to your dairy operation.

Agrivision panel: Doug Hodorff, Fond du Lac County dairy farmer; Sam Miller, managing director, group head of agricultural banking, BMO Harris Bank; and Katie Wantoch, Dunn County Extension agriculture agent specializing in economic development. If you have questions you would like the panel to answer, send them to: Wisconsin Agriculturist, P.O. Box 236, Brandon, WI 53919, or email [email protected].

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