For the past few years, Dave Tkaczyk has hired a professional to spray his 3,300 acres of crops twice a year.
But at $4 an acre in the spring for burnoff and $4 an acre in the fall for desiccation, his spraying bill was reaching $26,400 a year. And that didn’t include weed spraying that he did himself.
Last fall, the Holden, Alta., farmer bought a used mid-range $70,000 high-clearance sprayer to help cut costs.
“Times are tough. Really, you’ve got to cut corners where you can,” he said.
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“I was tired of paying more than $20,000 to spray when I could put that money towards my own sprayer.”
He hasn’t decided if he will try to recoup some of the costs of his sprayer by joining an increasing number of farmers who custom spray their neighbors’ fields.
“With the price of grain, I could make more money doing custom work than seeding my own fields.”
Tkaczyk already does some custom seeding work for neighbors if he has time.
Becoming common
Bob Winchell, financial management specialist with Alberta Agriculture’s agricultural business management branch in Olds, said there is a trend toward farmers doing and hiring more custom work.
While the branch has no clear statistics, it believes custom work will soon be a way for farmers to diversify, similar to investing in llamas, bison or elk.
This summer, the branch will publish a book through its Ag Venture Series on custom farming.
“We now recognize one diversification opportunity is to do custom work,” said Winchell.
While much of the custom work done now is neighbor to neighbor, he said farmers must treat custom farming as a business and recognize the need for liability insurance and marketing savvy.
Harvey Hamm, owner of Crowfoot Agri Supplies in Daysland, Alta., is a veteran in the custom business. Ten years ago, with the advent of Roundup as a desiccant, he saw an opportunity to diversify his farm crop business.
“We do a really good job, that’s one of the reasons we’ve survived,” said Hamm, who sees many operators jump in and out of the custom spraying business.
When his company began, it charged about $4 an acre to spray. Ten years later, because of increased competition, it still charges $4 an acre.
Winchell said spraying is the largest opportunity for custom work. Sophisticated and expensive equipment that few farmers can afford has forced them to turn to custom operators for delicate spraying work. With larger air seeders and now air drills, custom seeding will also become more common.
Custom combine work seems to be a service that hasn’t caught on, he said. Unlike most of the United States and parts of southern Alberta, where there is a long harvest season, most prairie farmers aren’t willing to take a chance with the weather and wait for a custom combine to appear.
Joe Hermanson of Strathmore, Alta., is one of the few farmers who does custom combining.
“I could sit on a combine 365 days a year. I like combining,” said Hermanson, who does custom work for about a dozen local clients and a dozen more contracted through a feedlot to combine excess grain for silage.
“It helps offset the cost of machinery,” said the Strathmore farmer who has been custom combining since 1989.
Hermanson said he isn’t looking for more work.
“I don’t want to run crazy.”
He said it’s better to look after a select few customers than do a poor job for more customers.
Joining the crowd
With more competition for the shrinking agricultural dollar, even the larger mainline grain companies like Agricore are offering custom services.
Agricore has put more emphasis on service and custom work, said Curtis Jones, acting customer service co-ordinator with Agricore’s Prairie Central Service Centre in Camrose.
“It’s all about service. You just want to be able to offer everything so the customer doesn’t have to go anywhere else for what he needs,” said Jones, whose service centre does all the custom work for five surrounding Agricore agro centres.
Centralizing the custom application equipment is a way to maximize the most acres for the expensive equipment, he said.
“Equipment is a big investment.”
Before a field is sprayed, a field scout is sent with a global positioning system instrument to locate the field and then check it for weeds.
The GPS location is used to ensure that the sprayer operator sprays the right field and makes sure there are no chemical misses. If there are more than two liability claims against a custom applicator, he will no longer be insured, said Jones.
Tips for contracting custom work
As with any business arrangement, hiring contract work for the farm can be difficult if terms aren’t clearly spelled out. A formal written agreement that includes these items can help to ensure custom hiring arrangements run smoothly:
- Include a schedule of operations. A schedule outlining time periods for the owner and custom operator, subject to such things as weather conditions and crop maturity, can prevent significant losses from a job that starts or ends late.
- Job specifications. The agreement should detail what work will be performed by each party and outline who is to supply any machinery, material and labor.
- Pay rates and terms of payment. The custom operator should clearly state rates for each job performed based on a per-acre amount, hourly rates or for the total job.
In addition, the agreement should spell out how the custom operator will be paid. The owner should be billed upon completion, and the bill should indicate actual units (hours, acres, etc.) completed, the agreed rate charged per unit, total charges and payment due date.
- Management practices. The agreement should ensure that the custom operator will use safe and legal management practices to do the job.
- Termination notice. A minimum period to end the contract should be included in the agreement, with a penalty included for any unjustified termination before the agreement ends.
- Insurance. Check with the insurance company and ensure the custom operator carries necessary insurance before signing an agreement to contract work.
For more information, check out Saskatchewan Agriculture’s website at www.agr.gov.sk.ca. Click on the farm business management section and select the farm machinery custom and rental rate guide.
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Source: Saskatchewan Agriculture
