For most producers, on first blush, making $100 per hour sounds like a pretty lofty goal. But two U. S.-based farmers and consultants say there may be all kinds of management decisions made in an average day that could return a farmer even more than $100 per hour.
Even something as simple as spreading your own fertilizer, in theory, could pay you as much as $400 per hour, say Darren and Brian Hefty. The brothers are part of a 2,400-acre family farm, seed business and consulting service based in Aberdeen, South Dakota. The brothers also host a nationwide agriculture television program called Ag PhD. You can watch their program online at: www.heftyseed.com/agphdtv.html.They were in Edmonton recently to speak at the 2009 FarmTech Conference.
Whether you spread fertilizer or not, the point the Heftys make is that producers need to focus on farm work — whether it be physical work or management work — that’s going to pay them the highest return. If need be, you should hire someone else to do “the $5 per hour jobs.”
“Our dad always told us that we needed to focus on those jobs that will pay us $100 per hour and then hire someone else to do the rest,” says Darren Hefty.
While the $100 per hour work sounds great, where do you find that on the farm? “You need to look at any and all opportunities. Spreading your own fertilizer is just one example,” Brian says.
THE FERTLIZER EXAMPLE
A farmer buys a new fertilizer spreader for $12,000 (amortized at $4,000 over three years.) He spreads 150 pounds of urea per acre (75 pounds of actual nitrogen.) His cost to hire a company to custom apply urea is $700 per ton. He can buy and spread the urea himself for $450 per ton. He has 1,000 acres to cover and figures the cost to apply the fertilizer himself is $1 per acre. He can cover 33.3 acres per hour.
He is saving $250 per ton, which equals $18,750 per year, but subtract $4,000 for one-year cost of the spreader, plus the $1,000 as his cost for applying the product. Annual net savings equals $13,750. Divide that by the 30 hours it took to apply the fertilizer and the farmer actually earned $458 per hour.
“The figures may be different for your farm, and not every job is going to pay you $450 per hour, but the point we make is that producers need to look at where they are spending their time,” says Darren. “Focus on those jobs that will pay the highest return.”
Don’t underestimate management details that may only seem to be worth a couple dollars or one or two bushels here and there. They can make a considerable difference to overall farm profitability, the Heftys add.
“We’re not here to tell producers they need to be using more fungicides or herbicides or other products,” says Darren. “But we do want to make the point that producers need to look at some of these management details. Pencil it out for yourself and see if makes a difference.”
For example, it may cost $6 per acre to apply a half rate of fungicide on wheat, but that treatment may increase yield by three bushels per acre. If wheat is worth $6 per bushel, that’s an extra $18 per acre — or $12 per acre net. For 1,000 acres of wheat, three extra bushels is $18,000. That represents a 300 per cent return on the $6,000 fungicide investment.
Another example is a $3 insecticide treatment on wheat that increased yield by 1.5 bushels per acre. Again with $6 wheat and increased yield over 1,000 acres, that was net gain in income of $6,000. How many hours of work did it take to earn that money?
“There are opportunities out there that may seem like an expense, but really when you figure out spending that money on crop inputs is really an investment,” says Brian. “Don’t just do it for the sake of doing it. Sit down and pencil it out first.”
Lee Hart is field editor of Grainews, based in Calgary. Contact him at 403-592-1964 or by email at [email protected]