How custom farming helps a growing number of producers manage risk and share the cost of new, more efficient equipment.
By Tharran E. Gaines | Photos By Michael Moenning
There’s not much free time on the 3,000-acre Birchen Farms, located near Pearl City, Ill. Owned and managed by Rod and Mary Birchen and their sons, Adam and Andrew, the farm not only produces corn, alfalfa and wheat, but also milks an average of 800 cows three times a day.
If that isn’t enough, the Birchens harvest around 4,500 acres of corn silage and 6,000 acres of alfalfa silage annually for other area dairies through a custom farming business. Although the custom business involves a lot of work for the family and their 26 full-time employees, Birchen insists there are a number of benefits to the arrangement. For one, it helps justify the purchase of newer equipment for use on their own farm. Plus, it lets Birchen spread out his equipment costs, and acquire new technology that further contributes to efficiency and the farm’s profitability.
The irony is that Birchen didn’t set out to do custom harvesting or have such a large dairy operation. It just fell into place during his 36 years in the business.
“My wife’s parents and my parents were dairy farmers; but I had an opportunity to purchase a 200-acre farm, with some help from my parents, and started with my own place while I was still a senior in high school.”
Over the next few years—after getting married a year out of high school—Birchen rented another farm and started a dairy in partnership with the owner, eventually buying out his half, too. By 1995, the milking herd was up to 500 cows, from which it has continued to grow.
Birchen’s story is a testimonial for how a custom operation can help a farm such as his. Due to the demands at harvest time, he used to hire a custom harvester to chop alfalfa and corn silage. “Unfortunately, our best custom operator quit the business,” he relates. “So, in 2001, we decided to buy our own equipment.”
That same year, Birchen also helped a neighbor harvest his silage—paving the way for what was to become his own custom business. By 2008, he was already up to a third tractor and running two harvesters at a time.
“Right now, we’re harvesting about 4,500 acres of whole-plant corn silage and cutting 1,000 to 1,200 acres of alfalfa four to five times a year for the equivalent of around 6,000 acres,” says Birchen. That’s in addition to his own farm, two-thirds of which is devoted to corn. Another 450 to 500 acres is planted to alfalfa, while the rest is in wheat and grass hay.
He’s also harvesting about 1,000 acres of corn for snaplage for his customers, noting that snaplage consists of the kernels, cob and parts of the husk and shank harvested at around 34% to 36% with a snapper head and kernel processor. “That’s a growing business,” he adds, “partly because it produces a feed product that is ready to use as it comes out of the field. Plus, the ground cobs and husks not only provide a little buffer, but they add more per acre over what you’d get with shelled corn alone.”
Generally speaking, custom farming is itself a growing business, says William Edwards, an Extension economist at Iowa State University. While some custom operators, like Birchen, garner business from those who don’t want to invest in a full line of machinery, other custom farmers are taking on the whole crop production process for those who are fully employed away from the farm or are retired. In essence, custom farming has become an alternative to leasing farm ground for some.
Other than the cost of equipment, Edwards says, “one obvious advantage to the custom operator is that little or no additional operating capital is needed. In addition, custom farming offers a fixed return as opposed to the yield risks faced by the property owner.”
Landowners find advantages to custom farming as well. Owners with small acreages can make most of the production and marketing decisions without investing in a full line of machinery. Since the owner receives all of the crop, that also means there are no lease payments to collect or expenses and profits to split.
Finally, the landowner often reaps the benefits of the custom operator’s equipment technology. As an example, Birchen’s three Massey Ferguson 8600 Series tractors are among the most fuel-efficient tractors in the industry—reducing extra fuel costs, a savings that is passed on to the customer.
In a good year, of course, profits from custom farming will be smaller than they would be under a conventional lease. But Edwards says that this is just one of the trade-offs for reducing risk on the custom operator’s part.
One of custom farming’s big payoffs, says Birchen, is that it has allowed him to use newer equipment on his own farm, as well as those of his customers. For instance, he plans to trade his Massey Ferguson 8600 Series tractors after about two years, if not less.
That’s a necessity he says. “We’re awful busy for about a six-week period in the fall, and it puts a lot of hours on the equipment. On the other hand, it keeps us in newer equipment and contributes a little more to the bottom line, which is important, no matter what kind of business you own.”Show Full Article