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Using a farm contractor

By David Mason-Jones

So, you have taken the advice and decided what you want to produce on a farm before going and buying the farm. The next step is to go out and search for the best farm on which to achieve your purpose, yes? Well, maybe there is one further step before you spend all that money buying the farm and that is to make sure you have the financial resources to develop the farm. One of the decisions to make in this process is to evaluate whether owning assets, like tractors for example, is better than hiring contractors.

Running your small farm could be a lot more expensive than your think and this is where the correct use of farm contractors may come to play as an efficient alternative to owning every piece of equipment for every farm task and trying to do it all yourself.

Most importantly the cost of owning everything you need on the farm will impact the amount of money you are going to have in your pocket to buy the farm in the first place. To expend your finance fully on the property itself and then have no money left over with which to develop it is a classical case of being under capitalised - a big business mistake.

There are many cases where the scale of the farming operation does not justify the expense of purchase. There are also cases where certain operations take such a short time that it hardly makes sense to buy costly plant to sit in the shed for 48 weeks out of 52.

Owning a truck for the sole purpose of moving your stock is a good example of this.

If you wanted to be fully self reliant in the movement of cattle, you might plan to purchase a 5 tonne truck which would have the capacity to carry around ten head of cattle. If you chose to buy this vehicle new it might cost you around $35,000. A similar vehicle se cond hand might cost $15,000. A new stock create for the truck could cost $7000 with a se cond hand crate costing $3500. Registration and insurance could cost $2000 per year. And you actually need to have the appropriate driver’s licence to operate the vehicle.

Assuming the effective life of the truck to be 15 years the total annual cost of the vehicle could be up to $6000 if the new option was taken.

If the se cond hand option were taken we will assume a lifespan of 10 years with no major mechanical work. The total annual cost of the se cond hand option would come in at around $3850 before any running or repair expenses.

The problem for a small farmer who is not actively trading cattle every week is that he/she may only move ten or twenty cattle per year. The true annual cost, there-fore, of owning a vehicle just for the purpose of moving cattle could be as much as, $600 per cow moved.

For these reasons many small farmers are likely to resort to extensive contracting arrangements in order to get things done on the property. Larger grazing concerns have also sold all their tractors, hay making gear and trucks for the same reason. For many farmers who purchase their property while still working in the city, the pressure to use reliable contractors is even greater.

Following through on the example of moving cattle, the cost efficiency of using a contractor can be seen in the following example.

Contract prices vary with the size of the truck used, the number of cattle to be moved and the distance over which they are to be moved. Taking an example of a small farmer who wants to move 20 head of cattle 200km. An indication of a freight price is $600 plus GST. Moving 20 head of cattle over 30km may only cost around $250 plus GST.

Many small farmers are stud owners and, therefore, their movement needs may only be for individual animals. An indication of the cost of moving a stud bull over 30km is $60 plus GST and a stud bull over 200km may cost $500 plus GST.

The example of moving cattle is a clear case of where it is far cheaper for the small farmer to use a contractor. The same logic also applies to many other farm activities.

Farming consultant, Bob Doyle of Sanders and Associates, says, “It’s a very common mistake made by many small farmers. They believe they must own a tractor, for example. But when you calculate its usage and the amount of time it sits in the shed, it is far more e conomical for those guys to hire a contractor to do the job rather than doing it with their own resources.”

Contract prices will rise and fall with a huge number of variables including the volume of work you are offering the contractor, the regularity of that work and the distance from the contractor’s base to your farm. The following figures are illustrations designed to focus the mind on the problem. All prospective small farm owners should do their own research on their own intended industry before making decisions.

Here are some contract costs for your consideration:

Contract tractor work.

Hire of a tractor and drill with operator for pasture renovation and minimum tillage seeding $55 plus GST per ha.

Hire of hay baler for 0.8 x 0.8 x 2.4m large square bales - $14 plus GST per bale.

Hire 3.3m heavy chisel plough $54 plus GST per ha.

Hire of offset discs $50 plus GST per ha.

Hire of Agroplow to aerate up to 300mm soil without inversion $93 plus GST per hour.

Hire of 2.4m Mulcher $80 plus GST per hour.

Fertiliser spreading up to 18ha per hour $80 plus GST per hour.

Dam sinking.

Hire rate for a D6 bulldozer $95 per hour.

Hire rate for a D10 bulldozer $205 per hour.

Hire rate for standard excavator $96 per hour

Hire rate for long reach excavator $110 per hour.

Float rate to move a D6 bulldozer $95 per hour.

Float rate to move a D10 bulldozer depends on circumstances but the rate would be greatly increased by the need to provide road escorts for the movement.

One rule of thumb for the cost of sinking a dam is that it costs around $3000 per megalitre.

Shearing.

Industry standard for shearing large flocks where the contractor provides all workers compensation, other insurance and other workers such as rousabouts $4.20 per sheep. A normal performance rate per shearer is around 120 - 130 sheep per day.

Crutching for conditions, as above, industry standard around $3.80 per sheep.

Where the flock is much smaller, as with the case of many small farmers, the cost of shearing can be much higher due to the smaller scale of the shearing task.

Shearing alpacas. A common contract rate is around $10 per alpaca with the shearer supplying their own shearing table and shearing gear and the owner assisting with having the alpacas efficiently available - $10 per alpaca plus travelling time.

Fencing

A sturdy fence for small farms purposes could comprise; 1.2m high, hingejoint ‘mesh’ 900mm high, mesh supported by three strands of high tensile plain wire, two strands of barbed wire on top, star pickets every 4m and a strainer and stays every 200m. Such a fence would cost around $9.75 per metre if erected by a contractor. The variables would be in the number of strainers and corners which take most of the work. This would be capable of holding a variety of stock and also suitable as a boundary fence.

Price increases with the degree of difficulty such as the need to fence through creeklines and up and down ground with dips and undulations. More strainers and star pickets are required in these circumstances.

Gateway consisting of a 3m gate with a timber strainer and stay at each end - around $680.

Olive planting

A huge number of variables apply. These include the amount of deep ripping required, the amount of irrigation pipe to be trenched and laid and the amount of ground clearing and preparation. The contract rate could range from $25 - $30 per tree up to $50 - $60 per tree.

Olive pruning. About $1.00 per tree for a light prune where the tree is already well pruned. Around $2.50 per tree where the trees require heavy pruning.

Olive spraying. Around $80 per hour for tractor, operator and sprayer. A 10ha grove would cost around $500 - $600 to spray. Cost of chemicals is additional.

Slashing and weed spray-ing. Around $90 per hour.

Olive harvesting. Around $2.50 per tree with a tree shaker.

Farm consultants.

A common per hourly rate is between $100 and $140 per hour.

Footnote: The costs shown on this page are illustrations only. Actual quotes will vary according to differing circumstances.

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