Farmers navigate a shared course
Last March, Dennis Gengenbach’s full-time employee suddenly quit, leaving the Smithfield farmer in the lurch for the coming cropping season. “It’s hard to keep good help today, especially with such big equipment and the precision technology that goes with it,” says the 61-year-old farmer.
To resolve his labor and equipment dilemma and to continue farming his 1,500 irrigated acres in 2010, Gengenbach entered into a farm operation agreement with Ag Navigator, an innovative limited liability company formed by several south-central Nebraska crop producers.
Ag Navigator packages several services for its current membership of 19 farmers, including pooling grain under production agreements and negotiating high-volume grain sales to ethanol plants, feedyards and other end-users. “We can generally negotiate a lower basis for our grain,” says John Hanson, Kearney, a founding member. Gengenbach had already used this marketing service before signing up for the separate operation agreement in 2010.
At a glance
• Navigator finds efficiencies for farmer members.
• Nebraska group has grain marketing, machinery pools.
• Farmers also work together on purchase of inputs.
The component in this agreement that attracted Gengenbach is an equipment pool that consists of a complete line of machinery and precision ag tools the group leases from John Deere. Gengenbach, for a per-acre fee, received use of a planter and combine operated by several members of the group. In turn, Gengenbach provided labor by bringing seed tenders and fertilizer to the field, not only on his acres, but also on land of the farmers who operated the equipment.
“My equipment isn’t new. I couldn’t justify the cost of a new tractor or combine, or the latest in precision tools like autosteer and variable-rate technology,” he says. “Ag Navigator negotiates a two-year lease so the equipment is always updated, and there are no repair costs for the group or individual farmers.”
Gengenbach says his annual fee, based in part on his acreage, equipment used on it, and labor he receives, is less than what he would spend in yearly payments for a new combine or tractor.
Some of Ag Navigator’s members opt to use their own equipment instead of signing up for the leased machines, but they take part in other ways.
Ag Navigator has an agronomist on staff for those who choose that service, although Gengenbach and other farmers retain their own crop consultants. The organization also serves as a purchasing entity, negotiating for members on inputs such as fertilizer and ag chemicals.
The group, as part of its production agreement, also offers risk management tools, including federal crop insurance and an “add on” protection to minimize risk up to 90%, says Hanson. Ag Navigator also has a real estate and farm management division.
“This is a unique way for farmers to work together to capture efficiencies,” Hanson says. “We are not all big farmers. Average acreage of members is 1,000 acres, and I only farm 400 acres. I would probably not be farming today without these arrangements, or I would just be hobby farming.”
Phil High, another Ag Navigator founder, says the farmers are managing their operations forward. “We’re always at least one season ahead in our planning,” he adds, referring to locking in input and machinery costs, crop insurance levels and, in some cases, marketing contracts.
Most acreage in the organization is irrigated, and they are considering including precision irrigation monitoring and management in the future.
This article published in the January, 2011 edition of NEBRASKA FARMER.