How are they making money?

ncmc

I visited an uncles farm yesterday where there was silage being picked up by a new New Holland harvester and 4 big tractors. I am just wondering how a contractor can make a profit with the short time frame, wages and huge machinery costs.

I know my uncle had 80 acres and that's 8k but I'm sure that must have been half the day. With the harvester probably idle for 11 months it sure looks like a tough business.

NIMAN

Ask him?

mickdw

ncmc wrote: »

I visited an uncles farm yesterday where there was silage being picked up by a new New Holland harvester and 4 big tractors. I am just wondering how a contractor can make a profit with the short time frame, wages and huge machinery costs.

I know my uncle had 80 acres and that's 8k but I'm sure that must have been half the day. With the harvester probably idle for 11 months it sure looks like a tough business.

Tractors etc will surely be out much of the year on various tasks. The harvester is hard to understand. Very difficult to make it pay you would think but I'm sure they know the figures and taking into account reliability of a new machine and possibly faster production with the latest machinery, it must make sense.
Maybe he was in a position to take up a good deal on the new machine if they are hard shifted.

Manoffeeling

mickdw wrote: »

Tractors etc will surely be out much of the year on various tasks. The harvester is hard to understand. Very difficult to make it pay you would think but I'm sure they know the figures and taking into account reliability of a new machine and possibly faster production with the latest machinery, it must make sense.
Maybe he was in a position to take up a good deal on the new machine if they are hard shifted.

And clients who pay

mickdw

Manoffeeling wrote: »

And clients who pay

Thats a whole other issue. From that end I've no idea how they survive in current climate with fuel prices as they are and no over drafts available from banks for many.

Timmaay

I don't understand this whole option that every single contractor whos rocks up with new kit is definitely on the road to nowhere and is going to be bankrupt in a yr etc etc. Its a business, and simple as is, with every business you got a whole range of level of success. I can guarantee any of the better lads who do go out and buy all shiny new kit aren't doing it just to be able to brag down the pub etc etc, they have done the sums and new probably works out better in that case, of course for every one of them there is someone who probably hasn't done their homework and is making feckall, but happyly bragging about his shiny fleet in the pub, that's the way the world works!

Once they keep cashflow moving, and are making a profit of some sort at the end of the day thats all that matters, whether its with clapped out rust, or shiny new machinery.

MfMan

Timmaay wrote: »

I don't understand this whole option that every single contractor whos rocks up with new kit is definitely on the road to nowhere and is going to be bankrupt in a yr etc etc. Its a business, and simple as is, with every business you got a whole range of level of success. I can guarantee any of the better lads who do go out and buy all shiny new kit aren't doing it just to be able to brag down the pub etc etc, they have done the sums and new probably works out better in that case, of course for every one of them there is someone who probably hasn't done their homework and is making feckall, but happyly bragging about his shiny fleet in the pub, that's the way the world works!

Once they keep cashflow moving, and are making a profit of some sort at the end of the day thats all that matters, whether its with clapped out rust, or shiny new machinery.

Bigger machines like a SPFH are most often acquired on a lease or HP rather than bought outright.

grange mac

MfMan wrote: »

Bigger machines like a SPFH are most often acquired on a lease or HP rather than bought outright.

My man rocked into farm on sunday wit a new holland tractor 3 days old...only cost 100k apparently.Said fusion baler up hill was testing last tractor 150hp so went for 180hp wit a boost to 230when required...but told me bout 35% more efficent on. fuel after taking adblue into account. That plus tax planning on vehicle makes it viable...aka. capital allowances

Muckit

Any silage pit contractor that is still in business after last year is made of tough stuff and will stick at it. With heavy lodged crops cut weeks late, most burnt twice the amount of diesel to pick up the same acreage.

Re baled silage, if a lot of them took out a calculator they are making zero baling surplus paddocks. I see one lad near here had the contractor up to bale an acre of grass. But he didn't just bale, he came up with a set of butterfly mowers, then a 30ft rake, then finally the baler.... what money had contractor out of that? Now he was more than likely keeping farmer happy to get the job of his pit silage.

Long story short, they are probably asking the same of many beef/suckler/sheep farmers. They are at it because they love it and couldn't see themselves at anything else. Contractors are like mechanics, underrated and underpaid for the hours they put in and what they do.

yellow50HX

grange mac wrote: »

My man rocked into farm on sunday wit a new holland tractor 3 days old...only cost 100k apparently.Said fusion baler up hill was testing last tractor 150hp so went for 180hp wit a boost to 230when required...but told me bout 35% more efficent on. fuel after taking adblue into account. That plus tax planning on vehicle makes it viable...aka. capital allowances

when it comes to big gear its all about the repayment plan as opposed to the list price. last thing you need is a tractor breaing down when its needed most. also with new gear you are covered for services and parts. the lad that used to do our silage used to buy a brand new baler every year. his reasoning was that with the large number of bales he was doing the baler would need a good overhoul at the end of each season. One year he kept a baler for a second year and he ended up getting out the service guy a good few times by the time it got to its 2nd straw season.

when it comes to tratcors its a case of making them work as much as you can while you have them. if your doing big hours of heavy work then the fuel effieceny really needs attention. Tillage farmer near here traded 4 120-140 hp tractors for 2 200+hp tractors about 7/8 years ago. he was one of the 1st fellas round here to get really big tractors. his reasoning at the time was 3 fold. he was unable to keep enough good drivers as most were going off to work on building sites, he was noticign that he had more machines idle over the year as most were being used at the same time, and fuel his fuel costs were going up the whole time cos of teh number of machiens he was running. Anyway the two tractors do all the tillage work, 7 furrow rev plough (he also has a 4 furrow on a 125hp which is used for small fields and closing the headlands after the big plough) 6m trailed seed drill and 6m trialled harrrows and roller. during the summer one tractor is hired out to mow grass with a front and rear mounted mowers and the other used to be hired out to fella pulled a trailered sp harvester. he only hire's out one of them now for the summer as the other one is used for the grain harvest when seasons start over lapping. in the 1st year alone the repayments on the 2 bigger tractors were the same and the ones on the 4 smaller ones but his fuel bill was about 1/3 and his labour bill about 1/2 on pretty much the same amount of work. he has upgraded the 2 big one twice in that time and despite the rise in fuel costs reckons they are still cheaper to run. He has 1 lad with him full time and 2 other local lads that fall in when he needs them.