Agri contracting?

Waite870

Well lads.. Im a big fan of machinery and tbh I'd be fairly handy on them and good at fixing them.. I want to start contracting. Now there's a few established lads near me but there's one big lad on the way out now who was doing about 8/900 acres. I have 3 next door neighbours who I have always worked for with silage pits.. And I'd get the work from them no problem. About 300 acres and Im sure there will be plenty others as im well In with a lot of farmers.. Was looking at a claas combi baler also aswel as a jaguar 870 and 3 ex demo claas tractors to draw and pull slurry spreaders.. I want to buy fairly fresh yokes which I hope will last a bit longer.. Planned to spend about 550k for slurry, silage and bales. Problem is getting that money.. Would the bank finance it? Like I said I know nothing about financing machines I only drive them haha.. Seriously what do ye think?

6270red

Start small maybe a baler and slurry tank build your reputation and your customer base. If things go well then move into the self propelled game.
Ask the tractor dealers about finance, claas have a good finance package as far as I know.
Small steps first and you'll be fine. Good luck.

Waite870

But what about the financing?

ZETOR_IS_BETTER

Waite870 wrote: »

But what about the financing?

Did you do a business plan with projections?

Waite870

I reckon I could pay 550k over 7 years after a wage, depreciation, maintenance, and tax

Bullocks

Waite870 wrote: »

I reckon I could pay 550k over 7 years after a wage, depreciation, maintenance, and tax

That's a big heap of finance to pay starting out especially when the farmers SFP isn't paid on time and he can't pay in time .
Have you any savings or a good relationship with the bank ?
As someone else said, start small and build up over a few years

Mf310

Waite870 wrote:

I reckon I could pay 550k over 7 years after a wage, depreciation, maintenance, and tax

Yeah grand if thats what ya like doing, But what would make you stand out from the other lads? Could you do it much cheaper? Also I dont know about buying the best of kit from start maybe buy a couple of old classics like massey 6180 mccormick mtx case 5140 tm series etc... work your way up .. also if you did it that way you could have a few so that say you wouldnt have to unhook slurry spreader while at silage or for long draws although the other side of the story is the claas finance may be better in the long run and youd have real good machines... Also go around to farmers local with your prices made out just to see would they change or is it a waste of time... Best of luck in whatever way ya go all the same

lab man

Do u like headaches! !!!!!!!!!

tomwaterford

Waite870 wrote: »

I reckon I could pay 550k over 7 years after a wage, depreciation, maintenance, and tax

Wagon silage out my way is picked up at e70-85 a acre
At 1000 acres that's 85K over 7 years is E595....are you budgeting for diesel???

Waffletraktor

Waite870 wrote: »

I reckon I could pay 550k over 7 years after a wage, depreciation, maintenance, and tax

Is this on farming simulator ye?

You may fancy yourself but that doesnt mean farmers will instantly switch over unless at a substantial premium.. And thats a train to no where...
What you will get is off-loading of other contractors poor payers and awkward jobs that dont make existing guys money. Can your business plan live on cash turn over of not being paid for six months?
If you want to be a fulltime tractor jockey, of which only a tiny handful are of much use really need to do what other guys are not and specialist things. A Keltec bale chaser and a loader/grab chasing a few contractors fusion/baler combos type thing.

Waite870

Only reason im planning this is because of the contractor that's pulling out due to health reasons.. Who had alot of big contracts in the area

tomwaterford

Waite870 wrote: »

Only reason im planning this is because of the contractor that's pulling out due to health reasons.. Who had alot of big contracts in the area

Hire the gear off him??

Who's to say you'll get all his work either

Waffletraktor

Waite870 wrote: »

Only reason im planning this is because of the contractor that's pulling out due to health reasons.. Who had alot of big contracts in the area

You and every other contractor around too, and you occasionally hear of guys buying out the predecessors round nonsense. Customers normally choose a contractor on relationships built up/reliability/price not because you took over the previous guy.
Borrowing that much money would give established guys sweats! Look at specialised jobs like fencing, soil testing - mapping, that farmers dont want to do but you set your price with minimal outlay.

visatorro

You'd have to be cutting well over 3000 acres to pay it off, going by my rough calculations.
Contractor here bought loads of machinery. Banks moved in, left him with one tractor. He's making more money hiring himself and tractor into existing contractors now then he ever was with a big fleet of stuff.

Miname

I say go for it, if we don't have young enthusiastic lads coming on that will drive for a loss then it's going to cripple me with contractor bills.

kerry cow

There's no money in machinery , a living only and you will just spend the rest of you life on a merry go round of finance. Shinny paint and diesel are addictive. Remember you will need a deposit of 100 k for your purchase .
Start small and farmers will support you easier and if your good it will grow . Don't put the cart before the horse or you could Fock yourself for good .

topmanamillion

Waite870 wrote: »

I reckon I could pay 550k over 7 years after a wage, depreciation, maintenance, and tax

I can tell you now you won't pay off 550k in 7 years. That's about 80k a year to the bank plus interest (I'm presuming you need the full 550k and haven't factored in interest?)
Factor in insurance, wages, repairs, materials, fuel etc etc and you'd want to be turning over E200k /year just to cover outgoings never mind giving yourself a wage.

For example do you know how much profit there is in a round bale for you after overheads?


You need to sit down and do reasonable projections.
Most new businesses make losses in the first year or 2 and you have to expect this.
As has been said you should start small and work your way up.

Also your belief that your "well in with farmers" seems very naive. If a contractor is pulling out I can only assume he's retiring and has been doing it for years.
His customer base will most likely look to contractors with similar experience. These contractors won't have the start up costs you'll have and will more than likely be able to under cut you.

I'm not saying don't do it but your "figures" and over all business plan don't add up at all.

foxer3640

I'd be reluctant to go down the agri contracting route if I could turn back the clock.... Finance companies, revenue, chasing money, breakdowns etc. The good days are great but there are lots of bad ones. My advice coming from 30 years experience would be to start small with older kit and avoid finance as much as you can. Maybe a job driving for an established contractor might be better.... Less stress and hard to beat a weeks wages. Best of luck whichever route you take.

davidk1394

Silage contracting isn't for the faint hearted. Especially pit silage you'll have a lot of money tied up just to break even. Perhaps do what I did start small. I started off with our own 2wd and decided if I last the summer I'll consider investing in machinery. Are you guaranteed any of the work and have you any experience managing people and money ?? Being able to budget during the summer months is difficult. With diesel and the odd break you can build up a bill very quickly. If I was to give you advice, keep it simple and try not have big machines parked up 10 months of the year

ganmo

You could offer to buy the retiring lads business

Willfarman

There is a living in contracting and if you are passionate about it then go for it. Do you need to jump in so deep? Minimise the amount of kit and maximise the amount of use you can get out of it. Minimise the amount of help you need and maximise his/her use too.

twin_beacon

Waite870 wrote: »

Would the bank finance it? Like I said I know nothing about financing machines

First of all, make an appointment with a financial adviser. Before you even pick up the phone to the bank, you will need a business plan with projected revenue for the first few years. As pointed out earlier, its expected that you will make a loss in the first few years. If the bank does decide to give you money, you will need a lot of collateral as you are buying fixed assets that are going to depreciate in value. If you cant make payments, and the bank repossesses your machinery, then its not going to be worth the amount you borrowed, so there will be an outstanding balance.

Do you have any business experience? Honestly, I can't see any bank giving you half a million euro for this. Even if one of the existing contractors wanted to expand their fleet to take the work of the retiring contractor, they would have to jump through hoops to get that much.

I think you are starting to sprint before you walk. Start small, get one tractor, something that isnt going to break the bank, and has almost bottomed out on depreciation (like a 110-90, of an F 140). Try and offer a job that not many other people do. Or, talk to a contractor about hiring you and your machinery to do some jobs for them, like tedding/woffling/raking silage or drawing/stacking bales. Services that contractors are obliged to offer, but isnt their main earner.

Its all about money at the end of the day. Id say you have a better chance of making more money with one tractor, than a fleet of 4, and a LOT less overheads!

Willfarman wrote: »

Minimise the amount of kit and maximise the amount of use you can get out of it.

exactly, tractors done make money when they are parked up. From October to mid Jan, there is no silage or slurry.

lakill Farm

Waite870 wrote: »

Only reason im planning this is because of the contractor that's pulling out due to health reasons.. Who had alot of big contracts in the area

would he do you a partnership deal ?

johndeere3350

Do you know how much it's costing to put in an acre of silage?
The profits are miniscule I'd say borrowing for the gear you would be at a loss 550k wouldn't get you a whole pile anyway.
Loader 70k harvester the same.??
4 tractors you say you want to keep fresh so 60k on each tractor x4
We are on 380k now.
Trailers 10k each another 40k
A decent mower 12k?
A rake 10k
Slurry tanker 10k
Agitator 5k
Your over 450k already.
How many acres was said again I tink it was 900 plus neighbours give it a 1000 acres that would be some going the first year out.
1k acres at 110 euros an acre is 110k euro.
If the drivers ran on fresh air and so did the machines the it's going to take the 7 years to just cover the repayments alone ( I'm Including intrest in that)
And besides that you have claas tractors that will depreciate a crazy amount.
You will have a worn out rake and mowers a harvester that needs a serious overhaul and the trailers will need tyres and brakes.
Again fuel running costs and wages haven't even come into it.
Where will you get drivers? Good lads now I mean.
What will happen if the mower breaks down 10 miles away and your too busy driving the harvester to go and look at it because the guy driving it hasn't a clue?
Where will you park them?
Have you the equipment to carry out essential repairs?
I've a feeling you haven't asked yourself alot of these questions.
It can't be stressed enough it's no walk in the park.
I started when I was 16 with the help of my father and another guy.
As the years went on the lads have let me get more involved in the whole thing to the point of where my father now enjoys himself and has free time and so he should.
I used only drive the tractor we had then but I learned an awful lot be it dealing with lads fixing machinery and driving.
There's plenty and I mean plenty of lads my age (mid 20s) that bought gear and are only fooling themselves.
And one of the main reasons?
Because they know absolutely everything.
I remember seeing one of them chatting to a farmer that he did work for every second word out of his mouth was LAD and blowing smoke into yourmans face.
I said to myself that isn't going to last much longer and sure enough it didn't.

No empty promises,be on time, fix what your break and say thanks for everything you get.
Believe it or not it's the simple things get you the work

9935452

Waite870 wrote: »

Well lads.. Im a big fan of machinery and tbh I'd be fairly handy on them and good at fixing them.. I want to start contracting. Now there's a few established lads near me but there's one big lad on the way out now who was doing about 8/900 acres. I have 3 next door neighbours who I have always worked for with silage pits.. And I'd get the work from them no problem. About 300 acres and Im sure there will be plenty others as im well In with a lot of farmers.. Was looking at a claas combi baler also aswel as a jaguar 870 and 3 ex demo claas tractors to draw and pull slurry spreaders.. I want to buy fairly fresh yokes which I hope will last a bit longer.. Planned to spend about 550k for slurry, silage and bales. Problem is getting that money.. Would the bank finance it? Like I said I know nothing about financing machines I only drive them haha.. Seriously what do ye think?

Another few things that lads havent really highlighted to you eithre.
You will pick up work but a lot of the time its working for people that noone will work for because they wont pay you.
Then there is also the lads who pay you for last years silage when you come to cut this years silage ,
Are you willing to work on a years credit with lads?
Also be thinking about how dairy farming is going at the moment. To be fair to the lads they are struggling to survive with the price of milk so will struggle to pay to.

Another thing to think about is your employees . If you go big you will have a few permanent employees.
Think about their entitlements, holidays , sick pay , redundancy and the likes , it gets awefully expensive

id agree with the lads here , you need to start off small and affordable, good second hand machinery and do a good job and build from there.
If i was going contracting tomorrow id focus on slurry.
3000 gallon tank with a lazy arm.
What i see at home is everyone is cuttig silage and no slurry is being spread . When you get around to it the grass has grown too much,
is say 3000 gallon tank to get better productivity and its bigger than most and gives people a reason to bring you in. Anything bigger and i could see concrete in peoples yards suffering.
Baler wise round here i probably wouldnt bother. Every man and his dog seem to have a baler. we have 6 fusions in a 5 mile radius.
There is also a lot of lads who will only bale light crops and put heavy crops into pits so you could find yourself getting 2 or 3 bales to the acre picking up after haybobs .

st1979

Agree slurry is often forgotten about. The silage contractors are way too busy to do it. One guy around here just specialized in slurry got big at it then branched out into silage. Think it's a better way than other way round

st1979

What about a wagon silage service. If you have none in your area it might be a unique service. Pick the handy draw customers and the lads with long draw can stick with self propel gang. Less tractors less drivers etc needed. Less work needed in the rest of the year to keep everything busy

mythos110

Waite870 wrote: »

Well lads.. Im a big fan of machinery and tbh I'd be fairly handy on them and good at fixing them.. I want to start contracting. Now there's a few established lads near me but there's one big lad on the way out now who was doing about 8/900 acres. I have 3 next door neighbours who I have always worked for with silage pits.. And I'd get the work from them no problem. About 300 acres and Im sure there will be plenty others as im well In with a lot of farmers.. Was looking at a claas combi baler also aswel as a jaguar 870 and 3 ex demo claas tractors to draw and pull slurry spreaders.. I want to buy fairly fresh yokes which I hope will last a bit longer.. Planned to spend about 550k for slurry, silage and bales. Problem is getting that money.. Would the bank finance it? Like I said I know nothing about financing machines I only drive them haha.. Seriously what do ye think?

Do you do any of the above jobs on your own farm at present (assuming you are farming)? I am working full time and farm part time. I have a lot of gear at home - 3x fairly good tractors, trailed silage harvester, mower, trailers, loader, excavator, good slurry gear etc and currently thinking of buying a baler. I worked as a mechanic for a year before doing engineering in college.

At the moment I owe nothing to a bank apart from the mortgage on my own house(for a few more years). I've built up this machinery over the last few years basically as a tax write off from the farm. Long story short, you wouldn't believe the amount of time that goes into preparing your own equipment for the run out every year. It can be stressful enough doing it for yourself, never mind starting into doing it for others. If you don't have experience of running and maintaining machinery on a small scale, then don't even consider the expansion you are talking about.

Also, consider family life. You might be young and full of energy now and willing to work every hour of the day to pay it back. Some day though, you'll probably end up getting hitched and then your better half will need you to do your fair share of rearing the potential offspring. That's not a job that mixes well with contracting!

Bass Reeves

Waite870 wrote: »

Well lads.. Im a big fan of machinery and tbh I'd be fairly handy on them and good at fixing them.. I want to start contracting. Now there's a few established lads near me but there's one big lad on the way out now who was doing about 8/900 acres. I have 3 next door neighbours who I have always worked for with silage pits.. And I'd get the work from them no problem. About 300 acres and Im sure there will be plenty others as im well In with a lot of farmers.. Was looking at a claas combi baler also aswel as a jaguar 870 and 3 ex demo claas tractors to draw and pull slurry spreaders.. I want to buy fairly fresh yokes which I hope will last a bit longer.. Planned to spend about 550k for slurry, silage and bales. Problem is getting that money.. Would the bank finance it? Like I said I know nothing about financing machines I only drive them haha.. Seriously what do ye think?

Waite870 wrote: »

I reckon I could pay 550k over 7 years after a wage, depreciation, maintenance, and tax

Waite870 wrote: »

Only reason im planning this is because of the contractor that's pulling out due to health reasons.. Who had alot of big contracts in the area

If you do not know about financing machines forget it. You are lucky it is very unlikly taht the banks will give you money. Know a young lad that made that assumption this year. He was looking to set up a baling outfit. two tractors, rake, baler, mower. Like you he wanted fresh yokes.

He got the baler, rake and one tractor. He could not get more finance. He has 50K borrowed. He is borrowing a tractor and mower from at home and his father and brother are fair pissed at this stage. It is unlikly that he will survive the winter.

If you managed to borrow 550K you will need 100K in repayments/year over 7 years. On your outfit you will need 2 lads fulltime and two for the summer factor in labour at 100k for the year. Labour is a big issue this year it seems. What will insurance and PL cost 20K???. I have heard of a case where a pit silage outfit is gone out of business because of not being able to pay insurance and PL this year Add diesel, maintenance etc. As well you will need access to a yard for working out of with a workshop in it.

Considering you like driving machiner you will not be on them long what with racing around fixing issue, pulling the bowser of diesel for all you machinery in your new 4WD( another 40K) and out collecting money.

What caued the lad that ill health that retired. There seem s to be a fair exit of contractors this year all with different excuses.

9935452

st1979 wrote: »

What about a wagon silage service. If you have none in your area it might be a unique service. Pick the handy draw customers and the lads with long draw can stick with self propel gang. Less tractors less drivers etc needed. Less work needed in the rest of the year to keep everything busy

I was thinking wagon too but there would be a fair lump of startup there too. 2 wagons with 2 fairly big tractors to run them.
Tractor and mower, loading shovelm maybe tractor and rake too.

Though one possibility is run the wagon and allow farmers to mow/put it up themselves, hourly hire. Or find a man who is running wagons and see if you can hire yourself into him

johndeere3350

st1979 wrote: »

What about a wagon silage service. If you have none in your area it might be a unique service. Pick the handy draw customers and the lads with long draw can stick with self propel gang. Less tractors less drivers etc needed. Less work needed in the rest of the year to keep everything busy

Wagons would be the way to go for us if we went down that route way less labour intensive

kerry cow

Hi lads , looking to buy jd 78 or 7710 low houred .any one know where there is one . I bought 6820 last yr with 1800 hrs on clock from a builder so they are there , just to find and tip off .thanks

davidk1394

They'd be hard to come by at this stage. Most of them have a lot of heavy work done at this stage

MF290

kerry cow wrote: »

Hi lads , looking to buy jd 78 or 7710 low houred .any one know where there is one . I bought 6820 last yr with 1800 hrs on clock from a builder so they are there , just to find and tip off .thanks

There's always another low houred one hiding somewhere. The likes of GM Stephenson and Parris tractors snap them up fairly quickly though. They say at the dispersal auctions the dealers sort out who wants which machine between themselves ahead of the auction. If two want the same machine they flip a coin and whoever wins has to pay the loser. There's no competing against them at an auction. There's surely a few on 400 acre farms in England only clocking up smallish hours as cultivation tractors, you could always head farm to farm with a big wad of cash the way the price of grain is heading