Hiring a Custom Farming Outfit: The Pros, The Cons and the Paperwork

Chances are, every farmer will hire out work to a custom operator at some point in the their farming career. Whether it’s a high-clearance sprayer to get a fungicide on ASAP, or getting hay done in a tight window, custom operators can save you time, money and maybe a crop, if the weather is working against you.

For other farmers, hiring a custom operator is part of the overall business plan, freeing up capital that would instead be sunk into machinery that depreciates and needs parts and servicing. Still, hiring out work means becoming dependent on someone else for what could be a very time-sensitive project. How do you make the call? Consider this list:

The Pros

  • Custom operators typically run new equipment and the latest new technology
  • The fee is a full write off as a cost, vs. just depreciation
  • No maintenance, fewer engines/tires/etc. to deal with (and store)
  • Custom operators should be bring experience and expertise
  • Allows you to get certain jobs off your plate — free up your time AND your capital

The Cons

  • Priority list …what happens when you’re on the bottom of the list
  • They don’t show up, or answer their phone
  • They rush – could = poor seed germination for example
  • unorganized outfit – hard to know who to talk to
  • disease/weed spread through contaminated equipment
  • Potential conflict

So, You’ve Decided to Hire a Custom Outfit…

Ultimately, the decision of whether or not to hire out work is yours. Beyond considering the above pros and cons, you should also consider your Return on Investment. If hiring the job out looks like the best idea, shop around for a good option; someone who’s fair, reliable and trustworthy. Consider taking the potential operator for a drive around the field or through the herd to give them a better sense of what you’re asking (and to see if they’re okay with the rocks and sloughs or your herd’s temperament). A great many partnerships fail simply because the custom operator or farm hand does not have a good grasp of what they are being asked to do.

If it looks like it might work out, write something down. You need only look to your neighbours’ poor succession plan or a friend’s botched attempt at a verbal work agreement to understand why putting negotiations in writing is important. Beyond addressing uncomfortable topics like money, it might bring up other questions, assumptions or expectations.

Consider including the following in writing:

  1. Detailed Work Expectations – This goes beyond simply writing a task, like “combining.” Be specific. Is the custom combiner expected to supply fuel? A truck? An auger? His/Her own food? Will you help with transport? Will you help assess the work as it’s being done, or just complain, er, provide feedback afterwards?
  2. Location and Time Expected – Jot down where the job is, and when you hope to hit the field. Not everyone has an incredible memory, and this will give the operator a chance to make a mental note or put it in her/his calendar.
  3. Pricing – Nobody likes to be caught off guard by a higher-than-expected bill, nor is it effective to try to negotiate a price after a job has been completed. Nail down what you believe to be fair. No idea? Ask farmers online and have a look at the Saskatchewan’s Farm Machinery Custom and Rental Rates Guide, Pasture Lease Agreement or similar publications before the negotiations begin.
  4. What Happens if Job is Canceled or Delayed – In some situations, timing really matters. If you’re hiring out custom spraying, and they’re broken down, is it acceptable to hire someone else? If the deadline for seeding a specific crop is approaching, and you can’t get in touch, what will you do? Alternatively, if the custom outfit has a lot of work to do, and yours isn’t ready when they are in the area, can they move on, either returning to yours or refusing it outright?
  5. Payment Timing – Determine when money transfers should occur, and how. Ask for a bill and receipt. When is the best time for both of you to pay/receive? The fewer surprises, the better.
 

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