Team Share ExampleThe following explanation offers a brief working example
of the cost involved in a typical Team Share situation.
Please remember that good, used machinery can be used within
the schemes.
We use examples based around new machinery prices for consistency,
but we are more than happy to base a proposal on good used
equipment for individual groups.
For the purpose of this exercise we can assume that four farmers
wish to achieve a reduction in their cereal production costs.
Farmer A is farming 540 acres, farmer B wishes to retire but
owns 400 acres, farmer C is farming 650 acres and farmer D
is farming 700 acres.
Farmers A, B and D have all their land into cereal production
and farmer C grows cereals and 150 acres of root crops. This
gives a total acreage down to cereal production of 2140 between
the four farmers.
We can assume that farmers are working on medium to heavy
land and are currently using a plough based primary cultivation
system followed by a mixture of pressing, rolling and power
harrowing to form a seed bed. Following on from that they
are each using a different drilling system, which could include
power harrow/drill combinations on some of the farms.
We can calculate the current crop establishment costs of these
farmers at being between £50-£65 an acre. Based
around known production costs of farmers using a low-tillage
system we know that it is possible to achieve crop establishment
costs of between £20-£35 an acre. To achieve this
the farmers would be looking to purchase a large rubber-tracked
tractor in excess of 375 hp and a one-pass cultivation system,
such as a Simba Solo or a set of heavy discs complete with press
and subsurface cultivator. The drilling would be achieved via
a 6-8 m specialist drill, such as a Simba Freeflow or Horsch
drill.
If the farmers adopt option A to achieve the most profitable
results they would look to purchase a 375 hp tractor, Simba
4.5 m Solo, 5.5 m press and Horsch 8 m drill.
If they choose option B they would purchase a similar sized
tractor, a set of 6.5 m 34C-type disc harrows, 7.5 m press,
6 m Freeflow drill and 3.5 m Flatliner 500.
With option A the cost of owning the machinery, at today's
rate of interest, could be £41,875.00 per annum. If
this figure were apportioned per acre the cost to each farmer
in the group would be £19.57.
If the farmers went for option B the annual cost of ownership
would be £42,809, which would give a cost per acre of
£20.00.
The figures shown are based around a 5-year programme. Within
the Team Share plan it is proposed that the tractor be
purchased with a 5 year service agreement which could cost between
£3.50 and £7.50 per hour. Based on approximately
2200 acres it is assumed that the large tractor would work no
more than 600 hours per year which gives service and warranty
costs of between 0.98p £2.10 per hour. The only additional
costs would be fuel and insurance.
The above example offers the individual farmers the opportunity
to determine their crop production costs for the next 5 years.
It also offers them a potential saving on crop production costs
of between £30 and £45 per acre, plus any additional
savings that will be achieved through the reduction in the costs
of labour, chemicals and a benefit from possible tonnage increases.
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Most farmers can obtain the first 2 years of
contributions from the disposal of surplus machinery and the
savings made through a reduction in maintenance, breakdown and
general running costs of the more dated machinery on their farms.
The Team Share system advocates that the farmers only
combine their interests via the sharing of specialised pieces
of equipment and each individual farmer is free to manage his
farm however he chooses. Within the Team Share proposal
each farmer continues to apply his fertiliser and spray with
his own machinery. This avoids disputes should the quality of
a crop suffer due to late application of fertilise or chemicals.
The farmer can sell his crop how and when he pleases. Most importantly
he maintains his individuality and independence, his only restriction
is that he would have signed a 3 or 5 year agreement binding
him to the sharing of the specialist equipment.
The Team Share system is one that requires very little
administration and simply requires the members to make either
a monthly or annual contribution to a joint bank account from
which the leasing and running costs of the machinery are met.
Each farmer is responsible for funding his own labour and providing
the fuel for the large tractor when it is on his farm. The Team
Share proposal advocates an "arrives full and leaves
full" policy. Through the Team Share system the
individuals maintain all the tax advantages that they currently
enjoy as individual businessmen and through the accountancy
advisory service offered by Team Share measures would
be taken to ensure that "The Group" operations do
not make a profit. This avoids various tax issues.
The Team Share system advocates that machinery is purchased
with the aim of achieving the desired cultivation and crop establishment
with 25-30% spare capacity. This gives the group the possibility
to take on an additional partner without jeopardising the well-being
of the original group members. If additional acreage is taken
on the cost per acre, per year is reduced for all members concerned.
Team Share does not advocate that machinery be purchased
with the view to it being affordable only if additional work
can be found. Team Share will only advise groups of farmers
to purchase machinery at a size they can afford based on their
known acreage.
If you wish Team Share to explain further,
please contact us by telephone,
fax or e-mail.
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