Machinery Decisions That Make Money
30 Dec 2324 min 17 sec

Modern farms have huge dollars tied up in equipment, but does that equipment provide an ROI? Johnny Verell joins Steve Simon of Simon Innovations and host Damian Mason to discuss machinery decisions and equipment upgrades. Are you upgrading equipment just to keep up with the neighbors? Does that shiny machine you saw at the farm show really need to be in your tool shed? We dig into the money side of equipment upgrades. As Johnny’s grandfather advised him, “Son, a man can justify anything he wants” but is it really a good financial decision?

Presented by Advanced Drainage Systems

Listen Here:

00:00 How do you make farm equipment decisions? Is it financial based or is it because you're your love of the machine? That's what we're talking about in this episode of extreme Ag Cutting the curve. 00:11 Welcome to extreme Ag Cutting the Curve podcast, where you get a guaranteed return on investment of your time as we cut your learning curve with the information you can apply to your farming operation 00:24 immediately. Extreme ag, we've already made the mistakes so you don't have to. Managing your farm's water resources is a critical component to a successful and 00:35 sustainable farming operation. Advanced drainage systems helps farmers just like you increase their yields up to 30% with their technologically advanced water management products. 00:47 Visit ad s to see how they can keep your business flowing. Now, here's your host, Damien Mason. Hey there. 00:56 Welcome to another fantastic episode oft Extreme acts kind in the curve. We're talking with Johnny Rell and Steve Simon of Simon Innovations about making 01:04 machinery decisions that make you money. Okay, we go to the Louisville Farm Show and we talk about, oh man, love that equipment. Oh, we kick the tires. Farmers love machinery. That's fine. 01:15 It's cool, right? We all get excited about that. But does the machinery make you money? And are you making decisions about your machinery that make you money? 01:22 Because after all, farming is a business. Johnny Rell and I decided to do this episode because I was in Tennessee at his farm. At the end of June, Steve Simon was there. 01:31 They had just put on a lift kit on his sprayer, uh, gives you an extra couple of feet to get through the field later in the season. And I said, okay, let's talk about this now after the season. 01:41 Did it make you money? Did putting on this machinery add-on, make you money? These are the questions I think we need to ask to make your machinery make you 01:50 money so that you can be in the farming game for a long, long time successfully. All right. Talk to me about the machinery, uh, decision, Johnny. 02:00 Yeah, so for me, you know, I've been looking at this lift for several years trying to figure out how I could justify it on our farm. 02:07 'cause we're in an area where we have a lot of residential neighborhoods around us. Uh, we're right next to a, uh, commercial airport, 02:14 so crop dusters and stuff like that. We're having to worry about what people are thinking we're spraying or we're flying in and out of a airports, uh, 02:23 zone where they don't really like us flying in and out of a crop dusters. So for us, it just made sense for us to finally transition into it. 02:29 And like I said, probably two years ago I talked to Steve about the lift, trying to look at it, trying to make sure it's gonna work, 02:36 hold up in our terrain, right? Because we're not flat level ground. We have a lot of rolling hills, a lot of terrace ground. 02:43 So I was really concerned about how that was going to hold up. So for us it was just, it was a lot of different ideas. 02:49 We were trying to figure out if it would work. So talked to Steve back at Commodity Classic, uh, I guess, what was that, February? I talked to him 1st of March and uh, 02:58 he had one there and walked around and looked at it and one of the guys that works with works with me looked at it and we made a deal with him. 03:05 So it's been a good investment. Alright. It's made a good investment. I wanna talk to you about the actual return on investment. Before I do that, 03:10 Steve, when you get people to come to you and talk about equipment, first thing, obviously everybody, 03:14 every customer in the world and farmers are certainly this way. How much, how much, how much? Oh, I don't know if I can justify that. 03:21 How do you tell people to justify any equipment decision, yours or otherwise? I mean, 03:25 you're obviously in the business of selling machinery or machinery upgrades. How do you tell 'em, I mean, 03:31 do you appeal to the financial or do you just appeal to shiny stuff? I swear to God some of this stuff is just appeal to, it's big, it's shiny, 03:38 look at 'em, tires. Do you appeal to the money side when you talk to customers? Uh, absolutely. Um, you know, 03:46 most of these farmers do have these big commercial John Deere sprayers sitting in their yard. 03:51 And to have a helicopter or crop duster come in has a extra cost to, you know, their, their financial outcome at the end of the season. Um, 04:02 and I've had like numerous guys even at the trade show saying, Hey, for your lift kit, like I pay, I pay our, 04:11 our crop dusters twice that amount during a season. And, uh, we could take control of this ourselves. 04:20 And then using a ground rig versus a crop duster, we're using significantly more water with that fungicide. Um, and water and fungicide go hand in hand. You can't get more efficacy. 04:33 Okay. So you, so you, when you talk to a customer, you make the point that, okay, it's, you compare it to, you compare your thing, 04:41 putting a lift kit on a sprayer, which then gives you a longer use of season, right? That's what we're, we're extending the season, right? No. So you, 04:50 you don't appeal to Yep. And you can get in there later, you're gonna get bigger yields. You go straight to comparing it to aerial. 04:57 Is that the, is that the sale? Is that how you go about selling stuffing And bigger yields? Because using more water, uh, 05:02 with your fungicide is going to gain you significant better yield than let's say a crop duster or drones today even so other options, 05:13 but okay. Yeah, ground rigs have a fit. So if I'm your prospective customer, you're gonna tell me, um, you can use this later in the season and thereby, uh, avoid using aerial, 05:22 which means you save the application cost of aerial and you're gonna use your more money in your fungicide mix, which is gonna help you get bigger yields. 05:29 So you going to a financial, you go to a two-pronged financial, um, later season, 05:35 more yield because of the fungicide and also avoiding the cost of the aerial. Is that what appealed to you, Johnny? 05:41 It is, it is. And like I said, we still use aerial application on our farm. It's, we're not doing away with it, 05:47 but there's a lot of places that the crop dusters really don't wanna fly. So it allows us to go in and put the product right where we need it to be. So, 05:55 you know, from a costless, you know, point, you know, I think the system's around $40,000 for the whole lift. You know, everything you need from the, the reversing fan and everything like that. 06:05 So on our farm, when we look at that and break it down, you know, we usually raise in between four and 4,500 acres a quarter a year. 06:12 So if you just say 4,003 years, that's 12,000. It's what almost three do a little less than $3 and 50 cents an acre. Yeah. That, that system's cost me. 06:20 And then I still got the wear and tear and fuel and employee on my sprayer. But when you figure all that in together, 06:26 you're still less than you are with the arrow applicator. And like I said, being able to do it when we need to is the big thing. 06:32 But if it sits in the raining, we can still use a plane. You know, it's still there. But, you know, 06:37 we do a lot of trials on our farm and that's another thing that's really important to us is being able to have that data and know exactly where we put 06:44 what trial. And with an airplane, a lot of times it's a lot harder to get that information. 'cause when I draw on a map and say, Hey, this part of the field, 06:51 he's flying a hundred plus miles per hour, right? That part of the field don't look the same as it does to me. You know? So just having the data, having it recorded, knowing where we put the plots, 07:01 that's been a big deal for us. 'cause we did a lot of, uh, replicated trials across several farms where we did 240 acre strips, 07:08 360 foot or 240 foot strips, 360 foot strips with that sprayer all the way across the farm replicating it. And that's really what was big for us, 07:17 being able to take that and really see what we have at the end of the year. Okay. So you, you actually did make this decision, uh, 07:24 pretty well convinced it was gonna make you money. Now the trial tells you that it it has. Oh yeah. Yeah. And I mean, you, he's right. 07:32 The more water you put with the fungicide, it there is a better control. Uh, at the end of the year. We did several trials this year. 07:39 We went from 10 gallons all the way up to 25 gallons. And you could see the penetration in the canopy, especially when you went closer to after tassel, uh, 07:49 you get a lot better penetration, more water, which I think everybody knows. It's just getting that with a plane or getting that with a drone is real hard to 07:56 do. So Answer me this, uh, this, what, what'd you say the cost on this upgrade was? It's about $40,000, I think. 08:04 Okay. Steve, this in, in the scope of things for a large scale or even mid-sized farming operation, 40 grand is a spit in the wind. I mean, you've got, 08:15 you've got a half million dollar combine, at least you've got a half million dollar sprayer, you've got a couple of semis, you've got, 08:22 this doesn't seem like it's a hard thing for you to get over from the cost standpoint comparatively. Um, 08:29 but it's also something that some might say is unnecessary. How do you get past that? 08:35 Yeah, I, uh, I don't know about the unnecessary part. I think just making these, uh, machines, uh, a full season machine, um, 08:44 comparing 'em to the other brands that are out there, Um, no, I didn't say, I'm not bashing on you saying it's unnecessary. I can see where the, I can see where the 08:54 skeptical customer might say, well, you know what, that's, that, that's kind of cool. But that's like, you know, doing wheelies on a tricycle, 09:03 it's cool, but do I really need it? Uh, so that's where I can see somebody saying, uh, questioning the need for it. Yeah. No, and, and fungicide, uh, doesn't seem to be going away. Um, 09:14 there seems to be more and more diseases coming in. Um, and this tar spot, I don't know if it, how far south it goes, but up here in the, in the central mid, um, 09:28 corn belt either and all the way out to Ontario here, it's, it's devastating. Like we've, we've recorded like 50 bushel yield, um, 09:38 reductions without spraying fungicide. So, uh, 50 bushels is, uh, we can't leave that anywhere. 09:46 I want to go back to Johnny and ask about how he makes other financial and machinery decisions. 'cause I think that, I think he's pretty business-minded, 09:55 but I, I wonder if he still actually still does that thing. The neighbor's got this. I need that. I'm gonna ask him that. But before I do, 10:02 I want to ask you, dear listener, are you ready to stand up to weather induced crop stress? It's been a tough year depending on where you are. You know, 10:10 our buddy Kelly Garrett saw a degree, a hundred degree temperatures in Western Iowa for crying out loud. So you got crop stress, if you wanna stand up to it, 10:19 turn to Terramar and innovative bio stimulant technology from Loveland products designed to help your corn and soybean crops thrive even under stressful 10:25 conditions. Try terramar exclusively available from nutrient ag solutions. That's terramar. T-E-R-R-A-M-A-R Terramar for stress, 10:35 for stress crops that will help you get big yields. Do you, do you really not fall for that farmer competitive thing when you're thinking, 10:42 Hey, I should upgrade my equipment? 'cause the neighbors did. Do you do that? I mean, I think every farmer likes new equipment, so I mean, 10:51 I think everybody does that. But, you know, we've talked about it in some of the other podcasts and stuff we've done, you know, we share equipment around, you know, I got two neighbors here. Mm-Hmm. 10:59 Uh, we share different from fertilized trucks with one of 'em, another one. We have different grain cars, equipment we share together. 11:05 So I think something like this, when people are kinda on the fence, if they can justify it, there's, there's a need for it. 11:11 There's a lot of people wanting, you know, you got other brands that come with lifts. John Deere doesn't offer lift right now. So, you know, 11:18 I look at it as a way I can diversify and, you know, if I wanted to start custom applying with their, with this lift, it's real easy to do. So 11:25 Is that something, is that something that you also factor in? Like, okay, if I need, I put a lift on my sprayer from Simon. Um, it's 40 grand, 11:33 which again, it's pretty negligible in a, a size operation of yours, but then you also get in your back of your head, like, 11:38 if it looks like it's not making sense, I can probably also do this with it. Do you give yourself option B and C on making the money off of the upgrade? 11:48 Yeah. Yeah. And I mean, if you just talking about farming in general, I think a lot of times you buy something, 11:52 you always need to have a plan B in place. Like, you bought it for this, what else can I use this product for or this piece of equipment for? 11:58 And you know, a lot of things that I've seen through extreme ag over the past mm-hmm, you know, over the past couple years is, 12:04 is the different equipment everybody's running, right? And you know, from the Estes Concaves, that's been a game changer for us. You know, 12:11 I can use 'em in all, all three crops. I raise, you know, this lift here, we're pretty much just running it on corn, but I don't have to take it off. 12:19 I just lower the sprayer back down, spray soybeans, spray wheat. You know, this past summer when we raised the double crop corn, we were spraying beans. 12:26 And then like usually Thursday or Friday we'd go spray, you know, five, 600 acres of corn one of those days. 12:32 And then the double cropped corn had to spray twice for the fungicide. So that sprayer really helped me get across that ground twice, uh, after tassel. 12:39 So, you know, it, it's getting used more and more on our farm, you know, and like I said, the lifts really just for the corn, 12:47 but there's other products that we've seen through extreme adding different things like that, that really get used on every crop. 12:52 Yeah. So what your, your, your point there is it was an upgrade, but it didn't also, it it's, it's, it gives you, shall I say, 13:01 uh, versatility because you can, it didn't have to change it, it didn't make it so you couldn't still do what you always had done, 13:08 say covering wheat or covering acres of soybeans, you just lower the thing. So this gives you versatility and I guess, uh, like, like Steve says, 13:17 extends your season. And, and another another thing Damon, you know, we have a drone that we use for trials and, you know, small scale spraying, 13:25 well, they're 30 to $40,000 too, and I already know what I can do with a sprayer, right? So when I talked to Steve, he kind of showed me how it worked, 13:34 how fast it raises up and down, kind of told me how long it would take to put it on. It was really a no brainer for us because I knew how many acres a day I could 13:40 use that sprayer. And I one person, When you're talking about this, Johnny, you're, you're talking about something that is pretty easy to justify. 13:49 How do you get through the harder decisions when it comes to machinery upgrades that are not 40 grand, they're more than that. Do you, do you get, 13:57 do you get a little more, um, shall I say stressed with a decision? Yeah, I, I think so. I mean, we put in a pretty big grain system, 14:06 grain drying system a couple years ago added a commercial dryer and you know, I was trying to figure out how to pay for that and I knew how to pay for, 14:13 it was captured early harvest premiums, right? So that's really what we try to capture. And I was like, well, if I can do it over five years, you know, seven years what everyone always says, 14:21 if I can do it in five, well, you know, I, I'm always in competition how fast I could pay for something by finding niche markets and stuff like that. So, you know, that's been a big deal for us. 14:30 You know, it's, you know, figuring on a lot of things. Like this thing, you know, this lift, I figured two to three years payout at most, you know, 14:37 a grain dryer, that's something that big, yeah, it's seven years, but it's probably got a 20, 25, 30 year lifespan. So it, it all just depends. 14:45 But, you know, my granddad taught me something one day I was looking at a piece of property and he looked at me and he said, son, a man can justify anything he wants. So, 14:54 you know, whether it's a piece of new equipment or a piece of land, you know, you can always justify something in your head if you want it. So 15:00 I by the way, your grandpa, I would've liked to have met him because, uh, there's times when I, uh, I get done doing something like I'm, 15:06 I really make a rational decision there. Or I just, uh, uh, did I just make a decision and then backed it up with, uh, as much, 15:13 like you said, you can, you can justify, you can rationalize it all you want. Steve, when you talk about it, it is not just your stuff. 15:21 He talked about concaves or whatever. Do you get into the business of, do you ever find yourself instead of salesperson that's counseling on, on, uh, 15:30 hey, should I do this? Should you know, is your job sometimes counseling people on the decision about an upgrading or about, uh, a machinery decision? 15:39 Yeah, I know I enjoy, uh, you know, at these trade shows or whether it's talking on the phone, um, all the decisions that these guys are going through to, to, you know, 15:49 help their bottom line and uh, and things like that. So no, it, it's, it's always a good time talking to farmers about, you know, 15:58 their future decisions. Yeah, and David, I'd say this, you know, whether you're talking about this lift or other products that we all use on our 16:06 farms, it's always amazing to me how somebody like Steve comes in and takes a product that every farmer's using and designs stuff to fit what we already have. 16:15 You know, because we're where we are, it's John Deere sprayers, right? There's a few other brands coming around right now, but it's John Deere. Well, 16:22 without somebody like him having the ambition to go out and design a lift that would bolt on and work on what I already have, you know, 16:29 I still wouldn't have a lift today. So that's what I love about going to the trade shows. Commodity classic Louisville different ones, is you can meet one on one, 16:36 especially at Commodity Classic. And I spent probably an hour with Steve that morning, one on one at his booth, and he was showing me all the different innovations he had. And, you know, 16:45 and I, I thought it was great. And that's what I always think is, you know, what's next? What can we do next? What can we do to make us more efficient? 16:55 'cause efficiency in farming is, is is what it really affects our bottom line. So you told me that you, uh, you, you've given me three great examples, 17:02 you said, okay, the grain drying and the grain new setup and I've been there, it's beautiful. It's huge. And again, the farmer in you gets like, you know, 17:09 enamored with, oh man, that's a bunch of steel. It's a bunch of pretty grain bins. Look at that man. Great big drive-through area. Oh, but you went with, how can I justify? 17:19 You're talking about multiples of millions of dollars. This is not 40 grand, this is multiples of millions of dollars. And you said, 17:24 I'm gonna put it right back to can I capture early season positive basis, uh, if I have this, if I have this grade set, 17:31 I can capture early season positive basis. You go with the Simon Lift kit, you said I can extend my season with my spray rig and the employees that I 17:39 already have. I've already got an employee that runs a sprayer. Um, I've already got the, you know, I know what's the season looks, whatever. 17:46 Then you mentioned, uh, concaves, um, how did you, how did you look at that machinery upgrade or that equipment or, uh, you know, expense and as an event, viewing it as an investment? 18:01 How did you look at it as an investment? That gives me an ROI, well, You know, 18:06 we were already buying half million dollar combines and really weren't happy with the grain quality we were getting, especially in high moisture corn. 18:13 So ran into some guys at, uh, ESIS Concaves talking to them, talked to different concaves company. 18:18 I just went with Estes 'cause kind of hit it off with 'em. And, um, you know, at the end of the day I started off with two, two sets, 18:26 ended up buying two more because what we were seeing. And then this year we had a combine go down and we're, they let us use one that they had sitting on the yard and it didn't have the SS 18:35 con it's the grain quality. So little things that you can affect throughout the year, whether it's, you know, cracking the corn or whether it's cleaning up the soybean sample. It, 18:44 it does, it does seem like a little bit of an investment on the front end, but it makes you money every day you're running it. 18:49 So, right. So then, and that's a, again, a pretty small expense. I mean, that's an upgrade. That's, you know, uh, less than 10 grand, isn't it? 18:58 Yeah. And it's people doing just like what Steve's doing, they're taking stuff that they see that combine could be enhanced on or benefit 19:05 from, and making them simple adjustments on concaves that they see a really big return on, right? So that's why I like partnering and looking for people like that. 19:14 And they always answer the phone. The small guy always answer the phone. I can text Steve at seven in the morning, he's gonna answer the phone. 19:20 That's what I really like dealing with companies like this. Wait A minute, he's giving you accolades here. Uh, Mr. Simon, 19:26 what do you think about that? No, he is right. And it's, you know what it is just my products have been come from me sitting in the seat 19:35 for the last 20 years, um, custom spraying and, uh, being a tool and die maker by trade. You know, I just felt that there was possibly a need. I know I had a need, 19:48 so I created some products and, uh, fortunately they've all been home runs. Um, 19:54 Johnny, you gave us three great examples, the grain bin, uh, which is a huge investment, uh, the spray lift kit, 20:02 which is, you know, fairly, uh, I mean, it's, it's not, it's not nothing, but it's also, it's a fairly uh, uh, you know, mid-range expense, 20:10 I guess. Uh, in terms, in terms of your daily, uh, decision making about money, and you gave us the concaves, 20:17 what's your advice to somebody when it comes to how they, how you think you make good your grandpa's right, you can justify anything, 20:25 but you, you believe, you make good, solid financial decisions about machinery, upgrades. What's your advice to somebody? 20:33 Obviously the first one would be probably don't get emotional, don't fall in love with something because you saw, saw to the commodity class. 20:40 Oh man, I like that. What's the other stuff? What, what else do you guys say? Yeah, yeah, I would say build a spreadsheet, run the numbers, 20:48 justify it by what the numbers say. And then a lot of times I'll sit on it one more day. So like, I talked to Steve one day at Commodity Classic, 20:56 I think a day or two later I went by, I think I went by Saturday morning when they were getting ready to close and kind of cut the deal with him. So I, I might've saw 'em on Thursday, 21:02 thought about it, looked at it again Friday. But the big thing is think it through, figure out how it can work for your operation. Because at the end of the day, 21:10 the lift I can always sell if I don't, you know, don't wanna use it no more, right? The grain dryer, it's, it's a permanent fixture here on the farm, 21:16 so it was a bigger investment. But look, you know, just think about 'em, draw it out on a spreadsheet, run the numbers, and if it pays, it will pay. And, 21:25 you know, this year for us was a big deal. 'cause you know, talking about the grain jar, we had a dollar over in August, 21:32 and I think the worst I saw was a dollar 30 or a dollar 50 under in September on corn. So that's $2 50 cents. So yeah, 21:39 Yeah, you, you, you could, you can, you can spend a lot of money on a two to $2 50 cents spread. Uh, you know, it's only, what, six weeks apart there. So that's, 21:50 that's the big one. So, all right. I heard, don't we get emotional? Uh, remember, remember what granddad said, you can justify anything. 21:57 Run the numbers and also don't be impulsive. You, you did your research and you let it rest. You, you, you let it not fester. And also, and also what I also like, I heard there is there are people that say, 22:09 well, I've been thinking about it. I'm like, you told me that two years ago. You told me that three years ago. At some point, make a decision. 22:14 Don't make a hasty decision, but go ahead and make the decision. 'cause you, it took you a few days on a few of these. Right? 22:20 That's your honor. His name's Johnny Rell. We're joined by Steve Simon. Simon Innovations, if you wanna learn more about Simon Innovations, it's Simon Innova. 22:28 Simon as in Simon says simon You know, as far as Canadians go, we like him. So anyway, thanks for being here, Steve. 22:38 I appreciate Damien, thank you. You bet. And also Johnny Rell, Tennessee, uh, an extreme ag affiliate and, uh, uh, an awesome dude who makes good decisions, 22:47 at least. I mean, I don't know. He's, he's some, Some good Decisions. Yeah, I mean, he's, he's, he's decided to hang out with me sometimes, 22:53 so I don't know, but I think it's just for professional purposes. Anyway, till next time, thanks for being here. Uh, I'm Damien Mason. 22:59 Remember that you have a library of hundreds of videos just like this. Literally, we've, we've produced hundreds of episodes of cutting the curve. 23:07 Also, Johnny and the other Extreme Ag guys are shooting videos out in the field. You can view this for free at Extreme Ag Farm. 23:15 You can also share them with your farming friends so that they can up their farming game. If you wanna take it to the next level, 23:20 become an extreme Ag member, $750 a year, that's all. It's seven $50 a year. And you'll have direct access to ask questions of guys like Johnny and say, Hey, 23:28 I want to dig a little deeper into, for instance, this machinery thing that you're talking about. If for seven $50 a year, you can make way more than that by having direct access to them, 23:37 become a member. You don't have to become a member. You can also just go to Extreme Ag Farm and watch the videos. Thanks for being here. Until next time, this is extreme 23:44 Ag cutting the curve. That's a wrap for this episode of Cutting the Curve, but there's plenty more. Check out Extreme Ag Farm where you can find past episodes, 23:54 instructional videos and articles to help you squeeze more profit outta your farm. Cutting the curve is brought to you by Advanced Drainage Systems, 24:05 the leader in agriculture, water management solutions.

Growers In This Video

See All Growers