Every ag equipment operator has had it happen, a high dollar piece of equipment, with weather threatening on a weekend, is ground to a halt for a simple mechanical failure, like a shear bolt doing its job and well, shearing.
That simple break can bring a series of operations that rely upon each other to stand still unless another shear pin is available. Those are usually stocked after the first time a shear bolt strands the operation.
While shear bolts don’t physically manifest in other portions of an ag operation, they are metaphorically sure do. Taking time to identify in advance breaking points in an operation can cause you the pain and misery of threading a new bolt in the dark, with a little drizzle, while a semi waits to be loaded.
Hear are some “shear bolt” areas that your operation should be prepared to deal with
- The insurance companies do three things well, deny claims, delay claims, and defend claims. They have read your policy backwards and forwards a number of times and know distinctly what is and isn’t covered by their contract with you. Your agent is not responsible for you understanding your coverage, you are. When was the last time you looked at listed property items, valuations, costs of replacement and the like? After the storm is no time to get familiar with your coverage. Of particular note is a trend for insurance companies to demand all claims be submitted in a short period of time that doesn’t match up with traditional understanding of how long you have to bring an action. By contract, they can do this and by the contract you will be hung.
- Knowledge retention. Many operations have one person do the marketing for the operation, manage contract delivery dates, input deliver and pricing and coordination with third party vendors. What happens if that person leaves, quits, gets fired, or straight up just dies. Is it all on a cell phone that may or may not survive a car crash (or get impounded as evidence until the accident is fully investigated)? What are your redundant systems to pick up and move forward? Does anybody else know the truck driver’s cell phone number? Who is the guy who does the IT work for the operation and how do we get ahold of them?
- Title to assets. What was a great plan in 1995 (split ownership to avoid estate tax) is now an avoidable cost? By changing from tenants in common or sole ownership to joint ownership you may avoid having to have two estates. You can’t expect your estate planning lawyer from 1995 to run you down and remind you, it is incumbent upon you to do a review of your documents and understand what is going on.
- Security in assets. Signing a general pledge of equipment and inventory to a lender is a big deal. It’s a promise that your equipment stands to pay for the operating note if the crop doesn’t. You selling items from that equipment line is a violation of that agreement and can expose you to financial responsibility that you could have avoided with a simple email or note to the lender about your plan to liquidate that old manure spreader. Likewise, you buying a tedder from a Facebook ad for cash may result in you having a tedder that is subject to a bank’s lien. The bank will get to come take that tedder and sell it to satisfy its lien and you are left with hunting down @genericironfordays to try to get your funds back. Better course of action is to do your research on the Iowa Secretary of State’s website and get a release from the lender that holds a security interest in that old iron.
