The online sharing concept that has produced Uber, Airbnb and other examples of peer-to-peer services aimed at better utilizing existing capital is developing in the U.S. farm machinery market.
MachineryLink Sharing, which launched in the fourth quarter of 2015, bills itself as the industry’s first internet-based equipment sharing program. Farmers, and even some equipment dealers, are renting out their equipment to farmers at different stages in the growing season.
“Agriculture is one of the most capital intensive sectors in our economy and we also have a lot of assets that sit idle for long periods of the year, so we thought the sharing concept would lend itself very nicely to agriculture,” explains Jeff Dema, president of MachineryLink Solutions, speaking with RealAg’s Shaun Haney in the interview below.
Not only is machinery getting more expensive, the number of calendar days spent operating it each year is getting smaller. Dema points out it used to take Iowa farmers 6-7 weeks to plant corn. Now they’re down, ideally, to around 2 weeks.
“If there’s an ideal date to put seed in the ground, you want to get as many acres planted as possible,” he notes. “So usage periods are higher, and the valleys are longer and lower, so that lends itself to the sharing model as well.”
Of course every farmer wants to make sure they’re ready to roll the moment weather and field conditions are right. Nobody wants to be stuck waiting for a rental to arrive.
“We are extremely sensitive to the ‘when I gotta go, I gotta go’ notion,” says Dema, noting they encourage farmers listing their equipment to give themselves plenty of cushion around the earliest and latest dates that they might need a machine.
“When you’re using a combine on average for 7 percent of a year, there’s lots of flexibility,” he says. “You can block a month ahead of when you need it, the month while you use it and the month after you need it, just to make sure you’re covered and still provide lots of availability for other farmers to rent that machine and generate passive income off an asset that would otherwise be sitting idle in your shed.”
Dema says they’ve also taken steps to address concerns about whether equipment will be maintained when rented out. He says users must commit to abiding by community standards. There’s also a rating system, where owners rate users and users rate owners.
The timing of MachineryLink’s launch could be in the company’s favour, with U.S. farmers adjusting to lower prices and looking to cut costs and raise revenues. By renting, producers can generate incremental revenue and also access technology they would otherwise be unable to afford.
“It’s all about the most efficient deployment of cash and capital,” says Dema, noting some dealers have started listing used equipment rather than letting it sit on their lots.
In February, MachineryLink’s parent company U.S. ag data firm FarmLink announced a decision to split the company into two businesses, one focused on data analytics and the other equipment sharing solutions.
According to a recent report in the Washington Post, MachineryLink already has more than 1,200 users and features “tens of millions of dollars worth of equipment.” The business also has some of well-known supporters, with Howard Buffett, former U.S. ag secretary Dan Glickman and Julie Borlaug, daughter of Norman Borlaug, named to its advisory board a few months ago.
MachineryLink is currently only available in the U.S., but Dema says they are looking at other markets, including Canada.