By Alison Martin
In this economy, sharing is caring – and trendy. Lyft Inc. and Uber Technologies Inc. popularized ride-sharing, making it easy for car owners to share their cars with riders. Airbnb Inc. allows homeowners to share their spaces with travelers while the homeowners are away.
Now this concept of sharing is moving to the agriculture business, where an Internet opportunity to economize in this way is offered by MachineryLink Sharing.
But will farmers embrace this idea?
MachineryLink Sharing is the brainchild of a Kansas City, Missouri-based company called MachineryLink Inc., originally part of FarmLink LLC. It’s an online platform that allows farmers to rent out their pricey equipment – such as tractors, combines and plows – to other farmers at a fixed rate per day. In their ads, users can post details about their equipment, dates when it’s available, notes about operating the equipment, and daily use and shipping rates. Some users will even include an operator in the price, which means farmers who answer the ad won’t have to work the machine themselves.
Users can also browse through the listings and send messages to one another with questions about quotes and operation issues. Membership is free, and users can upload insurance documents to reassure loaners that their equipment will be cared for.
The benefit of the site goes two ways. Rather than buying expensive equipment that isn’t needed every day, farmers cans simply borrow from one another. Those farmers who have equipment that’s not always in use can create a new income stream by leasing it out.
The company launched its beta site in July 2015 and its full site in October 2015. Jeff Dema, president of grower services at MachineryLink, says the site currently hosts about 700 farmers and about 110 agriculture retailers.
The idea for the site came from trying to solve what Dema calls the “asset-rich and cash-poor” problem among farmers. Furthermore, while land appreciates in value, equipment depreciates – much like cars after they’ve been driven off the lot.
It hasn’t always been that way. Jason Wykoff, owner of the Wykoff Brothers Farm in New Carlisle, Indiana, says equipment has maintained its value over the last 10 years, but the softening corn and soybean commodity prices led to a lower demand for equipment.
“That capital and asset end up sitting in the shed,” Wykoff said. “It’s on our balance sheets, and it’s very difficult.”
Average Corn Commodity Prices, 2010-2015
The farming sector itself is also experiencing a decline. According to the most recent reports from the U.S. Department of Agriculture, farming sector profitability is expected to decline for the third straight year.
“If realized, 2016 net farm income would be the lowest since 2002 (in both real and nominal terms) and a drop of 56 percent from its recent high of $123.3 billion in 2013,” the report says.
MachineryLink began leasing combine harvesters over 16 years ago, and as new technology became available, the notion of helping farmers rent out their own equipment became more viable.
“Over time we realized it’s not just combines that have great utilization,” Dema said.
One of the biggest challenges the company faces right now is the notion of ownership in the farming community.
“Farmers are known to have an emotional attachment to equipment,” Dema said.
For good reason, too. New equipment costs tens of thousands of dollars. Wykoff says loaning equipment can be “emotional and nerve-wracking” for farmers.
“It’s their baby,” he said. “They need it desperately to work in order for them to harvest their crops.”
Other sharing companies face similar problems getting users to trust them. Last February, Uber agreed to pay $28.5 million in a class-action lawsuit that accused Uber of misrepresenting the level of scrutiny in its background checks, according to the New York Times.
MachineryLink encourages farmers to post proof of insurance to their profiles. When a user requests equipment from an owner, the owner will receive a link to the requesting user’s profile and insurance documents, if provided.
While insurance documents provide one level of reassurance for equipment owners, user profiles can also make owners feel better about loaning equipment. After a user returns equipment, he or she and the equipment owner can rate one another. If equipment came back to the owner with broken pieces, the review gives the owner a chance to warn other users.
With all this information, the owner can then make the decision to lease to that user or not.
Wykoff says meeting with representatives from MachineryLink helped quell some of his fears. He connected with the company at the 2015 Top Producers seminar hosted by Farm Journal, and he used to site in 2015 to lease two of his combines.
“It did everything we had hoped it would in terms of providing us with revenue for our machine and lowering our cost of owning the equipment,” Wykoff said.
Dema says timing is key to the success of the company. As commodity prices slip, farmers will need to find new ways to remain productive without sacrificing sustainability or profits.
“Farmers need new business models, new technology solutions to stay profitable,” he said.
But timing could also work against MachineryLink. Dave Kanicki, editor of Farm Equipment Magazine, says timing is critical to farming.
“Farmers are on a strict schedule,” he said.
Growing up on a farm, Kanicki remembers his father sharing equipment with family members. But one year, the work got backed up. His father couldn’t get the equipment he needed to harvest his crop. After that, Kanicki’s father never loaned out equipment again.
To an extent, Wykoff agrees. Farmers often need the same equipment at the same time, making it hard to lease equipment to one another. Wykoff, however, says that MachineryLink does a good job of matching farmers together.
Dema isn’t deterred. In order to remain profitable, farmers need to be searching for and adapting new business models, he says. The timing may be just right for MachineryLink.
Now that the company is working to establish itself in the grain belt, Dema says expansion to farmers in California is the next step. Their needs vary from the needs of farmers in the Midwest.
“I’ve never paid much attention to vegetable washers,” Dema said, “but I sure am now.”