Farmers share equipment to increase profits

(BPT) – With stagnant commodity prices causing farm incomes to fall to their lowest levels in 9 years, America’s farmers are finding new ways to add revenue or cut costs. While the sharing economy has taken hold in urban areas and vacation hot spots with services like Uber and AirBnB, its arrival in agriculture only occurred this fall.

Through MachineryLink Sharing, a new platform offered by Kansas City-based FarmLink, equipment owners earn extra income on farm equipment when not using it during certain times of the year. Renters gain access to the equipment while saving money and freeing up capital for other investments.

And it couldn’t come at a more critical junction. In 2015, farm incomes are expected to drop 36 percent, according to U.S. Department of Agriculture (USDA) projections, resulting in tight margins for American farmers. In some areas, commodity prices mean some farmers will not meet their breakeven point. In eastern North Dakota, the break-even point for corn is approximately $ 4.30 – $ 4.63 given the average yield per acre and the average land rent, according to the NDSU extension data. Currently, corn is trading around $ 3.60.

“In the current farming economic climate, farmers have to watch their costs, such as equipment costs,” said Jarod Osborne, general manager at Top Notch Farms. “With this new sharing platform, farmers will be able to better utilize their specialty equipment and be able to find equipment when it doesn’t make financial sense to buy it.”

The USDA estimates equipment and machinery represent 41 percent of non-land production costs. In turn, for every dollar spent on a piece of equipment, it generates $ 0.34 in revenue for that farmer, making it among the lowest in any industry.

“At FarmLink, we see tremendous opportunities to bring disruptive solutions to farmers through data science, technology and new business models, like equipment sharing,” says Jeff Dema, president of Grower Services for FarmLink. “We believe there will be more change in agriculture in the next 5 years than in the previous 50, and it will be driven by innovation, including sharing economy platforms.”

Within this financial reality, farmers and agricultural retailers are reconsidering long-held assumptions that equipment must be owned to ensure a successful operation, despite some initial hesitancy.

“We’ve tried sharing with other co-ops, but the logistics and needs at similar times never made it feasible,” says Marvin Rose, agronomy manager of Great Bend Cooperative who was among the early adopters of MachineryLink Sharing. “This new platform expands the geographic area where farmers and coops can find available equipment, giving us access to equipment when we need it. Frankly, it just made sense to our bottom line.”

Much like other sharing models, MachineryLink Sharing established community guidelines and functionality for the transaction to help ensure transparency about the equipment and people involved. It also fits the customized needs of big and small farmers alike by offering transportation solutions or providing access to an operator. All equipment must be insured to participate in the platform.

The platform is the latest innovation from FarmLink, an agricultural tech company that got its start 16 years ago by leasing combines. The company credits its ability to master the process required to move heavy agriculture equipment around the country as one of the key reasons the company is well suited to coordinate agriculture’s first sharing platform.

“The fact is, owning expensive assets that sit idle for a majority of the year is a business model that is running out of gas. New ideas — like MachineryLink Sharing — can help transform modern agriculture now, and into the future,” Dema, says.

 

 


Brandpoint – Free Online Content

Short URL: http://www.yourbg.com/?p=4391

Posted by on Dec 23 2015. Filed under Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Leave a Reply

Search Archive

Search by Date
Search by Category
Search with Google

Display Ad Deals

left Pause Right
 
Log in | Powered by Anchor Communications