Machinery Link: Where Uber meets agriculture
Can a new equipment sharing system disrupt the ag industry?
For every dollar farmers spend on their equipment, they generate 15 cents in revenue.
Workers at Machinery Link Solutions, based out of Kansas City, think this is an unacceptable market inefficiency, and released a website designed to milk every ounce of revenue from agricultural capital to close this gap.
The idea behind the site is a simple extension of the online sharing economy. Most farmers use their combines roughly four weeks out of the year. The site allows farmers to list their equipment when it’s out of use to be picked up by farmers in different regions who will pay to rent it instead of buying their own. Machinery Link doesn’t rent any units out itself, it just facilitates the exchange.
Thus, companies can avoid buying the equipment and opt to rent it, or buy it and use revenue from renting to cover monthly payments.
Machinery Link formed 16 years ago as a combine leasing operation, but recently switched to its combine-sharing model.
Jeff Dema is president of the company. He said agriculture has become an arduous market to enter because of the sky-high startup costs. Machinery Link was built to mitigate these costs and level the playing field.
“The barriers to entry in agriculture tend to be very profound between accessing land and accessing equipment,” Dema said. “They’re significant barriers to face and they make it much harder to reach high levels of operational efficiency.”
In the same way apps like Uber and Lyft upended the taxi industry, Dema hopes Machinery Link will shake up the farming industry.
After looking into the company, Kim Niewolny, associate professor in the department of agriculture, leadership and community education at Virginia Tech and Virginia Cooperative extension specialist, said she’s intrigued by the company’s business model and plans to keep an eye on it looking forward.
“I won’t recommend it yet, but I think the idea of sharing equipment to reduce costs and to build a communal understanding of farming is really interesting,” she said.
Niewolny added that the site introduces a new aspect of community to farmers that transcends state lines. She said farmers can network and learn from one another while sharing the equipment.
While the system is likely to cut into manufacturer sales, Dema said the company has the entire industry behind it: Farmers can earn money off their idle equipment or use equipment without forking over the full sticker price; Retailers can make use of their unsold equipment and beef up their maintenance business, given the additional use of the machines; and bankers can relax when seeing farmers’ debt turn into revenue as their agronomic productivity increases.
As far as logistics, Machinery Link handles everything from transportation, to insurance to invoicing. Farmers leasing out their equipment set a price and date availability to rent our their machinery and whether they want to handle transportation themselves or let the company do so. Machinery Link in turn takes in 15 percent of all transactions as their revenue source.
The sharing service started in the closing months of 2015. Since then, it has accrued more than 1,400 users, and 140 retailers as well.
The company is not without its challenges, however, Dema said one issue will be getting farmers to get on board with new technology. However, he said the app will make its presence known nationwide and overturn the ownership model of farm equipment.
“The sharing model is not just a flash in the pan,” he said. “Manufacturers are looking to understand it and embed themselves in it.”
On the same issue, Niewolny said it’s likely to be new farmers who adopt the technology because they have less to lose, more to gain, aren’t stuck in any protocol, and ready to assume risk.
Currently, Virginia farmers have yet to rent any equipment through Machinery Link. However there is regional manager for the company in-state who is looking to build up brand awareness and a market base.
Looking forward, time will tell if the bludgeoning, new system will take over agriculture like Uber and Lyft took transportation. In the meantime, it’ll keep hauling combines from harvest to harvest, one farmer to another.
Contact staff writer Jake Zuckerman at 540-465-5137 ext. 152, or firstname.lastname@example.org
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