Share And Share Alike

It didn't make sense to Joel Lange to have an expensive piece of equipment spend 90% of the year doing nothing. His 2012 John Deere S670 was an underused asset. "If you have a $300,000 combine sitting in the shed, you should be using it," said the 28-year-old corn and soybean farmer from Jefferson, Iowa.

So Lange listed the combine on the MachineryLink website's "sharing" section. It wasn't long before he had a hit from a Montana farmer who wanted to rent Lange's combine for wheat harvest. Lange also had nibbles from wheat growers in Kansas and Colorado. If the stars align, Lange's S670 could head to Kansas in June, travel to Colorado in July, continue to Montana in early August and return home in time for a late-August Iowa corn and soybean harvest on Lange's 1,500 acres. In the process, Lange's underused combine could make him some serious money. "It will mean a lot of hours on the combine, but I'll get $70,000 to $80,000 of rent out of it," he said.

MATCHMAKER

That's the logic behind MachineryLink's venture into the sharing economy. The company, which has been leasing combines to farmers for 16 years, announced last July it would expand its business model to be a facilitator for farmers who want to share equipment.

"We looked at Uber and Airbnb," said Chairman and CEO Ron LeMay, "and we saw the opportunity to apply that [sharing model] to agriculture. Why should we buy equipment when farmers have it, and it could or should be available for lease?" The company will continue its leasing service, of course. But being the middleman for farmers who want to share equipment has the look of a growing and profitable venture, something hard to find in today's farm-machinery world.

By LeMay's calculation, farm equipment sits idle 83% to 93% of the year: "The economist in me says that is a waste for the farmer who owns [it], and it's a waste for society." When MachineryLink started researching the possibilities of establishing a sharing service, "I was stunned by the variety of equipment [sitting idle]," LeMay said. When the sharing site went live, farmers posted everything from "crop dusters to tractors."

Timing of the sharing site launch was fortuitous. Fallen commodity prices caused farmers to be willing and able to buy less new equipment, and used equipment inventories had reached the glut stage. That meant not only farmers but also farm-equipment dealers were likely to find a sharing site attractive. MachineryLink hoped to get four dealers in the first year, LeMay said. It signed up 40 in the first 2 1/2 months.

HOW IT WORKS

Sharers list equipment on the site with a photo and description of the equipment. They also list an asking price, usually by the day. Prices and time periods are negotiable. Owners have an option to also offer their equipment with "operator available." (Lange, for instance, has listed on MachineryLink a dual-placement fertilizer rig, which he'd be happy to share -- as long as the sharer hires him to run it.)

Interested renters indicate when they need the equipment and get an estimate of costs. (MachineryLink charges a 5% transaction fee to renters and a 10% commission to owners.) Besides rental rates, the renter pays for transportation costs both to and from the owner. A tab on the website produces an estimate of transportation costs. If the renter is still interested, he can click on a link to contact the owner.

MachineryLink joins in the conversation to facilitate the transaction. It can help provide transportation, if needed, and can help with insurance, which the renter is required to have.

SOME DRAWBACKS

Lange understands that his S670's value will be reduced as separator hours increase. It's a calculation he thinks will work to his favor in the end.

Although he bought the combine new and has put few hours on it, "The value of used equipment has [already] come down so much, I can't afford to trade it in and take a bath on it," he said.

Of course, eventually he will have to replace his combine, and a bath might be deeper with a high-hour combine as a trade-in. "At least I will have gotten it paid for," Lange said of his current combine.

The wear-and-tear sharers will put on his combine also is a concern. It could become damaged goods. But, Lange argues, sharers must buy insurance to cover catastrophic events like fires or theft. And, because his combine is still under warranty, some repairs will be covered.

FROM THE OTHER SIDE

Monte Willeke is experiencing equipment sharing from the other end of the equation. He grows dryland wheat on about 7,600 acres spread over 40 miles around Akron, Colorado. He was fully equipped until about seven years ago, when he went to continuous wheat and abandoned spring-planted crops. That meant, "Some of the equipment I had was useless because I wasn't planting spring crops anymore," Willeke said. He sold his combines and started renting three each year from MachineryLink.

This year, he decided to give sharing a chance, in large part because, by leasing from an individual, he could screen the equipment for its condition. By his own description, Willeke is "intense" about keeping combines clean and in tiptop shape.

He found two farms in south-central Kansas on MachineryLink's sharing site, visited them and was impressed by what he saw. "Their intensity was just as intense as mine," Willeke said, and their combines met his high standards. This year, he will lease two combines from one of the farms and one from the other through MachineryLink's sharing program. Willeke is optimistic that his initial venture into the sharing economy will be successful: "I think this share program will work out well for both of us."

Jim Patrico can be reached at jim.patrico@dtn.com

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