A Kansas City company has launched a farm equipment sharing program that will generate income from machinery when it normally sits idle.
FarmLink has launched an online farm equipment sharing community at sharing.machinerylink.com called MachineryLink Sharing, which will connect farm equipment owners with customers who need additional machinery.
MachineryLink Sharing is a natural outgrowth of FarmLink’s original business, which is leasing out 200 combines a year. The combines usually operate in four harvesting periods per year from Texas to Montana. The company also has a third division, Analytical Solutions, that uses data for managing land.
While running the combine leasing business for 15 years, management saw an opportunity for a farm equipment sharing program.
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According to the U.S. Department of Agriculture’s 2012 census data, farmers own about $244 billion in machinery and farm equipment. Because of the seasonal nature of farming, much of the heavy equipment residing with farmers and agricultural retailers is underutilized most of the year.
Farm equipment costs hundreds of thousands of dollars and depreciates every year. To improve revenues, equipment owners have an opportunity to lease out their machinery at their price, with a 15 percent markup for MachineryLink, plus shipping. FarmLink, which has 150 employees, is using one of its core strengths — logistics — in the shipment and leasing of combines and rental agreements to deal with risk.
Already 16 agricultural retailers and co-ops have signed up to participate in MachineryLink, said Jeff Dema, FarmLink’s president of grower services.
Bill Ruzicka, general manager of agronomy at Farmers Feed & Grain in north-central Iowa, said the owner of that business is a farmer with a lot of heavy equipment that is used on a seasonal basis. One example is a floater, a large piece of equipment used for applying fertilizer and chemicals in various terrain.
Ruzicka said they use a floater about 40 to 45 days in the spring and again in the fall. If it is possible to increase usage from 90 days annually to 150 days, the owner could make more money from the equipment.
A floater costs $275,000 to $350,000. If the company leases it for $60 per hour, the floater could generate up to $4,800 per week if used for 80 hours per week. Multiplied by four weeks, that is $19,200. If used for another four weeks, that would be $38,400. If the owner has debt on the machine, the owner might apply that income to debt reduction.
“This allows us to get extra income where the equipment would be sitting in a shed or outside,” Ruzicka said. “What I like is they are doing the underlying agreements.”
MachineryLink will make sure the customer has insurance to safeguard the equipment from damage, Dema said.
Ruzicka likes FarmLink’s knowledge of farmer needs in various parts of the country.
“They are the ones that know that demand. I don’t, they do,” Ruzicka said.
Farmers made record profits in the mid-2000s, but prices of commodities have softened after two record grain crops in a row in 2013-2014. With commodity prices in a slump, Dema predicts farmers will be looking for other ways to generate income.
The MachineryLink Sharing online platform will include farm equipment such as sprayers, floaters, tender trucks and tractors for both long- and short-term rental periods by users seeking to avoid long-term lease or purchase commitments.