The Sharing Economy Comes to the Farm
Three months out of the year, the 5,500 members of the Heartland Co-op push their sprayers and fertilizing machines to maximum capacity in hopes of getting the most out of a million acres of central Iowa farmland planted mostly with corn and soy. The rest of the time, the machinery typically sits in barns, idle until the next season, like most of the $248 billion of equipment owned by farmers across the country.
FarmLink, based in Kansas City, Mo., seeks to turn that equation around. Run by Ron LeMay, who headed Sprint’s wireless division until 2003, the company has created a platform to help farmers rent out their unused equipment to growers who may be hundreds of miles away to take advantage of the differences in peak harvest seasons. Farm co-ops and equipment dealers can already sign up online, and FarmLink may add a mobile app later this year. “It’s Airbnb for agriculture,” says Jeff Dema, FarmLink’s president for grower services. “Farmers are examining their bottom lines and wondering if the $500,000 in their shed might be put to better use.”
The company lets farmer cooperatives and agricultural retailers set rental terms. It also offers to transport heavy equipment, removing one major obstacle to sharing, and will help farmers secure secondary insurance as needed. “The opportunity to improve productivity in this industry is dramatic,” Dema says. “If you can take machinery that’s being used 7 percent of the time and even double that, you’ve had a tremendous impact.”
With commodity prices tanking and farm profits falling from a peak of $124 billion in 2013, farmers are eager for ways to squeeze more money out of their combines and other heavy equipment, which cost hundreds of thousands of dollars to buy and maintain. While a U.S. Department of Agriculture forecast released on Aug. 25 put this year’s farm profits at $58.3 billion, the lowest since 2006, farm-related income—which includes machinery sublets—was up almost one-third from February estimates. “There is a growing effort to share farm equipment,” says Agriculture Secretary Tom Vilsack, a Democrat who had been Iowa’s governor.
Contractors, custom harvest crews, and equipment-rental services already exist to help farmers in a pinch. Most have longtime ties with individual farmers. The idea of letting strangers rent expensive equipment—among farmers’ biggest capital investments—might still be a tough sell, some say. “It’s maybe a neat idea, but I don’t see it as a disruptive proposition,” says Martin Richenhagen, chief executive officer of Agco, maker of Massey Ferguson tractors and the world’s second-biggest agricultural equipment manufacturer after Deere.
Heartland Co-op Executive Vice President Marc Melhus says the pressure on farm profits makes the concept more attractive than it might once have been. Heartland is among the first co-ops to sign up for FarmLink’s sharing program. “You wouldn’t have thought you needed something like this 10, 15, 20 years ago,” he says. “But if the concept makes sense, it seems worth trying.”
The bottom line: As farm profits fall, a Midwestern company helps struggling farmers rent their equipment in the off-season.