If commodity prices and equipment sales have indicated anything to farmers and dealers this year, it’s that leaner times may lie ahead. To shrewd businesspeople this just means it’s time to get more creative.
Kansas City-based FarmLink, a data science and technology company, developed MachineryLink Sharing — a rental program that looks to provide farm equipment dealers with a profitable alternative to letting machinery sit idle on their lots.
“Thisis an online platform that is essentially a new marketplace that allows farmers and ag retailers access to equipment when they need it and added income when they don’t,” says Dan Alcazar, vice president of marketing with FarmLink.
The program website, which went live on Oct. 19, allows dealers and farmers to coordinate short- or long-term equipment rentals with farm customers. The listing party sets the rental price and customers make online reservations based on need, then publicly rate the experience based on satisfaction and machinery performance.
While there is no membership fee for dealers to participate, FarmLink receives a commission on each transaction, but the agreement is entirely negotiated by the equipment owner and the customer, based on need and availability. Since its beta launch in early July, the equipment-sharing program has already had more than 46 retailer/dealers and hundreds of individual farmers enroll.
For a dealer with a lot full of inventory that isn’t selling as quickly as it once did, interest payments can pinch the balance sheet. An efficient rental system can offset some of that cost.
“If a dealer is sitting on a used sprayer for 6 months before selling it, but is able to rent it for a single week at a $100 an hour for 40 hours he covers months’ worth of floorplaninterest for his entire inventory. And he still has the opportunity to sell that piece of equipment,” says Alcazar.
He also points out that concerns over rented equipment losing value through usage can be exaggerated, and that the value added is often far more significant than what is lost.
“The depreciation associated with equipment usage is minimal, except on combines in some cases, so in total, the rental allows the dealer to generate significantly more incremental financial value for his business,” says Alcazar.
Farmers and coops can utilize the program because they aren’t in a position to make a new equipment purchase, but they still have need for it, Alcazar says. For dealers, the sharing service may be used to generate sales leads that may bear fruit further down the road.
“A dealer can come back to a renter in 6 weeks or 6 months with an offer and they might be ready to buy,” Alcazar says. “If I am trying to sell my equipment, the first farmer I’ll go back to is the person I rented it to.”
There also may be some opportunity for additional precision equipment sales. While searching the platform’s selection for a piece of equipment to rent, farmers will be able to pick and choose what precision attachments and capabilities they want included.
Dealers will then have the opportunity to honor requests for certain precision attachments if the farmer desires them and negotiate price, accordingly. But the rental is also a chance to convince farmers to test run precision equipment that they may not have used otherwise.
Convincing farmers that precision equipment is a necessary investment can be a struggle. Alcazar says the sharing program offers one more chance to get newer precision equipment out on the field in the hands of potential buyers.
Farmers renting a piece of equipment that happens to be outfitted with precision technology that they’ve never used before can give precision specialists the chance to prove the equipment’s value to farmers of the equipment’s value.