Machinery sharing: Small farmers key to success

Date : 2016-11-09  | From : weeklytimesnow.com.au

IN 2008 the phrase “sharing economy” was coined. It was a new concept that ring-fenced a handful of companies – companies that changed the way millions look at innovation and disruption.

Uber and Airbnb are the best-known examples of companies capitalising on a sharing economy. They are mentioned without fail when speakers flesh out what it means to disrupt and innovate.

Those two (and others such as Australia’s own Airtasker – a network of 750,000 people from handymen to IT experts available for hire across the country) have successfully created a marketplace for people’s unused assets, time and knowledge. However, while everyone is starry eyed by the share economy idea, I find myself thinking it all seems very familiar … and applicable to agriculture.

HISTORY BY SAM

Let’s take a look back at how agriculture started.

I’ll be accused of grand generalisations by historians, but essentially Gog and Nok gave up roaming as hunters and gatherers and decided to shack up, breed and deplete the local area of food sources. So, they started growing food and traded surplus tucker for other food, products or services they didn’t have. Bartering and IOUs were common and eventually led to some form of currency.

I know Gog and Nok were a few years off using an Android app, but they were part of an effective model that evolved over centuries and is the same driver that makes Uber, Airbnb and Airtasker successes.

Did agriculture and the need for food actually start the share economy? Maybe.

NOT SO SIMPLE

Not all sharing models work.

Community gardens may be considered a modern take on Gog and Nok’s way of life, but the very people who use them illustrate they are flimsy models.

Theft, politics, bickering, lack of time and not enough necessity are reasons the model hasn’t successfully upsized.

Turn back to the billion-dollar examples to see success comes from putting structure around people – rigorous accountability, a seamless payment gateway and governance.

FARM SHARE

How can Australian agriculture and small farms create another Uber?

The start of an ag-focused sharing economy for farm machinery has been suggested by entrepreneurs. It’s not hard to find unused tractors and equipment sitting around in farm sheds across the country. And, considering $3 billion a year is spent on agriculture machinery, perhaps there is demand.

My observation is if it’s to get traction in the industry, it’ll have to be developed by the readers of this magazine. It’s a model better suited to and more easily perfected by small farm owners than large scale producers.

The issue with large farms is the likeness of their operations across regions. Most of their machinery is used for similar purposes at the same time of the year. Seasons mean there are troughs of surplus and peaks of scarcity, so critical mass is difficult to achieve.

Small farms, however, are diverse. Drive down a road of 40-hectare blocks and you won’t see the same enterprise mix repeated for kilometres on end.

This liquorice all sorts picture surely means small farming regions have an excess of manufactured and human capital. Perhaps it just needs some co-ordination.

Critical mass will be a hurdle for a model like this, but it’s definitely not one that should be left to the big end of town to prove before small farms (that far out-number large) follow suit.

This is a model that will be perfected by small farmers due to their agility, access to underused capital and diversity.

Doing more with less is the business of most small farmers. They lack the scale to keep afloat without 100 per cent utilisation of their land and working capital. Europeans and the British do this well (albeit with a taxpayer funded handouts) given small farms have always been the norm. As most small farmers use every square metre of their land, surely they can better utilise manufactured and human capital.

? Sam Trethewey is a rural commentator and general manager of agriculture innovation accelerator SproutX

AHEAD OF THE CURVE

Some plucky Australians have already dipped their toes in the agriculture machinery-sharing market, while the US has a 16-year-old blueprint for success.

Mangoplah farmer Andrew Stevens runs a mixed cropping and sheep farm on 1600 hectares near Wagga Wagga in NSW, and launched machinery-sharing business AgTribe last December.

“Over the years I have had to hire machinery,” Andrew said. “I looked online and couldn’t find anywhere to hire from farmers directly and thought there was a potential market there.”

Andrew’s hunch was right. One year in, AgTribe has a network of registered farmers and contractors offering a total of 70 pieces of equipment for hire and Andrew has won a technology start-up award from the Wagga Wagga Business Chamber for his vision.

“We have more people signing up all the time,” Andrew said. “I’m trying to base users around Wagga Wagga, just to try to get transactions happening.”

Another Australian start-up called Share Your Farming Gear launched last year.

Founder Andrew Oldfield said a small number of owners signed up – “about a dozen or so for harvest last year”. This year he hopes to refine the model and release a new version of software.

In the US, a well established business is being hailed as the Uber of ag.

MachineryLink, founded in 2000 in Kansas City, started as a combine-leasing business and now has 1400 registered farmers sharing machinery across 26 states.

Led by former telecoms executive Ron LeMay, MachineryLink checks users’ insurance and even helps co-ordinate cross-country transportation, making it viable for larger operators to participate in sharing.

And, in addition to new digital opportunities, traditional machinery co-operatives are still a sound way to reduce costs and earn a return on under-utilised equipment.

When starting a local machinery-sharing venture, agriculture economists recommend establishing firm rules.

Schedule machinery use equally when timing is critical to planting and harvesting.

Log use so repairs and depreciation can be monitored.

Clean machinery between farms, to avoid mingling grain types and prevent transporting weed seeds and insects.

Remove personal rubbish from the cab after each use.

Costs associated with the ownership and operation of the machinery should ideally be paid by the joint venture.

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