The cost of on-farm equipment can be prohibitive, especially in a business like macadamias where a return on investment is only realised after six years. The rapid growth of the sharing economy has introduced many to a new way of doing business, and agriculture has not been left behind.
In a sector with fast evolving technology, tying yourself down with a pricey tractor or spray cart could leave you behind when new efficiencies emerge. Likewise, staying ahead with the latest and greatest equipment can leave your bank balance in dire straits.
The solution lies in equipment rentals – an Uber for tractors, of sorts – where farmers can rent what they need and return the equipment when they are done, leaving the risks of capital investment with the owner.
Hennie Bezuidenhout, who manages rentals at Laeveld Trekkers, said that since much of the work that needs to be done with heavy machinery in macadamia orchards is seasonal, renting rather than buying made far more sense.
With new hectares being established every month, ripping, discing or land preparation equipment was in high demand on a rental basis.
“Once the orchards are established lime and gypsum is added maybe every three years, and this is where we find most farmers are making use of rental equipment. This is true for both smaller farmers who don’t have the liquidity to make big capital investments in machinery, and also for larger farmers, who are expanding quickly and don’t have enough equipment to service all areas of the farm.”
The lockdown as a result of the Covid-19 pandemic has also meant that spare parts for tractors have not always been readily available, further boosting the rental market.
Rentals at your fingertips
With the popularity of the rental economy gaining traction, AFGRI Agri Services has sought to streamline the rental process by developing an online app that allows farmers to rent their equipment to other users, reducing the downtime of their equipment and increasing the value of their investment. The Axl app connects equipment owners with those looking to rent, and provides a trusted platform where the interests of both parties are looked after, which bodes well for the established and emerging farmer sector.
“This kind of equipment rental service provides an opportunity for people with machinery that is not always in use to rent their equipment to other farmers. This is especially good for upcoming and small-scale farmers who can’t always afford the equipment, or someone whose machines might have broken down. Sometimes a farmer just needs an extra tractor or spraying cart and buying another one would not make sense,” said Niki Neumann, head of AFGRI technology services.
She said access to the right machinery at the right time was a critical success factor for farmers. “Whether it is a small, emerging, or large commercial operation, this is an ongoing challenge for farmers of all sizes, especially now, as the global pandemic has left supply chains under immense pressure. Uncertainty remains in the minds of our customers and currency volatility has also resulted in an increase in equipment costs.”
The Axl app was a result of the unforeseen challenges that are inherent in farming. “Uncertainty and change are something we will never see the back of. They are inherent in our lives now and going forward. Access to the right machinery at the right time is vital for all farmers.”
Neumann said Axl presents an alternative way for farmers to access mechanisation. This, in turn, makes it easier for emerging farmers to enter the sector. “Capital equipment costs can put a lot of financial strain on new or smaller operations. Our vision is for necessary equipment to be made available for rental so that farmers who do not want to or who cannot purchase capital equipment have the appropriate access.”
Patrick Roux, managing director of AFGRI equipment, added that Axl went beyond an online service. “It breaks down the traditional barriers to accessing mechanisation for all farmers by creating a secure and shared environment that encourages us to do more with less. In times like these, this has never been more important.”
Furthermore, the app will allow equipment owners to fully utilise their equipment throughout the year, getting a better return on investment. This means the equipment’s owner is also in a better position to keep up with new technologies.
Equipment rentals are especially useful to farmers who need their equipment only for a certain time of the year, and who are in an area where alternating season crops require machinery.
The online platform enables the convenient rental of farm equipment, facilitating the contract between renter and owner, and providing a secure payment platform, all without either having to set foot outside their doors. This enables service providers – equipment owners, retailers, and contractors – to build their businesses and grow revenue streams through the optimisation of the rental system.
The payment process is handled by Axl and while the renter needs to make an immediate payment to secure rental, the money is released to the owner only once both parties are happy with the service. The user and owner are both rated by the other party, just like on Uber, so customers can build an online reputation.
Roux said there was also a GIS system in place where farmers could indicate the exact piece of land for which they required the equipment, and owners could monitor the usage online.
Equipment owners can apply to list their services at any point and have the freedom to decide on the length of time for which they are renting it out.
Roux said that in the long-term, the aim is to deliver an innovative digital service that enables farmers to drive sustainability, profitability, and productivity for their business.
The global farm equipment market is projected to reach USD113 billion by 2025 from an estimated USD 92.2 billion in 2020 at a Compound Annual Growth Rate of 4.2% during the forecast period.
The primary reason for growing farm equipment market is the government’s efforts to popularise mechanised farming methods. The growing popularity of rental services is also expected to attract farmers to adopt modern farming methods.