In the 1990s, Sweden began to see the establishment of equipment sharing groups or “machine rings.” Today there are 20 local associations with about 5,000 members – approximately 6% of all Swedish farmers. Germany has about five times that amount of equipment sharing. Canadian farmers have formed a number of machinery cooperatives. The U.S. by comparison has very few equipment sharing cohorts, but that is likely to change.
Faith Gilbert, a founder of Letterbox Farm Collective and now of the Hawthorne Valley Association, hopes that adopting collective equipment ownership models can “chip away wherever possible at the barriers to farming well – and living well while farming.”
The Hawthorne Valley Association is a nonprofit based in Ghent, NY, that recently celebrated its 50th anniversary. According to their website, the 900-acre farm’s initiatives include “an early childhood through grade 12 Waldorf school; on-farm education programs; a full line of organic/natural foods and a grocery store; a Biodynamic creamery and organic bakery; a mobile grocery market; a 300-plus member organic/Biodynamic CSA; social, ecological and cultural research groups; teacher education programs; arts initiatives; and more.”
Gilbert noted there are various levels of pooling resources when it comes to farm equipment, each offering unique advantages and obligations:
- Tool Lending Networks – The simplest and most common form of sharing, tool lending networks involve simply lending each other equipment they personally own on an informal basis. Gilbert pointed to a network of New Hampshire grain and oilseed farmers.
“After one farm bought a seed cleaner and began lending it out to others, an informal group came together, with a habit of calling each other up to use the equipment,” she said. “Farms in the group then voluntarily decided to purchase additional needed equipment that they then made available to the group.”
A drawback of informal sharing networks is that they are not usually visible or open to the public, which may make them inaccessible to beginning farmers.
- Direct Co-Ownership – In direct co-ownership models, farmers purchase tools collectively without forming a separate legal entity. “Direct co-ownership arrangements tend to come out of close relationships. As such, there’s a tendency to manage the arrangements casually,” Gilbert said.
While the direct co-ownership model can be ideal for farms connected through familial relationships, the lack of clear written agreements can also mean a lack of clear planning and understanding between users.
- Shared Equipment Business – This approach sees farmers forming an LLC, with each member farm contributing money for both membership and access to the LLC’s pool of tools and equipment. “Members can sign out equipment… and pay per hour use fees for tractor use, per-year use fees for certain implements, etc.” Gilbert explained.
While the LLC limits the liability of those participating farmer-members, and facilitates transitioning members in and out of the organization, there are greater costs associated with setting up and maintaining the LLC as a distinct legal entity.
- Equipment Cooperatives – Like the LLC of a shared equipment business, an equipment cooperative is a type of corporation designed to be owned and governed by its members. According to Gilbert, what sets it apart from an LLC is that it “must abide by international cooperative principles, including being governed by their membership on a democratic, one-member-one-vote basis, regardless of how much capital they have invested.”
The co-op operates at cost, with any surplus after expenses returned to the members. The members can perform administrative duties, or they can hire employees. A cooperative can be open, accepting new members at any time, or closed, where the membership is defined at formation (with periodic windows for new admissions.) This model can be seen as more egalitarian, but a strong preference for individual ownership has made it less common in the U.S.
As input and equipment costs continue to rise and supply chain issues linger, considering joining or forming a farm equipment sharing network may be something to consider for 2023.
To read Gilbert’s full “A Guide to Sharing Farm Equipment,” visit northeast.sare.org/resources/a-guide-to-sharing-farm-equipment.
by Enrico Villamaino