A group of farmers who have identified an imbalance in their machinery capacity (this could be an excess resulting in high fixed costs or a shortage resulting in poor timeliness, both are commonly found on the same farm). The farmers then cooperate to sue the surplus capacity on each other's farms.
What are the benefits of Membership?
Reduction of fixed costs of machinery: by increasing the annual usage and therefore the efficiency of utilisation. Having work done by another ring member rather than purchasing a machine or replacing an existing machine removes the element of fixed costs entirely.
What are the disadvantages?
Disadvantages are similar to those of using a contractor. Some loss of control over the operation and, the possibility of untimely operation with consequent loss of quality or yield. Untimely operations are however, generally less of a problem than when using a contractor as the number of possible suppliers is greater. Making early arrangements for work to be done can help to eliminate these disadvantages.
What is the cost of membership?
This varies between rings. Joining fees (purchasing a share) vary from £50 to £75 and the average annual membership fee is £100. Perthshire Machinery Ring joining fee is £50 for a share with annual membership fees of £100 per member. Labour providers have a reduced fee of £75.
How many members are necessary to form a ring?
Size is critical. The larger the membership, the larger the number of machines available and the requirement for work to be undertaken. Also a large geographical ring area is likely to provide a variation in soil types and possibly climate so enabling a longer season of annual use for machinery. Currently the average number of members per ring is 240. Perthshire Machinery Ring in 2000 had 340 members.
How is the Ring organised?
In the UK, the ring must be registered as a Limited Liability Company and must have a Board of Directors elected by the membership. The Board is responsible for the overall management and finances of the ring and for the appointment of a Ring Manager. The Ring Manager is responsible for the day to day running of the ring operations, recruitment of new members, etc. The ring must also comply with the requirements of the Industrial and Provident Societies Act, 1965 and the Friendly, Industrial and Provident Societies Act 1968.
How does the Ring operate?
The ring manager maintains a computer database of members together with the services they can offer. Members who offer services are known as Suppliers; members who require services are known as Demanders. Most members will be both suppliers and demanders from time to time. When a demander requires work to be done, contact will be made with the ring manager who will match the demander to a suitable supplier via the database and put them in touch with each other. If the first match is not successful, further matches will be made until a satisfactory arrangement is made.
How is payment made for work done?
When the work is satisfactorily completed, the supplier fills in a triplicate "Work Schedule" (one copy to the Ring, one for the demanders and one for the suppliers records). The schedule contains all details of the work done and the price agreed and is signed by both the demander and the supplier. The supplier is responsible for forwarding the ring copy to the ring manager. The ring manager then arranges for the demander to be debited and the supplier credited (through the bank by a direct debit system) within thirty-two days from invoicing the work as per the schedule. The demander is given fourteen days notice of the amount to be debited from his account so that he can ensure that sufficient funds are available. *In exceptional circumstances this method of payment may be varied, an additional charge is likely to be made for payment by cheque.
How is income generated by the ring to maintain the service?
A levy of 4% is taken on each transaction, made up by deducting 2% from the sum credited to the supplier and adding 2% to the sum debited from the demander. As a cooperative charity, the ring is not expected to make a large surplus over running costs and profits are reflected in improved service facilities and possible reduced annual membership fees.
What other area of business are open to machinery rings?
Hire of machinery (without operator); supply of labour (without machinery) for long or short term contracts; supply of commodities e.g. tyres, fuel, fertiliser, training, provision of specialised services.
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