12 July 2002

Ring finds a way round rules that limit expansion

By Wendy Short North-east correspondent

THE Yorks-based Ridings Machinery Ring is the latest group to create a subsidiary company – RMR Rural Services – which can operate outside ring regulations and allow its members to carry out contract work outside the group. It is a gap in the market which has now been recognised by a number of machinery rings.

Ridings Machinery Ring manager Peter Day explains: "Almost one-third of farms in North Yorks are now bought by non-farmers lacking either the equipment or the skills to maintain their properties. Many, though, are reluctant to pay the full ring membership fee.

"However, they still have to maintain their land and I was getting a number of inquiries from people looking for contractors to carry out work."

But there lies the problem – the rules of the ring prevent members from working for non-members so all that could be done was to pass on the telephone number of a farmer who may have been able to help. This was seen as a lost opportunity by Mr Day.

"The new company, without the restrictions of the rings rules, will mean this sort of job can now be taken on," he says.

"Two or three farmers together can also bid for council contract work, such as grass-cutting, tree maintenance and even clearing snow from supermarket car parks.

"It could make a big difference to some of our members, especially those who are struggling against poor cereal prices and the after effects of foot-and-mouth disease."

Last years disease outbreak seriously affected the rings financial performance. It suffered a 15% loss in annual turnover, from £495,000 in 2000 to £475,000 in 2001. Membership fell from 275 members to just 250. The hope is that that RMR Rural Services will help to redress the balance.

Enthusiastic as Mr Day clearly is for the new company, he points out that it will not give farmers the security of the direct debit payment system which operates among ring members.

"RMR Rural Services will find the outside work but it cannot act as a banking service," he warns. "If an outside customer is late in paying his bill, the contractor will have to wait for his money, although we will help to chase up any debts."

A potential, lucrative source of customers for the new company is the growing number of farmers who put land into the Countryside Stewardship Scheme.

"They may not be able to justify membership of the ring. But they might need someone with a quad bike and a weed wiper to come and control their thistles."

Despite these interesting prospects, Mr Day insists the ring has no intention of abandoning its traditional system which prevents members from carrying out work outside the group.

"This limitation is partly in place for historical reasons," he says. "However, it would be harder to charge a membership fee if these rules were relaxed. The fee is necessary to cover operating costs.

"Being a mutual society also gives the ring the benefit of the direct debit system, which could not be used for one-off contracting jobs. And we also have freedom to veto members." &#42

RIDINGSMACHINERYRING

Inauguration 1993.

Members 250.

Annual turnover £475,000.

Membership fee £125.

Ring commission charge 2% either way.