From the Desk of Dave Kanicki
May 1, 2012
When I study the results from our monthly “Dealer Trends & Business Outlook” survey, as much as I pay attention to the numbers, I always find more “color” in the dealer comments about what’s really happening out there. That’s because they provide the back-story of why they’re sleeping well at night or not sleeping at all. They also let us know that as good as things are going in one area, they might not be going as well in another region.
Here’s a sampling of what we heard from dealers in our last survey when we asked them about how equipment sales went compared to the previous month’s sales:
- It was better this month. We had more combine settlements in March this year. The growth we experienced is largely due to that.
- We saw good cattle prices, good grain prices and greater demand for food products.
- It was better than expected because of the early spring.
- It was above budget because of early spring and good commodity prices.
- Weather drove better-than-expected sales.
- Customers were in the field working and planting. Due to the early season it looks like we’ll have a bad selling spring.
- It was inline with what we thought it would be. We had the product available to sell and our pre-sell units came to us in a timely fashion.
- Much of what we sold was unit delivered but ordered in the 4th quarter of 2011.
- It was worse for us. High gas prices, weaker dollar, fear in the market place all played a role.
- It was inline but only because we're not getting inventory equipment from CASE IH.
When we asked dealers how they’re looking at their prospects for the remainder of 2012, you can see generally they’re a pretty optimistic group, but some aren’t overly enthused for a whole variety of reasons.
- We’re less optimistic. There is reduced depreciation ability by retail buyer. The tax laws now stink.
- We’re more optimistic and have added two more stores.
- I’m more optimistic. 60 days ago there was some concern over higher input costs, cash rent, fertilizer, etc. Those costs are now locked in and contracts are being made with pretty positive pricing. I have talked with a couple of our large producers who believe that if they have a good crop, their income will be up over 2011.
- I’m less optimistic now. My main concern is lack of water. We irrigate off of snowpack and it does not look good for 2012. Snow and rainfall in our area is way behind. We are in an area with an average of 10-12 inches of rain a year, so snowpack is vital to irrigated farmers. Also, our dryland farm ground will be questionable for dollars of production.
- We are starting to get into a dry pattern in our area and several producers are changing their planting decisions because of it. It will affect their buying decisions soon if it doesn’t rain.
- Product supply has me less optimistic.
- Dry weather still hurts us.
- Input costs, including land rent and prices, will pinch farmers eventually.
Like farmers, equipment dealers worry a lot until the money’s in the bank. Then, like the rest of us these days, they worry about the banks.