In the latest episode we look at Hagie’s joint-venture with John Deere and what it means for the sprayer manufacturer’s factory-direct distribution model, Mahindra’s entrance into the combine market, Lindsay’s second quarter financial results and how dealers are integrating data management into their businesses.
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I’m managing editor Kim Schmidt, welcome to On The Record. Here’s a look at what’s currently impacting the ag equipment industry.
Deere, Hagie Enter Joint Venture
Last week, John Deere and sprayer manufacturer Hagie announced the two companies were entering into a joint venture, marking a major change in Hagie’s distribution model which has been factory direct. Equipment made by the joint venture will continue to carry the Hagie brand, but sales and service for Hagie equipment will now be integrated into Deere’s global distribution channel over the next 15 months.
Kent Klemme, the new president of Hagie, comes from Deere's Seeding and Tilling Division. He says the company will be ending it’s factory-direct sales model and Hagie products will now be sold strictly through the Deere dealer network.
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“The good part about that is, through doing this we are transitioning and moving our field service technicians and sales staff and working really closely with John Deere to integrate those people into roles and dealers that fit within their needs. There’s a really good chance for customers who have worked with Hagie technicians or the Hagie sales team in the past that some of those faces will hopefully be familiar at the dealership that is closest to the customer again in the future as well.”
Hagie CEO Alan Hagie and Business and Product Development Manager Newt Lingenfelter discussed the deal in a video released by Hagie on Tuesday. Lingenfelter says a new distribution model is necessary for the product portfolio the company will be coming out with.
We spoke with one longtime veteran of the self-propelled sprayer market to get his take on the situation and what it means. There are only two high-high clearance sprayer companies in North America — Miller/New Holland and Hagie.
He says with New Holland owning Miller that Deere was likely motivated to take command of the niche via Hagie. He suggests that, perhaps, Deere thought Case would pick up Hagie and take total control of the market.
Dealers on the Move
Dealers on the Move this week is AGCO dealer Agriterra Equipment and German Claas dealership BayWa Ag.
Agriterra acquired Waskatenau Motors in Waskatenau, Alta. Agriterra now has a total of 8 locations throughout Alberta, including those in Stony Plain, Camrose, High River, Lougheed, Grande Prairie, Eckville, Rocky Mountain House and now Waskatenau.
BayWa Ag of Munich, an international trading and services groups in agriculture, and Claas announced their intentions to begin cooperating in Canada. The partnership will focus on growing the business for Claas products and expanding its dealer presence in the province of Alberta. The initial new location will open later this year as the first phase of the cooperation.
Dealers Size Up Data Management Space
Picking a practical entry point into delivery of data management service can be a mystery for many farm equipment dealers. Figuring out how to make it a profitable part of their business is even more of a challenge.
But dealers continue trending toward developing and implementing agronomic service offerings and see the financial potential in this area.
The latest online poll by our sister publication Precision Farming Dealer asked dealers to assess their interest and investment in delivering data management services to farm customers. A total of 87% indicated they are at least dabbling in this space, including 47% who said they are committed to developing agronomic and data management service as a recurring source of revenue.
Only 13% say that data management service isn’t an area that fits into their precision farming business plan. While the majority of respondents are taking steps toward helping customers make sense and use of their precision data, one of the pitfalls that still plagues the industry is a misunderstanding of how to recognize good data, according to Steve Cubbage, owner of Record Harvest in Nevada, Mo.
"To manage data, you have to actually have data. And traveling around here the past 3 or four 4 months and visiting some of the growers that may be not in so much the top tier, but what I call the mainstream grower. The fact is that right now, if you had to grade this industry on where we’re at as far as managing data within the mainstream grower, I’d probably give it a D-minus. Because basically, number one — they don’t know what they have."
Cubbage adds that creating a sustainable source of precision revenue from data management service requires an understanding of how to collect and then validate quality data to start providing farm customers with a return on their investment.
Mahindra Enters Combine Market
Mahindra & Mahindra, India’s leading manufacturer of farm tractors, is tapping into Western combine technology to tackle developing markets by securing an alliance with Sampo-Rosenlew of Finland.
The deal, underpinned by a 35% shareholding reportedly acquired for more than $20 million, will result in the two companies jointly developing combine business in India, China, Africa and the Middle East. Mahindra will also supply the combines to selected markets in which it is already active.
Despite being a relatively small manufacturer with turnover in the order of $123 million, Sampo-Rosenlew has successfully sustained a position in the combine market by focusing on small to medium capacity machines and reaching mutually beneficial partnerships for distribution, service support and local assembly.
The company previously had such arrangements with AGCO and Deutz-Fahr, and currently supplies one of its straw walker models to John Deere to fill a niche that a major manufacturer has difficulty filling because of low volumes.
On the tractor side of the business, Mahindra’s unit sales for March were up 34% over last year, with the majority of sales coming from India. Exports for the month stood at just 751 units.
Lindsay Corp. Reports 2Q U.S. Irrigation Equipment Revenues Up 6%
Lindsay Corp. announced results for its second quarter ended Feb. 29, with total company revenues down 15% to $120.6 million year-over-year. A $13 million increase in environmental expenses reduced net income for the company by $8.7 million.
Total revenues from irrigation equipment decreased 5% year-over-year, but U.S. sales of irrigation equipment increased 6%. Lindsay attributes this increase primarily to revenues from acquired companies, including Elecsys Corp. [E LEXIS], which was acquired in January 2015. International irrigation revenues decreased 24% year-over-year due to lower demand from Brazil and the unfavorable impact of foreign exchange rates.
C. Schon Williams, analyst for BB&T, said in a note to investors that the flat year-over-year domestic irrigation sales came as a pleasant surprise given the current sentiments in the farm equipment market. The analyst also saw positive news in Lindsay’s irrigation gross margin, which was up year-over-year because the company was able to offset pricing pressure with lower material costs.
Lindsay’s President and CEO Rick Parod says irrigation markets continue to be constrained by low commodity prices and foreign exchange rates, and while the market shows signs of stabilization, Lindsay is still expecting lower investments on equipment from farmers due to a low projected net farm income for the year. In the longer term, Lindsay expects the market will continue to be driven by population growth, expanded food production and more efficient water use and conservation efforts.
Implement & Tractor Archives
In 1976, Great Plains founder Roy Applequist set out to develop a new grain drill for the Central Plains. After months of interviewing area farmers about their grain drill needs, Applequist developed a 30-foot folding press drill with high capacity and field flexibility. The new drill — and subsequent company — were named Great Plains. To commemorate the company’s 40th anniversary, two Great Plains employees restored the company’s very first 30-foot folding press drill, which was completed in December 2015.
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