In this episode of On the Record, brought to you by Associated Equipment Distributors, we take a look at the preliminary results of the 2024 Ag Equipment Intelligence Outlook & Trends report. In the Technology Corner, Noah Newman shows us the latest from Verdant Robotics. Also in this episode, shifting high horsepower used tractor inventories and a deep dive into the implications of AGCO and Trimble's new joint venture.

This episode of On the Record is brought to you by Associated Equipment Distributors — the leading association in North America strictly dedicated to the equipment distribution industry.  AED offers a wide range of education, events, advocacy and reports for companies of all sizes and all roles within your organization.  Learn more about AED by visiting www.aednet.org/agdealers

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• Dealers Seem Pessimistic About 2024 New Equipment Sales
• Dealers on the Move
• Technology Corner: Verdant Robotics Smart Sprayer Reduces Chemical Use by up to 95%
• Used High-Horsepower Tractor Inventories on the Rise
• AGCO to Adopt the ‘Fendt Approach’ with Trimble/AGCO Dealer Offerings
• DataPoint: Drone Tech Adoption

Dealers Seem Pessimistic About 2024 New Equipment Sales

 With the 2024 Farm Equipment Dealer Business Outlook & Trends survey complete and the results being tallied, we’re beginning to see some of what dealers are anticipating for the coming year.

Looking specifically at expectations for equipment sales, preliminary results suggest dealers  continue to forecast declines in new equipment revenues. A third of respondents expect 2024 new equipment sales to decline 2-7% vs. 31% that foresee some degree of growth. Nearly half of respondents — 48% — are preparing for declines in new equipment sales in 2024. This is in line with their 2023 forecast, when the same percentage predicted a decline. About 21%  expect sales will be flat year over year.

Going back through 5 years of forecasts, we can see how optimism about new equipment sales has done a complete reversal. In 2019, forecasting for 2020, about 42% of respondents saw growth going into the next year compared to roughly 22% forecasting declines. Sometime between 2021 and 2022, those attitudes shifted, and while they are not as negative as they were in 2022, when only 22.7% of respondents foresaw growth in 2023, they are not much improved from last year. Those who forecast sales would remain flat have almost consistently declined.

Feelings about used equipment sales were less pessimistic, with 36% of respondents saying they expect them to remain flat, with another 31% saying they could grow by 2-7%. Dealers foreseeing declines in used equipment sales made up the smallest percentage of respondents at a total of about 27%.

Used equipment revenue forecasts since 2019 showed no similar reversal in optimism as was seen with new equipment, although the gap between the two did completely close in 2023. While a higher percentage of respondents expect declines in used equipment sales in 2024 vs. 2020, when it was only 12% of respondents, the percentage expecting growth in 2024 is only a tenth of a percentage point smaller than what was forecast for 2020.

Dealers on the Move

This week’s Dealers on the Move include Alta Equipment and Tellus Equipment.

Alta Equipment Group in Livonia, Mich., announced it will acquire 3-store Illinois Kubota dealer Burris Equipment for $14 million. Kubota has stated Alta Equipment will not buy Burris’ Kubota contract, and the manufacturer is working with nearby Kubota dealers to support local customers in the meantime.

Texas John Deere dealer Tellus Equipment has acquired single-store Deere dealer

Bramlett Implement in Stephenville, Texas. Tellus will retain Bramlett’s employees and continue to operate the location.

Verdant Robotics Smart Sprayer Reduces Chemical Use by up to 95% 

About 10 months ago, Verdant Robotics received one of the largest investments in ag robotics to date — $46.5 million. The plan was to use the money to scale its fleet, build more machines and cover more acres.  We got a peak at one of those machines at the FIRA conference a few weeks ago. Verdant director of field operations Brad Abraham takes us underneath the hood of Verdant’s smart-spraying robot.

“These right here are sprayers. These are going to be spraying with that millimeter-type accuracy. They’re about the diameter of a pinky finger. We have 2 light fixtures that go with every spray box. We have 6 spray boxes. This could cover 20 feet. We also have a 40-foot implement that attaches to the side.

So, that way as we get across more acreage, bigger farms, we can get our distance longer to cover more acreage quicker. They spray herbicide right now, but the robots don’t care if it’s herbicide or fungicide or insecticide. Whatever it is, we can do the same thing for the plant as we’re doing for the weed itself.

The biggest thing is molecules on target. What we’re doing, we’re doubling — if not tripling — our molecules on target by being so precise with our spray. So, we can cut our percentages on our mixes down by 1/2 if not 3/4 of where they’re at on the conventional side right now.”

The machine has been working mainly in specialty crops, but Verdant plans to expand to broad acre organic crops, and eventually corn and soybean acres as well. 

Used High-Horsepower Tractor Inventories on the Rise

According to Sandhills Global’s September market report on ag equipment, U.S. used over 300 horsepower tractor inventory levels nearly doubled in September vs. last year, up 84.9% year-over-year. 

The report stated that used high-horsepower tractor inventories were up 6.4% month-over-month following months of increases. 

In addition, after consecutive monthly increases, asking values were up about 1.3% month-over-month and up 11.7% year-over-year in September. Sandhills notes the spread between asking and auction values continues to expand as inventory increases. 

However, according to our September Dealer Sentiments & Business Conditions Update, dealers are still reporting used high-horsepower tractor inventories are too low. Regarding their August inventory, a net 45% of dealers said their inventories were too low vs. a net 54% that said the same the month prior. 

Used high-horsepower tractor pricing was up 4% in August, up from the previous month, according to the latest Dealer Sentiments report. 

Commenting on the used equipment market, one dealer said, “The OEMs need to start offering better financing programs to move used equipment. Auction activity is slowing.” 

AGCO to Adopt the ‘Fendt Approach’ with Trimble/AGCO Dealer Offerings

AGCO announced Sept. 28 it had entered into a joint venture with Trimble. AGCO will own 85% of that joint venture via a $2 billion cash payment and the contribution of JCA Technologies, an autonomy software developer it acquired in May 2022 for $63 million Canadian dollars.

AGCO said the joint venture creates a global mixed-fleet precision ag platform that will be the exclusive provider of Trimble Ag’s technology offering. The deal is expected to close in the first half of 2024.

 In a presentation following the announcement, AGCO executives and Trimble President and CEO Rob Painter offered some insight into the synergies of the joint venture. AGCO Chairman, President and CEO Eric Hansotia said the company will be approaching the integration of its Precision Planting and Trimble dealer networks as it has done with Fendt: a cautious, calculated integration.

“Our mindset on this is very much like we’ve talked to you about our mindset on growing our Fendt business. It’s important for us to grow that business. We think customers like it a lot, and we want to give them access to it. But we’ve been very methodical about that. We’ve only been turning on dealers step by step by step, once the dealer has proven — through a robust evaluation — that they can do a great job of delivering the overall Fendt experience. We’ll be going through that same exercise in the marketplace, evaluating each dealer location to say, ‘What is the right answer here? Do you have the capabilities and is there a market need in your area that warrants granting you the channel?’ So, to be clear: on day 1, not every Precision Planting dealer will be selling Trimble technology. Not every Trimble dealer will be selling Precision Planting technology.”

As part of the agreement, Trimble will supply the joint venture with its global navigation satellite system — or GNSS — and guidance hardware and technology, which will be sold to AGCO dealers and other OEMs for a minimum of 7 years. A long-term agreement regarding licensing of Trimble trademarks and tech will begin after that supply agreement ends. 

And now, with the addition of Trimble precision ag offerings, AGCO is forecasting to achieve over $2 billion in precision ag revenue by 2028.

The presentation reveals other details about the joint venture, including the following:

1. The 2 companies confirmed there is “very minimal” portfolio overlap between them, and executives characterized themselves as the “only 2 large ag technology businesses that are focused on the mixed fleet.”
2. AGCO confirmed it will not be slowing down any engineering spending, but will rather redeploy some of it toward different areas, such as pain points both companies may have previously been working on and can now accelerate results.
3. AGCO sees growth potential in all its channels but considers the biggest potential to be customers choosing to install Trimble ag technology at the dealership level.

DataPoint: Drone Tech Adoption

This week’s DataPoint is brought to you by the Ag Equipment Intelligence 2024 Executive Briefing.

Dealer offerings of drone or UAV-based imagery has been increasing at around 5% per year and is projected to stay on that path. No-till farmers have been steadily adopting drone technology with an average increase of 1.3% per year and a linear trend fit of 1.5% per year. Surveyed growers in 2023 project a 32% increase to nearly 50%. That may be possible, as the regulatory status of the technology is becoming clearer, and there are many advancements in terms of drone-based activities. 

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