From my experience in manufacturing, I always found it just as difficult, if not more so, coming out of a recession then it is going into it. From what farm equipment dealers tell me, the same is true when agriculture goes into or comes out of a significant weather event like this year’s Midwest drought.
I was reminded of this during a recent conversation with a dealer friend in Texas. We were talking about (what else?) the “drought” and how it seems to be causing more uncertainty for dealers this year as they look toward 2013. And if anyone knows about droughts, it’s Texas.
Climatologists say the dry spell that the state went through last year was the worst one-year drought since Texas rainfall data started being reported in 1895. Nearly the entire state earned the highest rating of “exceptional” drought, while the remaining areas weren’t far behind with “extreme” or “severe” ratings by the U.S. Drought Monitor.
Most of the Midwest became all too familiar with these ratings this year. But here’s the difference between last year and this year. The Texas drought was devastating to farmers and ranchers there and impacted others beyond the region. The Midwest drought was devastating to almost everyone, everywhere because the lower yields led to rising commodity prices, which led to higher livestock feed prices, which led to higher food prices, probably around the world.
Anyway, back to the Texas dealer I was speaking to. He said, “I’ve been telling my friends up north that managing the back end of a drought is one of the most difficult things you can do in this business. During a drought, you know you can’t do a thing, except maybe be a cheerleader for your customers. But what do you do when things start getting a little better?”
He’s talking about the uncertainty, indecision and hesitation businesses experience when their customers are feeling insecure about their business.
This is what we picked up on while putting together our 2013 Dealer Business Trends & Outlook report that appears in this issue of Farm Equipment.
Few dealers are dejected or discouraged, they just didn’t seem to be sure what to expect next. They’re certainly not as confident as they were a year ago.
The forecast numbers tell a good part of the story, and many signs point to another solid year for farm equipment sales in 2013. But it’s write-in comments dealers offered where another part of the story unfolds.
For example, asked what his biggest challenge will be in the year ahead, one Missouri dealer responded, “I’m trying to anticipate stocking levels and control expenses with the fragile economy, election, farm economy and drought conditions.”
An Indiana dealer put it this way, “Farm income is such an unknown for 2013, and I am not sure where it will end up. I have given my answers [to the survey] but I am not confident they will be accurate as time plays out. I plan to be very cautious in ordering in 2013 until I have a clearer picture of the conditions we will be dealing with.”
A Kentucky dealer doesn’t see 2013 as a problem, it’s the next year that concerns him. He wrote, “2013 should be OK because most farmers sell crop into the next year. I think 2014 could be a tough year if we don’t have an outstanding crop in 2013.”
Most dealers responding to this year’s survey seem to believe that good moisture levels this fall and winter will help remove much of the doubt and hesitancy they’re seeing in their customers. That, of course, is another if.
But agriculture is used to ifs and unknowns. It’s just that this year seems to have more than usual.