Recent telephone calls with dealers and their written comments that have accompanied the various surveys we conduct between Farm Equipment and Ag Equipment Intelligence, are really quite revealing. Despite the current situation of excess used inventory and farmers slowing the spending on new equipment, dealers say they’re getting pushed to order more new product than they can sell — profitably.

I heard from a Deere dealer within the last few weeks and he talked about the pressure Deere was putting on its dealers to increase their orders for lower horsepower tractors and smaller ag equipment, particularly hay tools. He said his local rep was relentless in calling him and he finally broke down and placed a big order for tractors 150 horsepower and lower. He said he did what his rep had “suggested,” and ordered double the number of units he had sold all of this past year. He added that his need to remain in Deere’s good graces also played a part in his decision to go along with the “program.”

Here are some other comments we’ve seen in our surveys that suggest that Deere isn’t the only farm equipment manufacturer “urging” dealers to stock up, even though their lots are full of used machines.

“New Holland has asked all of its dealers to place a hay tools order equivalent to 22 months of inventory, but will deliver that inventory over the next 12 months. I don’t know what they have up their sleeve, but if the cattle price bubble bursts like the row crops, I wouldn't want to be sitting on excess inventory. I think it is justa matter of when, not if.”

“Used inventory levels and continued weak crop prices remain the key limitation to our current order book. With low farm cash receipts we are having trouble moving new products.”

“New Holland is getting more aggressive on hay baler incentives and pricing. Dealers continue to flood the market with large ag equipment, and it is destroying resale values.”

“Shortline company reps have become more assertive in wanting me to stock more inventory.”

“Order objectives have kept increasing like always. The difference is we are not ordering anything. We are willing to sit out and wait for a market correction, and so be it if we lose market share. We aren’t playing the share game anymore. We are focused on a profitable model.”

New Holland is pushing dealers to order equipment at levels that we are uncomfortable with.”

We’ve also started hearing that, in some cases, the buying decision has actually been taken out of the farmers’ hands. Here’s what one dealer told us: Farmers are being told to hold off on equipment purchases by lenders. We had to cancel pre-booked orders for 2016, because a lender told our customer he couldn’t trade up.”

Manufacturers Trying to Help?

To be fair, it appears that manufacturers are trying to help their dealers out in some situations. In addition to the certified pre-owned programs that are being offered by different manufacturers, last week AGCO Parts announced that it is offering a 15% discount and 180 days of no interest or payments on parts for preventative maintenance for customers taking their equipment to participating AGCO dealers by the end of the year.

And Deere is doing something interesting to help out, according to one its dealers: “Deere now offers a 3-year, interest-free loan on used tractors. This is the first deviation we have seen from their pool fund programs on used equipment.

Positive Outlooks

And while we’ve managed spread some of the less than optimistic forecasts recently, and we don’t believe 2016 will be a cakewalk by any stretch, some dealers are telling us they’ve had a pretty good year. So it’s only right that we share some of those comments with you, as well. Here are some of the more upbeat comments we’ve heard recently.

“Demand in Texas continues to be promising, especially with favorable weather patterns and high beef prices.”

“Parts and service sales are driving increases in sales this year.”

“We have seen particular strength coming from small ag products, notably utility tractors and hay tools.”

“August has had the best month of the entire year for us.”

“August has come in stronger than July. We have actually seen a pickup in traffic and sales.”

“We have had the best sales year in our history, even with the drought in California. The telling period won’t come until December/January, however, because most of the products we sell are sold ahead of time.”