How will farm equipment dealers grow their businesses in the near future? Sell more equipment? Acquire more locations? Offer more types of product, like compact construction equipment or specialized machinery? Diversify into other types of businesses?
For many dealers, these have been the traditional, tried and true approaches to increasing revenue and growing their enterprise.
There’s certainly nothing wrong with any of these approaches, but with the onset of precision farming technologies, many dealers are taking a longer and harder look at where the farm equipment business is heading.
What got my attention recently was a report about how the input sector of the ag industry is looking at growth in the future.
Liam Condon, head of Crop Science at Bayer, the world’s second-largest pesticides supplier, pretty much summed up the situation his company is confronting in a recent Reuters report. He said,“If our only goal is to sell as much inputs as possible by the liters of chemicals, I think we would have a real problem going forward. If you only spray half of the field, that’s much less inputs. The knowledge to get to the fact that you only spray that part of the field — that, you can sell.”
After it failed in its attempts to acquire Syngenta, Monsanto said data science and services are the “glue that holds the pieces together” of its growth strategy, according to the report.
In other words, these behemoth manufacturers of ag inputs are looking at much the same business as farm equipment manufacturers and dealers.
Word has it that John Deere is “encouraging” at least some of its dealers to employ a full-time agronomist that could help equipment sellers to capture more of the “data” business that’s emerging. Two years ago, less than 5% of Kubota dealers said they were looking to add precision specialists to their staffs. Responding to Ag Equipment Intelligence’s 2016 Dealer Business Outlook & Trends survey, nearly 24% of Kubota dealers said they were looking to add precision farming specialists to their staffs. This provided additional evidence that the Japanese manufacturer is serious about expanding into the production ag equipment segment and the precision farming business.
A look at the bigger picture would also seem to indicate that farmers are taking a much harder look at things like conservation tillage practices (no-till, strip-till, minimum tillage, etc.) and cover crops.
I can remember 10 years ago being advised to not put too much emphasis on these types of farming methods because it would upset some manufacturers who produced tillage tools.
Yet, precision farming is opening the door wider to utilizing these types of practices as farmers look to minimize inputs, improve soil health, increase yields and reduce the environmental impacts of crop and livestock production.
I believe equipment and precision farming dealers have the inside track when it comes to supporting farm customers with this level of advanced service. If they can keep the government, environmentalists and other activists off their back, that would be a big bonus, too.
While I don’t get to visit with a lot of farmers, those I’ve had occasion to visit with say they want and will increasingly need to improve their bottom lines. And while they like the products — inputs and equipment — that the big guys offer, they don’t necessarily trust them with their data. On the other hand, many have great relationships and do trust their local dealers. You need to take advantage of this “in” you have with your customers.
A few days ago, I read through a feature story that will appear in the summer edition of our Precision Farming Dealer publication that focuses on what farmers are and aren’t getting from their dealers when it comes to support and service. I think you will find it a worthwhile read when the issue comes out next month.
In the meantime, why not take some time to assess where ag and your business are heading; how it’s evolving and changing. Put on your longer-range glasses and glimpse the bigger picture. I can guarantee you that’s what your competitor is doing.