Making Precision Profitable
In today's newscast we look at new planting technologies, dealer association mergers, Topcon's acquisition of NORAC and the 2015 forecast for global ag equipment sales.
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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.
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There's been no aspect of farming operations that has received more scrutiny in recent years than planting operations. Emerging from this intense analysis are new precision technologies and approaches to seed placement.
One development that's beginning to garner attention is Clean Seed Capital's CX-6 Smart Seeder planting system. According to the developers, the new system is an advanced precision no-till seeding system that gives commercial farmers the ability to deploy up to six different seeds simultaneously per foot of the 60 foot seeder without unloading and replacing the seed.
The system is expected to be priced between $500,000-$600,000. Rocky Mountain Dealerships, Canada’s largest Case IH dealer, and Cervus Equipment, Canada’s largest John Deere dealer, have both signed distribution agreements with Clean Seed. For both dealerships, the agreement is for a renewable 3-year period starting in 2016.
Another development is a narrow row seeder from Stine Seed. The company believes narrow rows are the key to higher population planting. The seed company has partnered with John Deere and Great Plains to offer what they are calling a twin 20 planter system. The planter has tandem rows that are 8 inches apart, a 12-inch row and then another pair of tandem 8-inch rows.
Stine offered the planter to growers on lease through a purchase agreement for 10% of the retail price. If the grower likes the results, he pays an additional 23% of the list price to purchase the unit. Stine Seed leased 85-90 planters this year according to national marketing and sales director David Thompson.
While the Deere DB 60 72-row planter was initially only available through the Stine Seed program, it is now available through Deere’s dealer network, as well.
Dealers on the Move this week include, H&R Agri-Power, Bane-Welker Equipment and Meade Tractor
Case IH dealer H&R Agri-Power, with 14 locations in Kentucky, Illinois, Tennessee, Alabama and Mississippi, acquired Black Prairie Tractor, a leading Zimmatic irrigation dealer. The acquisition expands H&R Agri-Power’s irrigation division. The dealership will now have 2 facilities in Columbus, Miss.
On June 3rd, Bane-Welker Equipment, a Case IH dealer with 6 locations in Indiana and Ohio, announced that its locations in Wilmington and Georgetown, Ohio, are once again authorized Kubota dealers.
This past Monday, Meade Tractor announced the acquisition of 8 John Deere construction branches from Nortrax throughout Tennessee and Kentucky. The purchase will expand Meade’s operations across 5 different states and 15 locations overall.
Following the trend of dealer consolidation, the boards of the Pacific Northwest Assn. and Western Equipment Dealers Assn. voted to consolidate the two groups.
John Schmeiser, CEO of WEDA, says PNW recognized that merging offered an opportunity to provide broader access to its members.
“We have to acknowledge that our dealership networks have been changing. There have been mergers with our equipment dealers fairly heavily over the last 20 years, but dealership associations have not merged at this same rate. So, we’re recognizing today’s dealers require different levels of programs, services and advocacy from their association. By consolidating our association it makes it easier for us to meet those needs.”
Before the merger can be finalized, PNW dealer members will need to vote on approving the deal. Schmeiser says that will happen this summer and anticipates the merger will be complete by Oct. 1.
There is also talk that Southeastern Equipment Dealers Assn., which serves Arkansas, Mississippi, Tennessee, South Carolina, North Carolina, Virginia, West Virginia and Maryland, and Midwest Equipment Dealers Assn., which serves Illinois and Wisconsin, are looking to merge. However, no official announcement has been made to date.
The last year has seen some dramatic shifts in the precision farming corporate landscape, driven in part by a slower commodities market, as well as consolidation of several technology companies.
The pattern continued with week, with California-based Topcon Positioning Group acquiring Norac Systems International. Norac, based in Saskatoon, Saskatchewan, is known for its development of ultrasonic sensing and boom control technology.
The companies have been commercial partners for the last 3 years, collaborating on boom leveling and sensing compatibility for in-cab displays, according to Mike Gomes, vice president of business development with Topcon.
"We see that this is the right time in the industry to be expanding, to be broadening our product line. We believe that as the market continues to mature, that customers more and more want integrated solutions and they want them from a single provider. Those start with hardware and capabilities on the machine, and extend into software and connectivity and coordinated functions."
Topcon’s acquisition was its third ag-related purchase since last November, which include the addition of precision weight-sensing company Digi-Star and in-cab console manufacturer Wachendorff Electronics.
Several other precision farming hardware companies have also been actively diversifying their business interests in recent months.
In December, Trimble Navigation acquired IRON Solutions, which provides analytics-based intelligence and a cloud-based software system that tracks the lifecycle of used farm machinery. And in May, AgJunction purchased precision steering solution manufacturer Novariant.
The worldwide sales and production of farm machinery are expected to decline by 10% in 2015, according to the VDMA Agricultural Machinery Assn. based in Frankfurt, Germany. After reaching an all-time sales high of $116 billion in 2013, sales of ag equipment fell slightly to about $114 billion last year.
VDMA is forecasting a drop in global sales to about $102 billion in 2015. The main factor in the decline is the weak economic cycle in America and Europe, as well as in part of the Asian continent, especially in India.
During the last episode of On the Record, I was on assignment in Washington D.C. for the North American Equipment Dealer’s Assn. Legislative Fly-In. After a day of briefings on the issues, dealers and association staff spent a day meeting with Congressional members and their staff.
One of the top issues dealers discussed was tax reform, largely focused on Section 179 and bonus depreciation. I spoke with Tim Wentz, field director for the Northeast Equipment Dealers Assn., on how tax reform will help dealers.
Far from the traditional norm for tractor models, Minneapolis-Moline took a dive into the designing deep-end with the release of the Comfortractor in 1938. Equipped with a built-in radio and three-seat heated cabin, the tractor was still capable of reaching speeds of 40 mph. Hoping it would act as both a tractor and automobile for buyers, developers instead received a chilly reception overall to the concept. In addition to its steep price for that time, most farmers during the era prided themselves on toughing–it-out in the fields, rain or shine, and saw the Comfortractor as a cop-out to traditional farming values. The idea tanked, as only 125 total units were sold. It took decades before investors took another shot at a luxury tractor in its aftermath.
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