Three precision farming specialists share their perspective on the coming year’s business prospects, amid a projected decline in farm machinery sales.
Ian Gronau, Contributing Writer
Even before the New Year’s Eve confetti settles, dealers will be evaluating the coming year’s sales prospects, and 2015 may call for some creativity. Sliding commodity prices may prompt growers to scale back some larger farm equipment purchases.
However, Jason Pennycook, precision farming specialist at Johnson Tractor, a Case IH dealership in Janesville, Wis., suggests this stumbling block could be an opportunity in disguise.
“There might be some decline in machinery sales, but I think we’ll see an increase in precision farming equipment sales,” he says. “I see a boost coming in variable-rate technology sales for planters, sprayers and fertilizers.”
Lanty “Spud” Armstrong, precision farming specialist for Ag Technologies Inc. Rochester, Ind., couldn’t agree more. He expects customers he’s worked with in the past on significant equipment trade-ins will be ready to talk precision now.
“Variable-rate will continue to grow, there is a lot of potential there,” says Armstrong. “Some farmers have been cautious about getting into the technology and spent the money elsewhere in the past. With input costs staying high and crop prices dropping back, variable-rate seeding is going to be key in spring.”
It pays to know the all the obstacles while developing a sales strategy, so what will be working against dealers in the coming year? Pennycook notes that many farmers may just favor a temporary holding pattern — which could mean dealers will have to look beyond hardware for sales opportunities.
“A lot of farmers are just maintaining the equipment they have now rather than going out and making a lot of purchases,” says Pennycook. “That will be the biggest barrier to sales. Anticipating that, we've been expanding on some of our service plans. If customers aren't buying new equipment, we can at least generate revenue by making sure their older equipment is operating efficiently.”
Other factors, which could impact sales growth, are increased subscription prices on products like GPS signals, data transfers and vehicle telematics, says Phil Moskal, integrated solutions manager at Mid-State Equipment, a John Deere dealership, in Janesville, Wis. He also says that some co-ops and ag service providers are beginning to offer some of the same products that dealers offer, such as yield map printing and prescription writing.
“The only problem is that some of these co-ops or crop retailers will be offering these services ‘for free’ because they are tied to inputs the customer has to buy yearly,” says Moskal. “We also have to be cognizant that those co-ops are our customers too, and we can’t go stepping on too many toes.”
While ramping up service plans and talking return on investment on with precision customers are potential responses to lagging machinery sales, all three specialists agree that evaluating sales potential with emerging technology is also wise. Pennycook will be keeping his eyes open for more reliable data transfer options for customers.
“More and more companies are looking into data transfer tools to the cloud right from equipment,” said Pennycook. “It’s something a lot of customers are looking for, so they aren't relying on just a thumb drive or data card.”
Additionally, unmanned aerial vehicles (UAVs) remain on the radar of dealers. Official regulations from the FAA could be in place by September of 2015. Despite widespread skepticism that this date will be met, dealers seem to be responding to their customers’ level of interest with cautious optimism.
“We've just been looking into them, and I feel that there is a market,” says Pennycook. “With all the regulations still up in the air though, it makes it kind of questionable.”
Armstrong and Moskal already have some UAVs in stock and are reporting a high level of interest. Moskal is still evaluating which UAV manufacturer can best serve his customers because there are many to choose from. Armstrong, who began selling a line of UAVs last month, says, he’d like to start small with UAVs.
“We signed a contract with Precision Drone out of Noblesville, Ind.,” says Armstrong. “They have a lot to offer and it’s a local company for us so that made our decision a bit easier as there are a lot of UAV companies out there.”
He sees the coming year as an opportunity to educate himself on UAV operation, liability and application, rather than focus a lot of sales energy on them. However, if favorable regulations take shape, he will be prepared to seize the opportunity.