Recent earnings reports from Raven and AgJunction underscore the importance for dealers to diversify their precision farming offerings.

With more and more farm equipment rolling off the assembly line equipped with the latest precision technology, precision farming dealers admit the need to become less reliant on hardware sales as the primary driver of precision revenue.

Specifically, dealers are making for-fee precision service packages or chargeable phone support a priority, to at the very least, help offset potentially slower precision hardware sales.

Precision dealers, especially those independent from a major farm equipment manufacturer, are starting to feel the pinch of shrinking aftermarket sales opportunities.

Recent revenue reports from two precision farming manufacturers emphasize this trend.

Hiawatha, Kan.,-based AgJunction reported a 120% increase in its OEM revenue during the fourth quarter of 2013 compared to 2012, from $3,713 to $8,183. Overall, the company reported a 37% increase in fourth quarter revenue for its ag division, over the same period in 2012.

AgJunction CEO and president Rick Heiniger notes that international OEM business was “the core driver” behind the company’s fourth quarter growth and is “changing the traditional seasonality of our business.”

“We believe our global markets are generally making a transition from aftermarket to OEM for core precision agriculture guidance technologies and is evident in our sales results,” Heiniger says. “We are working closely with our current and new OEM partners to support this trend.”

Meanwhile, Raven’s Applied Technology division reported a 5% decrease in 2013 fourth quarter revenue, compared to the same period in 2012. In an earnings call with industry analysts, Raven CEO and president Daniel Rykhus attributed the decline to lower aftermarket demand in both the U.S. and Canada.

However, Rykhus noted that the company is seeing increased demand from OEM partners for certain products, including advanced field computers, planter and seeder controls, boom controls and application controls.

“We also plan to bring on a couple new OEMs this year that we’ve been working on for quite a while and that’ll help boost sales,” he said during the earnings call.

Precision dealers, especially those independent from a major farm equipment manufacturer, are starting to feel the pinch of shrinking aftermarket sales opportunities.

L&D Ag Service, a single-store fertilizer, chemical and precision farming dealership in Hartland, Minn., has seen aftermarket sales of auto-steer and planter row clutch systems dip in 2014, according to general manager Travis Routh.

“One hundred percent of our precision hardware sales are aftermarket, so we’re definitely seeing a difference as a result of more precision technology coming factory direct on equipment,” he says. “Sales are tapering off for some products, and we’ve made more of an effort to institute a charge for service and phone support.”

Starting in January 2013, L&D began charging for precision phone support, giving customers the option of a per-call charge or an annual fee. Generally, Routh says customers pay about $25 per call or $400 per year for unlimited precision phone support.

So far in 2014, Routh says the dealership has sold about 75% of last year’s total for precision service.

“The OEMs are really starting to get on board with offering tractors or planters equipped with technology, which wasn’t the case a few years ago. This trend is definitely something we’ll continue to watch,” Routh says. “While we’re fortunate to have our fertilizer business to rely on, selling service is going to be extremely important part of sustaining the precision side of the business.”