Here's How Farm Equipment Dealers are Evolving

November 1, 2016 02:18 PM
Here's How Farm Equipment Dealers are Evolving

Equipment dealers consider ways to reinvent themselves to better serve farmers in challenging times

When commodity prices slip, farmers feel the ill effects first, but everyone eventually gets a taste. That’s apparent now to equipment dealers, who face a multiyear sales decline, contracting net income and a less-than-stellar intermediate outlook.

According to a new Rabobank report, titled “The Dealer’s Choice,” the industry’s leading players have already made some moves to consolidate stores and reduce inventory. Now, they’re considering a new wave of strategic changes, according to report author Kenneth Zuckerberg, senior analyst of farm inputs at Rabobank.

“Dealerships must reinvent themselves for the future and will have to pursue [various] strategies, including partnerships with ag technology companies, to thrive and survive,” he says.

What does that mean for farmers? Dealerships and employees will adopt more of a “solutions provider type of mind-set,” says Stacy Anthony, national sales manager with North Dakota-based Brandt Holdings Company. For Brandt, the repositioning will shift the company’s strategies, including how they interact with customers, he adds.

For example, a sales rep will become more invested in a farmer’s operation to the point he’s able to predict the farmer’s next move. So when the sales rep visits the farmer he’s actually going with a proactive approach—a proposal to introduce the farmer to a new level of technology that could add dollars to his bottom line, Anthony says. 

While building strong customer relationships is critical to success, dealers “have to know what they’re talking about, and they have to have wise advice and solutions that propel a farmer forward,” he adds.

According to Zuckerberg, dealers who “know what they’re talking about” have several options to realign their businesses to better serve farmers:

1. Add greater parts and repair service capabilities, and leverage the mechanical know-how for staff.

2. Sell into new sectors, such as industrial equipment (wheel loaders and skid steers) or consumer products (lawn mowers).

3. Sell and offer service for high-tech equipment such as drones or autonomous solutions.

4. Provide value-added, fee-based agronomic services to customers.

5. Cross-sell precision farming or data collection services with other ag tech companies. According to Rabobank, these joint ventures represent a logical next step for the industry.

Anthony points to financing as another area for dealers to address to better navigate through these times with farmers.

“One thing dealers continue to do is offer financing tools that help lower the cost of operation and allow technology to still be affordable by minimizing the risk or the front-side capital investment,” Anthony says.

For example, Brandt is working with several customers to refinance their fleets to help “build a bridge to better times.”

One tactic that’s probably not going to work is stagnation, Zuckerberg says. It won’t be easy, but with low commodity prices, farmers and dealers alike must deal with the reality of the current farm economy.

“Dealerships will continue to face growth challenges as customers adjust to a new reality of lower commodity prices and income,” he says. “Courage and conviction will be key during the current period of financial stress and farmer anxiety.  

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Spell Check

Kearney, NE
11/1/2016 06:59 PM

  Prices for equipment need to drop dramatically to reflect the current commodity situation. Low interest rates will only hold back the tide for a short while when there is low to no profit from farming. No dealer is your "friend". They are only a "friend" of what's in your pocket book. Never forget that.

SoCen, MN
11/1/2016 04:28 PM

  It's going to be hard for the dealers to survive with millions of dollars of equipment that's too old for the big guys and too expensive for the little guys. Dealers have lived high off the hog in the good years, if the prices stay low it'll be a death knell for small independent dealers. Already the local JD dealer is gone, the next closest have been gobbled up by bigger chains. The CNH dealer nearest me has a dozen quadtracks on the lot... they'll rust away before they're are ever sold. Heck, they actually have prices on all of their equipment, which never used to be. Strange times


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