Farm Equipment Industry Consolidation May Impact Growers
December 1, 2009 The recent Italian Farm Equipment convention in Laguna Nigel, CA, was an opportunity for Italian farm equipment manufacturers and U.S. farm equipment distributors and importers to meet and conduct business. An afternoon program with topics relating to the farm equipment industry was a major feature of the convention. Several speakers covered the farm equipment industry, and their comments were of particular interest to vegetable growers.George Russell of Currie Management Consultants discussed how the industry is consolidating and the impacts of this consolidation on short-line manufacturers and distributors. These changes will eventually impact vegetable growers.
The major farm equipment manufacturers are encouraging their dealers to grow into multistore operations. The idea being that larger dealers can stock large inventories in new equipment and parts and provide better service for the high levels of technology that exist in modern farm equipment. Examples of the need for better service levels are GPS tractor steering systems, variable rate application systems, yield monitors, and similar technologies.
The Short End Of The Deal
Another issue is dealer purity. The major manufacturers are discouraging dealers from handling equipment that is made by short-line manufacturers. The major manufacturers don’t want their dealers to waste their time and resources selling short-line equipment. Market share has become very important to the major manufacturers, and apparently they think that marketshare can be increased if dealers only sell their major line.
Dealerships can be encouraged not to sell short-line equipment in several ways. For example, the major line can suggest that a dealership might get more equipment from its major line if it didn’t handle certain short-line machines. Another approach is for the major manufacturer’s financing company not to
finance equipment that dealers sell that is made by other manufacturers. In some cases, dealership contracts have been held up until the dealership has agreed to drop certain short lines.
This issue is important to vegetable growers since the major manufacturers do not make some of the equipment used in vegetable production and it is only available though short-line manufacturers.
In recent surveys of farm equipment dealers, it has been made known that more than 90% of dealers are concerned about the rising cost of new equipment, farm commodity prices, energy/fuel costs, and farm input costs. However, more than 39% of responding dealers are planning on shop-service improvements, and more than 34% of dealers are planning to add service technicians during the next year.
These figures can only be good news to growers as dealer service becomes more important as farm equipment becomes more complex and expensive. For growers who frequently work on very tight schedules, equipment parts and service are extremely critical issues.
One solution to the dealership purity issue for vegetable growers is dealerships that do not handle a major farm equipment line and handle only specialized equipment made by short-line manufacturers both domestic and offshore. There are some of these dealers already in existence, and in some cases they sell in several states. I know of at least three dealerships of this type around the country specializing in vegetable equipment, and they do a good job in meeting the needs of vegetable growers.