In this episode of On the Record, brought to you by Associated Equipment Distributors, we take a look at the state of the electric tractor market. In the Technology Corner, Noah Newman shows us the latest from NEXAT. Also in this episode, Art's Way Manufacturing's latest earnings report, dealers report little interest in autonomy retrofit kits and a word from Titan Machinery's new CEO.

This episode of On the Record is brought to you by Associated Equipment Distributors — the leading association in North America strictly dedicated to the equipment distribution industry.  AED offers a wide range of education, events, advocacy and reports for companies of all sizes and all roles within your organization.  Learn more about AED by visiting www.aednet.org/agdealers

TRANSCRIPT

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• Yanmar Executive Talks Electric Tractor Market Potential
• Dealers on the Move
• Technology Corner: Nexat “All-in-One” System Partners with EW Group
• Dealers Report Customer Interest in Retrofit Kits
• Art’s Way 3Q Ag Sales Down, Up Year-to-Date
• Titan Machinery’s New CEO on Future M&A, Headwinds
• DataPoint: UK Tractor Registrations

Yanmar Executive Talks Electric Tractor Market Potential

At this year’s Equip Expo, Ag Equipment Intelligence editors caught up with several manufacturers to talk about the future of electrification in the ag equipment market. One of those manufacturers was Yanmar, which unveiled its first electric tractor at this year’s show. 

The prototype was made with tech from Yanmar’s battery technology subsidiary Eleo, based in the Netherlands. The tractor is set for commercial launch at next year’s Equip Expo.

Several other tractor manufacturers are already offering electric tractors or are planning to. For example, when asked if they have any plans to get into electric tractors, Bobcat Vice President of Global Innovation Joel Honeyman said they’re considering all options but will eventually electrify their tractors.

“Everything’s on the table when it comes to that. I mean, at some point, we will. We're prioritizing. We build lots of different products, so we're prioritizing, but so we’ve got a loader, we’ve got an excavator, we’ve got the mower. So we're already starting down this journey from that standpoint.”

Other electric tractor competitors for Yanmar will include CNH Industrial, Solectrac and John Deere.

With this in mind, we asked the Director of Yanmar America’s Rural Lifestyle Division Jon Richardson what he thought the true potential of the electric tractor market really is. Richardson believes there’s still potential out there, though they’re keeping a close eye on this market’s trends.

“I think there’s still potential out there. There’s early adopters and there’s certain segments within rural lifestyle that would prefer a quiet tractor. You look at equestrians working close quarters in a barn with horses or other livestock where you're really in close quarters and don’t want to disturb the animals themselves. So that’s one of the high-potential areas we see. But we are continuing to watch the market. 

 I don’t expect it [Yanmar’s prototype] to be launched this time next year at the show and immediately take over our core traditional tractor sales with diesel engines. So, something we’ll continue to watch and play out with that. We will plan accordingly and forecast accordingly and roll out as many — we try to stay close to our dealers and survey them and what forecast are they giving us. Which is what many manufacturers do to kind of keep an eye on the market and watch the trends. We also try to track against other industries, power sports, automotive and kind of watch what’s going on and then try to make the best decisions we can off of that information.”

You can check out more coverage from this year’s Equip Expo at RuralLifestyleDealer.com.

Dealers on the Move

This week’s Dealers on the Move include Milton Cat and Ag-Pro. 

Caterpillar dealer Milton Cat of North Syracuse, N.Y., announced the opening of a new 100,000-square-foot facility. The 30,000 square-foot service shop will have more than 20 technicians working in its 24 service bays.  

John Deere dealer Ag-Pro announced it has completed the acquisition of South Daytona Tractor & Mower in South Daytona, Fla.  

Nexat “All-in-One” System Partners with EW Group 

Terrakamp’s Nexat system generated tons of buzz with its Farm Progress Show debut over the summer. The company just announced a partnership with the EW Group, that will give EW Group a minority stake in Nexat. 

It’s another big step in the process of bringing this all-in-one machine to the market. The Nexat system has interchangeable implements for harvesting, spraying, planting, seeding and more. It can perform virtually any task on the farm and is designed to boost soil health by only compacting 5% of the field. The first Nexat system hit the field in Ukraine in 2017, and Germany a few years later, but Terrakamp president and CEO Joe Jandrisch tells us the U.S. is now the primary focus of product development.

“We planted this spring and did some ground prep. It’s so new, we’ve heard a lot of positive and negative things. That’s why we’re here. We need feedback from the best farmers. We’re not looking at all the farmers. We’re looking at the best 5%. That doesn’t mean the biggest 5%. We’re looking at people that are concerned with the quality of the soil, and multi-generational farmers.”

“It operates like a locomotive. It’s not a conventional tractor where you have an engine. We have two 550 hp engines that run the generator. The generator creates electricity. There are 4 generators. Each of those generators have a specific electric drive on the wheel. With that, we have a much more efficient method of running these implements. Immediate fuel savings of about 20%, compared to conventional methods.”

The system is being tested in Illinois and South Dakota. For more details on the Nexat system head to PrecisionFarmingDealer.com, type in Nexat in the search bar.

Dealers Report Little Interest in Retrofit Kits 

While autonomous farm equipment has generated a lot of buzz lately, the latest text poll from Farm Equipment suggests customers may not be all that interested. 

Just over 46% of responding dealers said their customers are not interested in buying retrofit kits that would allow their existing diesel tractors to operate autonomously. About 39% said their customers were somewhat interested. And just 14% said they had customers who were highly interested.  

To be a part of future polls, you can text “farm” to 833-413-2175 to sign up. 

Art’s Way 3Q Ag Sales Down, Up Year-to-Date

In its earnings released Oct. 11, Art’s Way reported $8.1 million in third quarter sales and $23.4 million in sales for the first 9 months of the fiscal year. 

The company reported $5.5 million and $17.3 million specifically in agricultural products sales for its third quarter and year-to-date, respectively. This represented an almost 10% year-over-year increase in Art’s Way’s year-to-date agriculture sales and a 5-year high for the segment. Third quarter ag sales were down 12.8% year-over-year from $6.4 million last year. 

Art’s Way attributed the quarterly year-over-year decline to the timing of its beet equipment production., The company said it typically sees a spike in sales during its beet run, as it is Art’s Way’s  largest and most expensive equipment. However, Art’s Way shipped the majority of its beet equipment during the second quarter of fiscal 2023 compared to Q3 of fiscal 2022. 

Farm equipment sales for the first 9 months of the year were $14.8 million, up 8.3% year-over-year and a 5-year high. Farm equipment parts sales also hit a 5-year high at $2.3 million.

The company said it has seen increased demand for grinders, beet equipment and manure spreaders thus far in 2023 and has continued to increase the number of stocking dealers it works with. Art’s Way says it is incentivizing its sales team to bring new dealers on board and are also offering favorable terms to new dealers to increase the company’s reach.

Art’s Way also reported a 5-year low in work-in-process orders and rising finished goods inventories. Work-in-process inventory was valued at $267,000 for the first 9 months of the year, down 50% year-over-year. Finished goods inventories were up almost 16% year-over-year to $3.1 million for the first 9 months of the year.

Titan Machinery’s New CEO on Future M&A, Headwinds

Case IH dealer Titan Machinery announced Oct. 18 that its founder and CEO David Meyer will transition to executive chairman, effective Feb. 1 of next year. Meyer co-founded Titan Machinery in 1980 with Peter Christianson, and since then he has grown it from 2 stores to over 150 locations worldwide.

This transition will put Titan Machinery’s Chief Operating Officer and President Bryan Knutson in the role of CEO. Ag Equipment Intelligence sat down with Knutson to discuss what will define his time as CEO, which he says will include not growing the business simply for the sake of growing.

 “So to continue to grow, there’s tons of benefits we see for our customers and for our employees to scale. So [we want] to continue to grow organically and through acquisitions and in a very sustainable manner as well, and in a very healthy manner. You look at some contractors, some farmers even, as examples that grow just for the sake of growth, and maybe don't do the best job farming those fields. You see dealers and businesses sometimes do that, too. So we look very critically at every acquisition, analyzing each of the markets we want to go to.”      

For next year’s main challenges, Knutson says: Inventory shortages and long lead times in certain key product categories appear they will continue well into 2024 and also the lower commodity prices that can impact customer sentiment. However, he noted that income averaging, forward contracting, insurance programs, subsidies and most of all yields can certainly offset these lower commodity prices.

“Inventory is an interesting one because there’s areas where we’re still on allocation, where we’re still not getting enough product that we want, and you’re hearing that from other dealers, too. And then there’s certain other types of products that are building up a little bit, both on used and new — more so new — thus far. A lot of those are more the lower-dollar ticket items. So there is maybe a bit of a mixed topic within inventories.      

“We're looking at $4 in some corn now vs. pretty consistently $5 in some corn throughout last year. Operating loans as farmers go get those in late winter/early spring here for next year are going to be at higher interest rates and measurably higher than they were last year, and other inputs haven't come down as much. Undoubtedly, depending on yields, which is the other half of the equation, net farm income will likely be down next year.”

DataPoint: UK Tractor Registrations

This week’s DataPoint is brought to you by the Ag Equipment Intelligence 2024 Executive Briefing.

According to the latest data from The Agricultural Engineers Assn., the UK saw 1,114 tractors over 50 horsepower registered in September. This represented a 4% year-over-year increase and put the country at 9,702 over 50 horsepower registrations for the first 9 months of the year.

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