In this episode of On the Record, brought to you by Benzi America, we take a look at results of the 2024 Brand Loyalty study. In the Technology Corner, we examine how USDA’s use of ag data raises privacy concerns. Also in this episode, a look at the ag equipment companies that made the Industry Week U.S. 500 report and JP Morgan analysts say the rate of decline in the ag industry is expected to decrease.

This episode of On the Record is brought to you by BENZI.

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• Dealers Play a Role in Farmer Brand Loyalty
• Dealers on the Move
• USDA Use of Ag Data Raises Data Privacy Concerns Among Farmers
• Ag Companies Make the Industry Week U.S. 500 Report
• Rate of Decline in Ag Industry Expected to Decrease
• DataPoint: Cover Crops Most Dominant in Eastern U.S.

Dealers Play a Role in Farmer Brand Loyalty

Farmer brand loyalty remained relatively consistent in Ag Equipment Intelligence’s latest brand loyalty report with 63% of farmers identifying themselves as brand loyal.

Brand loyalty saw a slight improvement in 2024 after an over 12 point drop in 2020. However, the 2024 brand loyalty study conducted by Ag Equipment Intelligence shows farmers brand loyalty has not returned to the peak seen in 2017 when 75% of farmers identified themselves as brand loyal.

Much like with the 4 previous brand loyalty surveys, dealers continue to play an important role in establishing and building loyalty to the brands of equipment they represent. Of the top 5 factors that would cause a farmer to switch brands, the dealer is directly responsible for at least 3 of them: parts availability, better dealer repair/service, product specialists at the dealership.

The one factor that manufacturers have sole responsibility for in the top 5 when it comes to why a farmer would consider switching brands is product engineering, which came in at #2  with 97.0% of farmers saying it was somewhat important or very important. This is in line with where product engineering ranked in the 2020 Brand Loyalty study. 

Pricing continues to rank high in the factors that would get a farmer to change brands, but according to the results of the 2024 survey, the price of new equipment dropped in importance to #4 from #3 in the last study. While the manufacturer establishes the base price of the machinery it produces, the dealer can also influence what the farmer is ultimately asked to pay for new ag equipment. 

The full Brand Loyalty Report is available for order at AgEquipmentIntelligence.com.

Dealers on the Move

This week’s Dealer on the Move is Claas Farmpoint. 

Claas Farmpoint expanded into the Midwest with the opening of a new location in Le Mars, Iowa on July 15. This latest location will provide the same mobile maintenance and parts service for forage harvester, tractors, balers and other hay and forage equipment that it launched in 2023 in two other locations in Indiana and Kentucky.

USDA Use of Ag Data Raises Data Privacy Concerns Among Farmers

The USDA, other U.S. government agencies and private companies use ag data to measure the impact of initiatives aimed at sequestering carbon. In 2022, the USDA announced a $3.1 billion program aimed at funding climate-smart commodity projects through collecting data, but a recent survey found that 58% of farmers do not trust government offices with their data. Agricultural attorney Todd Janzen says that the USDA cannot disclose specific information provided by producers or owners of agricultural land.

“The U.S. code actually has a provision that says how USDA can share data with others. And so this is built into law. So I do think it is very enforceable, but if you share data with USDA, USDA cannot go sharing that data with others. They can't even share it with Purdue University to do research projects unless they take certain steps to strip out any reference to who the actual farmers were.”

“So they can't condition your participation in climate smart commodities by saying, "Well, if you do that, then we get to share the data with whoever we want." So there is a good statutory protection there for you. And historically too, and when I've looked for case law, there really aren't cases out there where you find USDA has violated this. So I think USDA actually has a pretty good track record of following the law as far as not disclosing farmer data outside of the statutory protections.”

Janzen says these are the three exceptions to the ag data protections, and he recommends that farmers go over program contracts before agreeing to share their data.

For more information on how the USDA uses ag data, we included a link in the article for this story on PrecisionFarmingDealer.com.

Ag Companies Make the Industry Week U.S. 500 Report 

Manufacturing news outlet IndustryWeek recently unveiled its highly anticipated U.S. 500 report, a ranking that highlights the top manufacturing companies across various industries in the U.S.

Since 2002, this annual report not only serves as a benchmark for performance and competitiveness but also offers insights into the economic landscape shaped by these companies. This year’s report included 4 ag equipment manufacturers and 1 dealer, displaying their 2023 revenue, revenue growth, net income and profit margin.

Ranked at 20 and with a revenue of $61.222 billion in 2023, a 16.5% increase from the previous year, Deere not only topped the list among agricultural companies but also boasted the highest profit margin at 16.6%.

Despite a slight dip in profit margin compared to the previous year’s 23.8%, Deere moved up the rankings by 15 spots.

Ranked at 100, AGCO’s revenue of $14.4 billion reflected 13.9% revenue growth in 2023. AGCO’s profit margin stood at 8.1%, supported by a net income of $1.17 billion.

This performance propelled AGCO up 29 spots from its 2023 ranking.

Case IH Dealer group Titan Machinery experienced a surge in revenue, achieving $2.8 billion in 2023 — a 61.1% increase from the previous year. Titan Machinery had a profit margin of 4.1 percent and reported a net income of $112 million.

Coming in at 464, Alamo Group reported a revenue of $1.690 billion, reflecting an 11.6% increase from the previous year. With a profit margin matching AGCO at 8.10%, Alamo Group recorded a net income of $136 million.

Rate of Decline in Ag Industry Expected to Decrease 

JP Morgan reported negative statistics for the industry, with especially negative trends in Brazil during its Ag OEMs: 2Q24 Earnings Preview webinar on July 11. 

Brazil retail sales of over 100 horsepower tractors are down 26% and shipments are down 40%. Brazil equipment sales are down 20% and volume is also down 20%.  

European sales are down 10% with volume also down 20%. North American sales are down 10%, but the volume is up 15%. This is higher than the average from 2017-2023 and 6% higher than the long term average since 1992.

In North America, over 100 horsepower tractor sales were down in May and June from a slight increase in April. Combine sales were down 5%, but inventories remain high. 

JP Morgan predicts that the Rate of Decline should decrease, though.

The analysts also highlighted some key points from the majorline OEMs, including John Deere. 

John Deere equipment sales for 2024 are expected to be 25% below the peak of last fiscal year, analysts said during the webinar. FY25 equipment is expected to decrease another 8% from the decrease of 19% this year. North American sales are set to decline further while the rate of decline will stagnate in Europe and South America. 

At the time of the presentation, Deere had laid off an additional 395 employees at its Waterloo plant, bringing the total number of workers laid off from that location to nearly 894. On Wednesday July 24, Deere confirmed it had begun reducing its global salaried workforce.  It's reported that at least 15% of Deere's salaried workforce will be affected. Deere attributed the need for the layoffs to a reduction in product demand, increased operation costs and a 20% decline in sales from 2023 to 2024. 

DataPoint: Cover Crops Most Dominant in Eastern U.S. 

This week’s DataPoint is brought to you by the Dealership Minds Summit. Check out the program and register at DealershipMindsSummit.com.

U.S. cropland area planted to cover crops increased 17 percent between 2017 and 2022, from 15,390,674 acres to 17,985,831 acres, data from the recently released Census of Agriculture show. That means cover crops were planted on 4.7 percent of total cropland in 2022. 

Cover cropping is more common in the southern and eastern parts of the U.S. because of soil and climate conditions, among other factors, but one of the states with the greatest increase in cover crop acres as a proportion of total cropland from 2017 to 2022 was Texas. The state also had the largest absolute increase in cover crop acreage. Cover crop acreage in Texas increased more than 50% from 2017 to 2022. Cover crop use decreased in 2022 in some eastern states, including  Maryland, Georgia, North Carolina, New Jersey, Tennessee and Kentucky. 

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