In this episode of On the Record, brought to you by Benzi America, we take a look at former President Donald Trump’s threat of a 200% tariff on Deere’s Mexico built equipment. In the Technology Corner Noah Newman visits with Bluewhite about the company’s partnership with New Holland. Also in this episode, a different way of measuring yield and the impact the Fed’s interest rate cut could have on dealers.

BENZI

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

BENZI delivers innovative solutions for power transmission. For 60 years we have been manufacturing PTO drive shafts, torque limiters, gearboxes, speed multipliers and speed reducers for agricultural mechanization. Our products are designed and tested to grant maximum performances in every working environment and our product range is by far the widest available on the market covering the vast majority of all power requirements and applications for agricultural PTO driven equipment

 

TRANSCRIPT

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Trumps 200% Tariff Threat Would Violate USMCA Act

Republican presidential nominee and former president Donald Trump made headlines this week during a policy roundtable in Smithton, Pa.

During the roundtable, Trump brought up Deere’s announcement earlier this year that it would be moving some production to Mexico by 2026.

He said, quote, “I’m just notifying John Deere right now: If you do that, we’re putting a 200% tariff on everything that you want to sell into the United States.” 

There’s one major roadblock to that threat, however — the United States-Mexico-Canada Agreement, signed by Trump when he was president in January 2020, which replaced the North American Free Trade Agreement. USMCA prohibits the leverage of tariffs on a range of goods, allowing companies to manufacture in Mexico and Canada and export back to the U.S. without high costs.

When the USMCA was signed 4 years ago, it was reported that nearly 30% of all equipment produced in the U.S. is intended for export and Canada and Mexico are the first and second-largest export markets for both U.S. construction and agricultural equipment. Since the creation of NAFTA two decades ago, the equipment manufacturing industry has benefited greatly from duty-free access to our industry’s largest two export markets, Canada and Mexico.

What an OEM Partnership Means to an Autonomy Startup  

The announcement of a partnership between New Holland and Bluewhite was one of the big precision stories of the summer. West Coast New Holland dealers now have the rights to sell, distribute and service Bluewhite’s aftermarket autonomy kits. 

I recently had the chance to catch up with Alon Ascher, Bluewhite chief business officer, and ask him about significance of partnership with a major OEM.  

“We did start working (at first, before the partnership) individually with a couple of dealers on the West Coast — John Deere and New Holland — but collaborating and partnering with the OEM gives us a bigger opportunity for better integration of the product. That means better performance, faster deployment time at more completive costs. We’re also collaborating and working closely with the dealers and New Holland folks to assist on training, and using lessons learned from other products on how to bring this digital and autonomous revolution to agriculture. This is very new for everyone, so it’s better to collaborate and we’re happy with this partnership. They have an amazing team at their headquarters and working in the fields that’s looking at how to bring these amazing technologies to every grower, starting with the West Coast but then looking at a broader scale.” 

New Holland and Bluewhite are also exploring future posisbilities for factory-installed solutions. Check out the Farm Innovations YouTube channel for more information on the Bluewhite autonomy kit. 

Fed Announces Larger Than Expected Rate Cut

The Federal Reserve lowered its discount rate by half a percentage point on Sept. 18 to 4.75-5%, the first cut since 2020. 

The cut was more aggressive than investors had been expecting a week ago, reports the Wall Street Journal. "For all the attention on the Fed, upcoming economic data could still play the biggest role in shaping markets. Stocks have historically performed well in the 12 months after the Fed has started to cut rates — unless the economy has entered a recession during that period," the WSJ reported. 

Greg Roberg, vice president of sales at AgDirect says he was pleasantly surprised by the decision. Back in August he had told Ag Equipment Intelligence’s On the Record he was expecting a 0.25 percentage point drop to be announced following the Fed's September meeting.

“This will be good news for producers as operating rates will likely come down saving them interest and equipment dealers should see lower fixed rates by finance companies to offer to their customers," Roberg says. "With the decreases in commodity prices this year, the ag industry needed some positive news and we received some today.”

A Sept. 18 Farm Equipment Insider text poll indicates over half of surveyed dealers say the news will have a positive impact on year-end 2024 farm equipment purchases. 

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Don Van Houweling, owner of the Iowa-based Deere dealership group Van Wall Equipment, sees the news as positive for the industry. "It will obviously help as it will reduce every payment on every new contract but it will have more of an effect psychologically," he says. "We have been offering low interest rates on many key items already so it will just help us lower them some more. It will help us as dealers the most as it will reduce our floorplan interest costs."

Measuring Yield by Bushels Per Inch of Water 

Harvest season is underway with 13% of corn and 10% of soybeans harvested according to the September 23 USDA Crop Progress Report. 

Last week, the Watershed Protection Committee of Racine County hosted its summer field day in Rochester, Wis., featuring presentations from no-tillers Jim Stute and Rick Bieber. Bieber made the trip out from north central South Dakota, where he’s been no-tilling for over 4 decades. 

One of the most interesting parts of his presentation was when he talked about how he measures yield, and why he’s not even a big fan of the world to begin with.

“There’s too many times the word yield is used to scare farmers into purchasing stuff. ‘You’re going to lose yield, or you get greater yield.’ And yield is what pays the bills basically at the bank. You must have so much yield against so many expenses to make it work. I understand all that. But on our farm, and I don’t know what made me start this 30 years ago, we started measuring things by bushels per inch of water that God gives us. We have no irrigation. So, when we started this whole thing back in the 80s, we were at 3.5 bushels of corn for every inch of water that we got. Today with our system functioning the way it is, we’re between 10 and 12 for the last 5 years pretty consistently there. Before that, we were at 8. The numbers keep rising for us. Looks like we’re going to stabilize between 10 and 12 bushels per inch of water that we receive, which means we’ve increased by 300-400% our water use efficiency and if we can give up the nutrients and maintain yield after it comes back 3-5 years later, we’ve actually increased our nutrient use efficiency by thousands of percent.”

Net Cash Farm Income Set to Decline Nearly 10%

This week’s DataPoint is brought to you by the 2025 Executive Briefing.

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USDA’s Economic Research Service forecasts inflation-adjusted U.S. net cash farm income will decrease by $16.3 billion  — or 9.6% — to $154.1 billion in 2024. This would come after a decrease of $52.9 billion — or 23.7% — in 2023 from an all-time high of $223.3 billion in 2022. 

U.S. net farm income is forecast to decrease by $10.2 billion  — or 6.8% — to $140.0 billion in 2024. This reduction follows a drop of $43.3 billion in NFI in 2023 from an all-time high of $193.5 billion in 2022 (after adjusting for inflation). 

Despite these declines, if forecasts are realized, NCFI and NFI would stay above their respective 2004–23 averages in 2024. Underlying these forecasts, cash receipts for farm commodities are projected to fall by $23.3 billion — or 4.3% — to $516.5 billion in 2024, primarily because of lower crop receipts. However, a $16.2 billion reduction in production expenses is expected to moderate the overall decline.

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