Deere & Co. Chief Executive Officer Samuel Allen said the world's largest maker of farm machinery has yet to see evidence of a U.S. economic recovery in its own business and doesn't expect growth to resume until 2010.
"So far we've not seen it, especially in our construction and forestry business, which is very housing-dependent," Allen said yesterday in an interview with Bloomberg Television in Washington. "We do not anticipate we'd see one until 2010 anyway," he said, adding that some countries, including Brazil, are recovering while Russia and others are still struggling.
Moline-based Deere last month said that its 2009 equipment sales will drop 21 percent, more than a May estimate of 19 percent, as the global economic slowdown deterred purchases of heavy equipment. The company, whose shares have gained 21 percent this year, kept its forecast for 2009 net income of $1.1 billion.
Allen spoke after appearing on a panel with the chiefs of Monsanto Co., DuPont Co. and Archer Daniels Midland Co. as part of a "Global Harvest Initiative." The effort, sponsored by the companies, promotes biotech crops and more efficient farm equipment as part of a campaign to fight hunger and double global food production by 2050, which the United Nations says is needed to meet the world's nutrition requirements.
The number of people going hungry each day will top 1 billion for the first time this year, the UN said in June. Climate change is leading to water shortages and land degradation, while dwindling fish catches and the use of crops to make fuels and cereal grains to feed livestock will weigh on food availability, the agency said in a February report.
The world's poorest people currently spend half their income on food, according to the World Bank. The Group of Eight developed nations in July pledged more than $12 billion over three years in agricultural investment to help poor farmers become more productive.
Deere is planning to increase its market presence in Asia, Africa and the rest of the developing world by increasing sales of products tailored to those regions, Allen said. Between 2006 and 2008, revenue grew more than six times as fast outside the U.S. and Canada as it did within that region. North America will remain important while smaller tractors and other equipment are adapted to smaller third-world farms, he said.
"We're really in much better shape to do that today than 15 years ago," Allen said, citing equipment plants in India and China. "It's a great opportunity."
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