It seems we’re barely into the planting season and already we’re hearing concerns about next year. I suppose that’s because nearly everyone I’ve talked to — dealers, analysts, manufacturers and economists — have a pretty warm and fuzzy feeling about 2013. Things are looking good unless something like last year’s drought should sneak up on us again or Congress does something stupid. Both of these are very real possibilities, as we all know.
But as you check out the “Forecast & Trends” and “Ag Equipment Intelligence” items in this issue of E-Watch, you’ll notice a very cautious, if not downbeat tone developing about the farm machinery business. For example, Titan Machinery issued a preliminary report on it first quarter earnings and it was a tough one, to say the least. A cold, wet start to the planting season and the continuing drag of the construction equipment market teamed up to make the dealership group miss its earnings target for the period and disappoint analysts.
I’ll let you check those out for yourself, but in compiling a special report for the June issue of Farm Equipment, I had the opportunity and pleasure, actually, of interviewing Professor Mike Boehlje of Purdue Univ.’s Dept. of Agricultural Economics and the Center for Food and Agricultural Business. I’ve read many of Professor Boehlje’s papers and articles over the years, but this is the first time I’ve actually spoke with him.
The article that will appear in the June issue is entitled, “Is Agriculture’s Current Prosperity Sustainable?” It’s one part of a three-part report on Ag’s Boom & Bust Cycles.
In it, the professor expresses some concern about agriculture in 2014 and 2015. While insisting I make sure to let dealers know that he’s very optimistic about ag’s long term future prospects, he said, “What I am nervous about are the bumps in the road on our way to the long run.
“We have evidence of increased volatility, but most of the volatility we’ve had in the last 5 years has been on the upside, and there’s reasons to believe there’s now some volatility on the downside that we ought to be positioning for, “Boehlje says.
He goes on to discuss eight industry drivers and where they’re heading and their impact. Addressing dealers directly, he says, “What I don’t want you to be is road kill on the way to that long run future.”
With all of this type of news, some might say we’re spreading some negativity around. Others might say, “Thanks. We needed a heads up.” Whatever.
But I will remind you what Mark Twain once said: “Even if you’re on the right track, you’ll get run over if you just sit there.”