In today’s newscast we look at New Holland’s acquisition of Miller-St. Nazianz, what analysts had to say about the 2014 Farm Progress Show, the USDA’s outlook for beef and pork prices and how big data can be used to benefit dealerships.
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New Holland to Acquire Miller Self-Propelled Sprayers and Ag-Bag Lines
I’m managing editor Kim Schmidt, welcome to On the Record. Here’s a look at what’s currently impacting the ag equipment industry.
On September 3, CNH Industrial and New Holland announced they entered into an agreement to acquire Miller-St. Nazianz Inc., a manufacturer of self-propelled sprayer and silage packaging/storage products based in St. Nazianz, Wis. At the closing, expected by the end of 2014, Miller sprayers and Ag Bag lines will become part of New Holland.
New Holland’s September 3 letter to dealers was shared with On The Record. Sent from Vice President Abe Hughes and Director of Growth Initiatives Ron Shaffer, the letter stated that “the Miller acquisition defines a new chapter for New Holland’s commitment to the professional and broad-acre segment of the agricultural industry and provides a strong platform to grow the self-propelled sprayer business on a global scale.”
John Miller, president of the 260-employee Miller-St. Nazianz, told the Milwaukee Journal Sentinel yesterday that the company had been struggling to expand its market presence since 99% of farm equipment dealerships carry a major line.
Since Miller-St. Nazianz has been providing sprayers to New Holland since 2010, Miller said it made sense to approach CNH Industrial about acquiring the company.
Miller told the newspaper that he’d be leaving the company at the closing of the sale, but that CNH intended to keep all employees and operate the company as is.
Historically, New Holland has not grown through acquisitions of an independent specialty equipment manufacturer.
We sent a team of editors to the Farm Progress Show in Boone, Iowa, last week. Here’s Assistant Editor Jaime Elftman with a report on news from the show.
Equipment Makers Focus on Livestock Segment
The 2014 Farm Progress Show, the largest outdoor farm show in the U.S., took place last week from August 26-28. Mig Dobre, analyst with Baird Equity Research, said in a note to investors that while traffic appeared relatively normal at the Deere, Case and AGCO booths, traffic was slower at the Kubota, Mahindra and other OEM booths.
Steven Fisher, analyst with UBS, told investors, “Overall the mood was relatively downbeat, as the reality has generally set in that ag equipment demand is declining after the strong upcycle over the last few years. Large ag is expected to be disproportionately weaker relative to small equipment, as livestock demand remains healthy.”
Deere highlighted a relationship with Hilco, a provider of baling technology, at the show. This focus on hay, Fisher says, is likely due to a combination of strength in livestock and weakness in grain while presenting Deere with the opportunity to access differentiated new products.
Dobre says the livestock equipment market will potentially become more competitive. “At the New Holland booth, there was a meaningful disparity in financing availability between the smaller livestock equipment and the larger, crop equipment … CNH management attributed this difference to OEMs generally chasing the livestock market as it has been a source of relative strength in ag,” he says.
Fisher says that AGCO, similarly, highlighted the “bright spots of livestock driven equipment demand, commercial spraying and storage.” He says AGCO expects orders for the following season will be healthy as the company takes share in the North American market.
Record Beef & Pork Prices
While low commodity prices have much of the ag industry talking about declines in overall net farm income, there’s good news coming from the livestock segment of the industry.
The USDA is projecting net farm income to fall 13.8% this year — the lowest level in 4 years — but that is an improvement on the 27% drop the department was predicting in February.
The upbeat outlook is largely the result of an improved outlook for livestock farmers, who are reaping the benefits of record prices for beef and pork as well as low prices for corn and other grains. According to the USDA, livestock farmers’ receipts are expected to rise 15% this year. Back in February the department was predicting just a 0.7% rise.
The record cattle and beef prices are primarily due to drought impacts on the U.S. cattle inventories and degraded pasture conditions and forage supplies. While feed and forage supplies have improved in 2014, herd rebuilding is progressing slowly because some growers are selling animals while the prices are high, according to the USDA.
The Association of Equipment Manufacturers is reporting that the sale of utility tractors, which are largely used by hay and forage and livestock producers, is up 4.2% through the first seven months of the year.
Now here’s technology editor Jack Zemlicka with his latest report from the Technology Corner.
‘Big’ Data Debate
As the debate over data ownership continues in precision agriculture, there is a both skepticism and optimism in the industry as to how rapidly farmers will embrace the opportunity to share farm information in order to increase productivity.
Some companies are using words like “control” and “manage” when talking about a farmer’s stake in his or her field data, while others have explicitly stated that farmers are the sole owners of any information collected in their operation.
But whatever stance a company takes, the key to successful evolution of data management in agriculture will be the value farmers derive from it.
David Friedberg, CEO of the Climate Corporation, says, that 10 years from now, he hopes that the industry has transformed to the point where farmers aren’t even talking about data anymore, because collection and analysis will have become a seamlessly integrated part of their farming operation.
We caught up with Friedberg at this year’s Farm Progress Show, where he shared his perspective on data management ownership and what approach the ag industry needs to take to increase farmer adoption in these services.
While farmers are increasingly tech-savvy, adopting precision farming technology to improve efficiency, Friedberg adds that they shouldn’t have to worry about being IT managers wondering where their data is going and who is using it. This all comes down to trust that data is only being used in a way that benefits the farmer.
Back to you Kim…
Rising Used Tractor Inventories
According to the Ag Equipment Intelligence Dealer Sentiments & Business Conditions Update released on August 29, used high horsepower tractor inventories saw a large jump in July.
A net 20% of dealers reported their inventories for used high horsepower tractors were too high in July compared to just 3% in June who said inventories were too high.
A net 39% of dealers reported overall used equipment inventories were too high in July vs. 16% in June, with high horsepower tractors driving the majority of the increase.
In addition, prices for high horsepower tractors were down 2.1% year-over-year in July vs. down 0.8% the previous month.
Ag Equipment Archives: Versatile 150
And now from the Ag Equipment Archives…
In 1977, Versatile introduced the Versatile 150, the world’s first bi-directional tractor. It’s billed as the first “push-pull” tractor and marketed as a “number of self-propelled machines in one.” The seat and console of the tractor could be swiveled 180 degrees within the cab.
Sound familiar? Claas introduced its Xerion tractor, the company’s first tractor to hit the North American market, at this year’s Farm Progress Show. The Xerion tractor, like the Versatile 150, features a bi-directional, “push-pull” design with the cab able to be swiveled 180 degrees.
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Next time Assistant Editor Jaime Elftman will be taking over as your On the Record host while I’m out on maternity leave. Thanks for watching.