In today’s newscast we look at results from Ag Equipment Intelligence’s “2015 Dealer Business Outlook & Trends” survey, USDA’s forecast for rising livestock and dairy cash receipts, the impact this year’s large harvest is having on U.S. transportation systems and infrastructure and the evolution of smarter tires in agriculture.
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Hi I’m Jaime Elftman, assistant editor, sitting in for Kim Schmidt, who is on maternity leave.
Welcome to On the Record. Here’s a look at what’s currently impacting the ag equipment industry.
2015 Dealer Business Outlook & Trends Survey
North American farm equipment dealers are forecasting a further slowing of ag machinery sales in the year ahead, according to Ag Equipment Intelligence’s 2015 Dealer Business Outlook & Trends survey. For only the second time in the 10 year history of the annual survey, more dealers projected a decline in revenues from the sale of new equipment than forecast an increase.
This year, 50% of the 300 dealers who responded to the survey expect revenues from new equipment sales to fall by at least 2% to more than 8%.
Nearly 20% of dealers expect revenues from new equipment sales to increase in 2015, while the remaining 31% are forecasting little or no change in revenues next year compared with 2014.
A summary of the survey results appears in the October/November issue of Farm Equipment. The full 48 page report will be released to Ag Equipment Intelligence subscribers in the next couple of weeks.
Record Highs for Livestock & Dairy
While crop receipts are expected to decline in 2014, in its most recent farm income forecast, USDA projected record prices will drive a 15.3% increase in livestock cash receipts. Despite expected declines in beef production, cattle/calves receipts are expected to set a record in 2014 due to higher prices.
Hog production is expected to decline, but higher expected annual average prices drive the forecast increase in hog cash receipts.
Wholesale milk and broiler receipts are expected to benefit from higher production and record annual average prices, with dairy cash receipts expected to increase by 21%.
This week, at the World Dairy Expo, the dairy industry’s biggest event, organizers are reporting attendance is already at a 10-year high.
The Milwaukee Journal Sentinel reported September 19 that cash prices for cheese and butter had settled at record highs due to near-record exports. Butter exports are up almost 40% over 2013 and cheese exports are up 30%, according to the U.S. Dairy Export Council.
Peter Vitaliano, chief economist of the National Milk Producers Federation, says that while dairy prices are high, he doesn’t expect farmers to be adding to their herds to produce more milk. He says farmers remain cautious and expects that prices will not stay at their current levels.
The USDA reported crop receipts are expected to decline 7% in 2014, the second annual decrease following a record high in 2012. Despite record production, cash receipts for corn are expected to decline over 20% due to a 32% decrease in the annual average corn price. Declines are also expected for receipts of other major crops including fruits, nuts, wheat, soybeans and vegetables.
Cotton is projected to recover from its decline in 2013 with cash receipts expected to increase 9.6% in 2014.
Huge Harvest Will Test U.S. Infrastructure
U.S. transportation is feeling the pressure of the record harvest this year and outdated systems are causing farmers delays getting their crops to the market. The Assn. of Equipment Manufacturers (AEM) reports deficiencies in U.S. rail, waterway and road transportation all threaten to upend farm progress.
In its advisor newsletter, AEM reported a shortage of railcars in North Dakota is preventing movement of grain out of the region because of increased shipments of oil and coal. A Univ. of Minnesota study found that from March through May of 2014, farmers lost more than $100 million due to railway shipping delays. Reuters reported that traffic on North American train tracks is moving 8% slower than last year.
The locks along major waterways, which are more than 80 years old with a design life of 50 years, are experiencing bottlenecks due to repairs that have been delayed as a result of budget cuts. Reuters reports the number of emergency lock closures jumped 543% from 1992 to 2008.
It also reports that the fleet of barges available to navigate the U.S. waterways has shrunk to 10,500 from 12,700 in the 1990s. In addition to the shrinking fleet, demand for covered barges to ship grain and oil is increasing. Grain shipments so far this year on rivers in the Midwestern crop belt were nearly double from a year ago, according to the USDA.
Agweek is reporting that many grain farmers in North Dakota are turning to grain bags for temporary storage for their 2014 crop because of the transport issues.
Dan Teich, a representative of Loftness Manufacturing, which builds the machines for putting grain in bags and unloading them, told Agweek that this year, through the end of August, they had already sold 21 loaders and 14 unloaders in North Dakota alone. Normally, the company only sells 10 for the entire year.
Technology Corner: Innovations from Michelin
Precision farming partnerships continue to be a popular trend in agriculture and this collaborative mindset is also evident in the tire industry. Last week, I had the opportunity to attend Michelin’s international media event in Europe and get an intimate look the company’s production, inspection and performance testing of new agricultural tires.
The event centered on the 10th Anniversary of Michelin’s UltraFlex tire technology, As farm equipment increases in size, company representatives emphasized the importance of developing tire systems to support heavier machinery, while reducing compaction and increasing efficiency.
One technology being tested by the company is the incorporation of automated vehicle functions into consumer tires. The objective is to provide more precise braking and suspension, while also removing some of the mechanical components from underneath the hood of cars, and possibly, tractors.
While these systems are still in the early research and development phase, we had the chance to talk with Emmanuel Ladent, President of Michelin’s Worldwide Strategic Business Unit about an evolution toward smarter tires in agriculture and what it will take to bring these progressive technologies to the market.
“One of the things which we learned that is coming in the future, is how can the tire play a role in making the machine more intelligent, more clever. We have a lot of concepts and ideas about that with some OEMs, so I can’t talk too much about that, but we are working with some key OEMs and key manufacturers on this kind of concept for the future.
“We see more and more partnerships. If I compare where we are today with where we were 5 years ago, we are doing much more co-development, co-integration, co-innovations with our key partners, because innovation cannot be brought by one company alone. Tires are one part of a system, which is a machine, tractor and engine. So we see more and more co-development and we see more and more OEM makers asking us if we can help them in certain areas.”
As farmers become increasingly conscious of long-term soil health to sustain yields, Ladent expects equipment manufacturers will continue to take notice of the role tire technology plays in this equation, and be active collaborators in providing a comprehensive equipment package tailored for customers.
First Skid Steer Loader Designed by Keller Brothers
Looking for a new way to clean out his turkey barns faster, Eddie Velo of Pelican Rapids, Minn., turned to Cyril and Louis Keller of Rothsay, Minn., who, in 1957, developed the first skid steer loader, a small, lightweight, 3-wheel front-end loader capable of turning 360 degrees within its own length.
Without the financing to mass produce the loader, they met Les Melroe and went to work for the Melroe Manufacturing Co. Thus, the Melroe Self-Propelled Loader was born in 1958. Eventually it came to be known as Bobcat.
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