The latest episode of On the Record is now available! In this week's episode we take a look at AEM's recent survey of manufacturers on their outlook for business in 2021. In the Technology Corner, Jack Zemlicka discusses precision farming dealers' revenue outlook for the year ahead. Also in this episode, a closer look at AgJunction and Raven's latest earnings reports and an update on ag credit conditions. 


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

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Equipment Manufacturers Report Positive Outlook for 2021

According to a recent survey from the Assn. of Equipment Manufacturers, 88% of equipment manufacturers have reported a positive outlook for the remainder of 2021.04-09-21_Slides_OTR10.jpg

The survey, conducted in the first quarter of 2021 with over 130 AEM members, found that 55% of respondents saw their sales increase or remain stable during the pandemic. About 1 in 5 manufacturers said their sales increased, with common reasons including strong orders, increased customer demand and customers being deemed “essential” during the pandemic. Some 45% of respondents, however, said their sales are down as a result of the pandemic, due to supply chain disruptions, reduced demand and a lack of meetings with dealers and customers.04-09-21_Slides_OTR11.jpg

Manufacturers said their biggest challenges remained the lingering effects of the COVID-19 pandemic, including employee safety, as well as the ongoing labor shortage. Some 45% of manufacturers indicated their productivity had increased during the pandemic, while 36% said it had decreased. Some 80% respondents indicated the pandemic would have a lasting impact on how they do business, and 19% of respondents said the pandemic had caused them to consider retiring early.

Dealers on the Move

This week’s Dealers on the Move include Bane-Welker and Apple Farm Services.

Case IH Dealer Bane-Welker has purchased the sales and service areas of the Evolution Ag dealerships in Circleville, Utica and Plain City, Ohio. The dealership now has 6 stores in Ohio and 15 overall.

New Holland dealer Apple Farm Service has acquired the Washington Court House, Ohio, location of Baxla Tractor Sales. Baxla Tractor Sales will continue to operate its two other locations in Seaman and Batavia, Ohio.

Rosy Revenue Outlook for Precision

Precision specialists are no strangers to being called upon to consistently meet, and exceed performance expectations. The trait translated to dealerships eclipsing 2020 revenue expectations reported in last year’s Precision Farming Dealer benchmark study.

Some 46% of participating dealers forecast revenue growth of at least 2%, with about 11% projecting growth of at least 8%. But preliminary data from the 9th annual Benchmark Study shows that 73% of responding dealers increased precision revenue by at least 2%, including one-third that increased revenue by more than 8% in 2020.04-09-21_Slides_OTR14.jpg

With contributions from farm equipment dealers, input retailers and independent precision companies of all sizes and equipment colors, the initial data points to a more confident outlook for 2021.

Some 86% of dealers project at least a 2% increase in precision revenue this year — a high in the 9-year history of the benchmark study. This includes one third of dealers forecasting more than an 8% increase in precision revenue.

The more optimistic outlook is bolstered by an increase in estimated year-over-year precision farming revenue. Nearly 60% of dealers reported precision revenue of $500,000 or less in 2019, compared to just over 21% in 2020.04-09-21_Slides_OTR15.jpg

Nearly 50% of dealers reported 2020 revenue of at least $1 million, compared to about 37% in 2019.

Look for complete coverage of the 2021 benchmark study and analysis coming in the Summer issue of Precision Farming Dealer and extended coverage of past studies at

AgJunctions FY20 Revenue Down 54%

AgJunction, a manufacturer of advanced guidance and autosteer solutions for precision agriculture applications, reports revenue for both the fourth quarter and the full year 2020 were down double-digits.04-09-21_Slides_OTR2.jpg

Total revenue in the fourth quarter of 2020 was $2.7 million compared to $3.3 million in the fourth quarter of 2019, a drop of 18%. The decrease is primarily due to reduced revenue volume from a North American VAR customer. This was partially offset by the large increase in the EMEA region attributable to revenue earned for product software access requirements, as well as an increase in the APAC region due to expansion into China and higher demand in Japan.

Total revenue in 2020 was $16.3 million compared to $39.2 million in 2019. Excluding $24 million of revenue generated from the BPO in the prior year, revenue increased 6.6% as a result of continued execution of the Company’s strategy.

Gross profit for the full year was $8 million compared to $14.7 million in 2019. Gross margin increased significantly to 49% compared to 37.4% for the full year. The substantial margin improvement was attributable to a higher margin product mix and improved manufacturing efficiencies.

Total operating expenses for the year improved to $13.2 million compared to $21.1 million in the previous year. The improvement was predominantly driven by cost savings from departmental consolidation, site closures, travel cost reductions and IT expenditure reductions.

Ag Credit Conditions Continue to Improve

Agricultural debt at commercial banks eased further at the end of 2020, and loan repayment problems moderated slightly, according to a recent report from the Federal Reserve Bank of Kansas City. It was reported that general improvement in the ag economy likely drove the pullback in farm lending activity and strengthened credit conditions.04-09-21_Slides_OTR12.jpg

Agricultural loan balances hit a 5-year low at the end of 2020 and have continued to shift toward farm real estate. The total value of farm loan portfolios fell 5% year-over-year in the fourth quarter of 2020, though the accumulation of farm debt remains above the 10-year average. Total farm debt decreased in the fourth quarter of 2020 at the fastest rate since the 1980s.04-09-21_Slides_OTR13.jpg

Delinquency rates on farm loans also fell in fourth quarter of 2020 compared to the previous year, reaching around 2% for real estate loans and around 1.5% for non-real estate loans. This continues the reversal in delinquency rates that began in 2019, after 5 years of steady increase that began in 2014.

Raven Net Sales Drop 9% in FY21

Precision farming technology manufacturer Raven Industries, reported its consolidated net sales for the fourth quarter of fiscal 2021 were $80 million, down 6.6% vs. the same period of fiscal year 2020.04-09-21_Slides_OTR.jpg

Applied Technology, which includes Raven’s ag segment products, generated growth in both the OEM and aftermarket channels, which was more than offset by declines in Engineered Films and Aerostar.

Division operating income in the fourth quarter of fiscal 2021 was $5.2 million, down 6% vs. the fourth quarter of fiscal 2020. Included in the results was investment in research and development and selling expenses to advance Raven Autonomy of $4.4 million on a pre-tax basis, an increase of $1.6 million vs. the prior year. The underlying profitability of Applied Technology before the impact of strategic investments continues to be very strong as the division delivers the next advancements in ag technology.

Consolidated net sales for fiscal 2021 were $348.4 million, down about 9% vs. fiscal 2020. Net sales growth in Applied Technology was more than offset by declines in both Engineered Films and Aerostar. The year-over-year growth in Applied Technology was driven by increased volumes to OEMs, including last-time buy activity.

"In fiscal 2022, Applied Technology is expected to drive growth in revenue as the division leverages its industry-leading product portfolio and customer relationships," said Dan Rykhus, president and CEO. "Order activity strengthened in the fourth quarter of fiscal 2021 and is building momentum through the first quarter of fiscal 2022. In addition, we are seeing strength in the agriculture industry as increasing commodity prices have created optimism in the ag market for the first time in nearly a decade. In Raven Autonomy, we expect to deliver AutoCart systems in advance of the fall harvest and commercialize the Dot Power Platform. We will continue to aggressively invest in Raven Autonomy as we build the foundation for a step-change in long-term growth.”