The latest episode of On the Record is now available! In this week's episode we take a look at President Joe Biden's recent executive order that encourages the Federal Trade Commission to make rules related to Right to Repair. In the Technology Corner, Ben Thorpe discusses the results of the 8th Annual Strip-Till Operational Benchmark Study and what precision technology strip-tillers plan to invest in in 2021. Also in this episode: Art's Way's second quarter and frist half earnings and Kubota's results in the latest EDA Dealer-Manufacturer Relations report. 

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Biden Connects 'Right to Repair' & Consolidation in Executive Order

In his recently released executive order, U.S. President Joe Biden made comments connecting ag equipment industry consolidation with the ‘Right to Repair’ movement and encouraged the FTC to limit manufacturers’ ability to place restrictions on independent and DIY repairs of equipment.

The language in the executive order specifically addresses the “concentration” of the ag market, stating, “the markets for seeds, equipment, feed and fertilizer are now dominated by just a few large companies, meaning family farmers and ranchers now have to pay more for these inputs.”

It goes on to make a connection between consolidation in the ag equipment industry and the ‘Right to Repair’ debate, stating:

“Corporate consolidation even affects farmers’ ability to repair their own equipment or to use independent repair shops. Powerful equipment manufacturers — such as tractor manufacturers — use proprietary repair tools, software and diagnostics to prevent third-parties from performing repairs. For example, when certain tractors detect a failure, they cease to operate until a dealer unlocks them. That forces farmers to pay dealer rates for repairs that they could have made themselves or that an independent repair shop could have done more cheaply.”

Biden follows this by encouraging the FTC to “limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs.”

Marc Johnson, CPA and partner at ag consulting firm Kcoe Isom, says the Biden administration has framed this issue around the impact repair restrictions have on independent repair shops.

“What they’ve couched this around is: is it unfair that dealerships have gotten so big and that manufacturers have gotten so consolidated that the average mechanic out there who is trying to make a living … he’s trying to repair equipment, they’ve couching it around that guy. As far as I’m concerned, I think our biggest concern is for the dealerships themselves and still that whole ‘Right to Repair’ issue.”

Dealers on the Move

This week’s Dealers on the Move are Florida Coast Equipment, WCTractor and Van Wall Equipment.

Florida Coast Equipment, the largest Kubota dealer in Florida, announced plans for a new dealership in Homestead to serve Miami-Dade County. The dealership will break ground on the new facility within the next 12 months and will immediately begin hiring 20 new team members over the next 60 days.

Texas Kubota dealer WCTractor has purchased the assets of W.A. Virnau and Sons, commonly known as Virnau Sealy Tractor. This brings WCTractor to 6 locations.

Iowa-based John Deere dealer Van Wall Equipment has acquired the assets of Brakke Implement in Mason City Iowa. This will be Van Wall’s 32nd location, spanning Iowa, Illinois, Kansas and Nebraska.

Strip-Tillers Invest in Variable-Rate Technology

According to the results of the 8th annual Strip-Till Operational Benchmark study, nearly 75% of strip-tillers indicated they utilized RTK-level GPS correction, in line with last year’s survey. Last year was the first time the percentage dipped below 80% in 5 years. Another almost 20% of farmers indicated they relied on either GLONASS or WAAS for GPS and about 6% said they didn’t use any level of correction for strip-till.

For the seventh year in a row, John Deere topped the list as the most popular brand of GPS used by strip-tillers. Some 44% of strip-tillers utilized Deere guidance in 2020, in line with  the prior year. Trimble was the second most used system, by 25% of strip-tillers, followed by Ag Leader at 17% and then Case IH at about 11%.07-16-21_Slides_OTR3.jpg

Looking at what new technologies strip-tillers had added or plan to add in 2021, abut 40% of respondents cited variable-rate seeding and another nearly 47% cited variable-rate fertilizer application systems as planned purchases this year. Another 35% have added or plan to add implement guidance in 2021 and 24% plan to purchase ag data management service or support.

Art's Way Reports 2Q21 Ag Sales Up 25.6%

In its recent second quarter earnings report, Art’s Way Manufacturing reported consolidated sales of $5.7 million for the second quarter and $11.1 million for the first half of the year. This represented a 4.8% year-over-year increase in second quarter sales and a 6.1%, increase for the first half of the year.07-16-21_Slides_OTR2.jpg

Second quarter sales in the company's agricultural products segment were $3.9 million compared to $3.1 million during the same period in fiscal 2020, an increase of 25.6%. Year-to-date, agricultural product sales were $7.4 million compared to $6 million during the same period in fiscal 2020, a 22.1% increase.

Art’s Way attributed the large increase in revenue to a strengthening agricultural economy and government assistance programs to farmers during the COVID-19 pandemic. Art’s Way saw a 65% increase in grinder mixer sales year-over-year and is showing a 25% increase in manure spreader sales year-over-year.

The company said its backlog continues to be strong heading into the third quarter of  fiscal 2021 and that it anticipates improved results for the second half of fiscal 2021, though it added that fulfillment of the backlog will depend on whether components suppliers are able to deliver or not.

Kubota Becomes Lowest-Rated Full-line Manufacturer in 2021 EDA Report

According to results from the 2021 Equipment Dealers Assn. Dealer-Manufacturer Relations Report, Kubota has received its lowest overall rating from its dealers in the last 8 years, making it the lowest-rated full-line manufacturer in this year’s report.

As of the 2021 report, Kubota reported a total mean score of 4.31, just behind New Holland at 4.44, becoming the lowest-rated full-line manufacturer for the first time in 8 years. In the same time period, New Holland was reported as the lowest-ranked full-line manufacturer every other year, aside from 2018 when Case IH received the lowest overall score of 4.08.07-16-21_Slides_OTR.jpg

For the report, dealers are asked to rate their manufacturers on a scale of 1-7 in 12 categories. Based on the average of those categories over the last 8 years, Kubota has seen only declines, dropping from 5.66 to 4.31. This represents a 23.9% decline and gives Kubota an 8-year average score of 5.14.

It’s worth noting that while Kubota’s overall score reached a record low this year, the mean score of all full-line manufacturers rose in the 2021 report to 4.90, up from 4.78 in 2020.

When asked to comment on the EDA report scores, Todd Stucke, senior vice president, Marketing, Product Support & Strategic Projects at Kubota gave the following statement:

“We have taken concerted actions to turn these numbers around by improving our processes to regain dealer confidence in Kubota wherever it has lapsed. To this end, we have very active Dealer Advisory Boards, which were established to share and exchange opinions, ideas and suggestions to further develop meaningful courses of actions that help both of our businesses grow.

“These processes are underway and will continue to be refined as we continue to work together to meet increased product demand more efficiently and effectively.”