Way back in 1999 Spencer Johnson wrote a small book titled "Who Moved My Cheese?" The book was about 2 mice and 2 small humans (named Hem and Haw) who were in a maze striving to find the reward of a stash of cheese. They were good at it but there came a day when the reward of cheese was moved.
The pair of mice (Scratch and Sniff) scurried around and found the cheese. The pair of humans hemmed and hawed around and eventually did find the cheese although they displayed all the faults of doing it the way it has always been done.
Today a lot of people have 'moved the cheese'. Our administration in Washington has sent shock waves, if not panic, into our suppliers as they deal with tariffs and supply chains that were just recovering from a worldwide pandemic. No matter what is stamped on the serial number of a product, by our research, about 100% of tractors and about 80% of all other products have foreign components comprising their makeup. As a result, today those brands must face from 0 to 50% tariffs on those items. Then they have gone off and back on again. Back on now.
Finding the cheese or profit these days has to be the most challenging times in farm equipment history.
Now let's look at the markets. Corn, wheat and soybean prices continue to be at production cost or less. There is an old adage that "Corn Buys Tractors." Well, not when there is a loss when producing at the national yield average. A continued look at used, huge, half million dollar units sitting on dealer lots for a year now means there is no cheese left to find. We do not even want to talk about cotton pickers. I talked to 3 sales managers of large ag chain stores of the big 3 and all made the same statement: “We have never seen anything like this before.” They could sell more, but they can't handle the trade-ins. Pretty bleak so far, eh?
There is a bright spot. That being cattle and some other livestock. Cattle prices are at all time highs. So hay and forage equipment sales are skyrocketing? Nope. We had a call from a competitor's company doing research on this market. The fishing question was with record prices why are we not selling out of forage equipment.
The answer is first, the producers of cattle in rural cattle areas are getting old. The median age of the North American farmer is 59 years and climbing. Older customers who are getting the big checks are quite frankly not used to this and are in somewhat skeptical states of mind. Secondly they are not popping for $60,000 balers as the ones they operate could have been only $18,000 new. They don't want to go into debt at their age. Thirdly, these farmers are finding it cheaper to hire or purchase feed than make it themselves. Thus instead of 20 producers shopping for haymaking products, there are now 1 or 2 custom operators. Therefore these prices for forage equipment have moved the cheese for these producers as well as they navigate the maze to profits.
Am I a Debbie Downer or what? Not quite, as there are markets out there. We in the rural lifestyle market are benefiting from continued movement of city dwellers and retirees to the country. Most dealers I have talked to state the market has really picked up in the last 2 months. New Cheese. We in the business always have to run the maze to profits. Pick up the book (or go online and read the condensed version) and see if you are scratching and sniffing or hemming and hawing as we change to meet our customers' demands.
Until next time, wishing you a brighter outlook and tons of cheese on your tables.
Equipment Dealer Tips, Tales & Takeaways is brought to you by NAEDA.
The North American Equipment Dealers Association (NAEDA) is a non-profit trade organization representing retail dealers in the outdoor power, agricultural, construction, industrial, forestry, lawn and garden, and turf equipment industries. In today’s complex, high-stakes environment, protection goes beyond policy; it requires a strong, informed voice. NAEDA is that voice. We know the industry, understand its challenges, and stand ready when the unexpected strikes. By strengthening dealer–manufacturer relationships and advocating for fair, forward-thinking policies, NAEDA ensures members are heard, protected, and supported. One Unified Voice: Advocating. Defending. Protecting. The voice you trust. The support you need.
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Told from the perspective of an in-the-trenches owner/operator — Tim Brannon of B&G Equipment, Paris, Tenn. — Equipment Dealer Tips, Tales & Takeaways shares knowledge, experiences and tips/lessons with fellow rural equipment dealerships throughout North America. Covering all aspects required of an equipment dealership general manager, Brannon will inform, entertain and provide a teachable moment for current — and future — leaders within equipment dealerships. |
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