In today’s newscast we report on the impact the California drought and low commodity prices had on the ag industry, Buhler growing its dealer network, Trimble’s acquisition of IRON Solutions and Lindsay’s latest earnings report.

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2014 Was a Tough Year for Ag

I’m managing editor Kim Schmidt, Happy New Year and welcome to On the Record. Here’s a look at what’s currently impacting the ag equipment industry. 

2014 — Tough Year in Ag

From the drought in California to low commodity prices, 2014 proved to be a tough year for agriculture.

A recent study by the University of California at Davis Center for Watershed Sciences estimates the drought will cost the California ag industry $1.5 billion.

The Fresno Bee reports that 420,000-700,000 acres of irrigated cropland were removed from production this past summer, and the state expects crop revenue losses of $810 million and dairy and livestock losses of $203 million.

In addition there was an estimated $453 million in added costs because of additional well pumping, according to the study.

Across the breadbasket region, lower prices for corn, soybeans and wheat drove down profits for farmers and pushed Illinois, Minnesota, South Dakota, Iowa and Nebraska to the lowest states for income growth over the 12 months ending in September, according to the U.S. Department of Commerce.

In Minnesota, farm income in the third quarter fell by $1.6 billion vs. a year earlier. For all Midwestern states farm income was down by $17.4 billion, according to a report by the Minneapolis Star Tribune.

Trimble Acquires IRON Solutions

Continuing a recent pattern of diverse agricultural acquisitions, Sunnyvale, Calif.-based Trimble Navigation purchased privately-held IRON Solutions. Although financial terms were not disclosed, the acquisition, announced in December, adds another dimension to Trimble’s data management platform for farmers, precision farming dealers and agronomic retailers.

The Franklin, Tenn.-based IRON Solutions provides analytics-based intelligence and a cloud-based software system that tracks the lifecycle of used farm machinery, using sales metrics to include specifications, options and adjustments for condition and hours of use. 

According to Joe Denniston, vice president of Trimble’s Agricultural Division, the integration of the IRON Solutions’ suite of services into the Connected Farm platform will equip dealers and agronomic retailers with a broader scale of real-time analytical tools to improve maintenance scheduling or fleet management through telematic service.

"The other thing that IRON has is a suite of IRON HQ products where they can offer an equipment dealer CRM and ERP tools  that we believe, when coupled with some of our Connected Farm fleet productivity tools, if the grower chooses to make some of his information available to his local equipment dealer, can position the equipment dealer to more proactively help manage the grower and his fleet, and make that grower that much more effective."

The acquisition of IRON Solutions is the latest in a string of additions Trimble has made to diversify its precision interests. In 2013, the company acquired the assets of privately-held RainWave, a precipitation monitoring firm in Auburn, Ala., and incorporated the service into its Connected Farm platform. Also in 2013, Trimble acquired New Zealand company IQ Irrigation, which provides remote linear and pivot irrigation control and Madison, Wis.-based C3, a soil health and data information company.

Buhler Grows Dealer Network

Sustained focus on expanding the Versatile dealer network and enhancing Farm King dealer resources characterised Buhler Industries’ 2013/14 fiscal year ended September. 

CEO Yury Ryananov says, “We continued to follow our long term strategy in 2014, working on developing and expanding our Versatile dealer network to carry the full line of products, including tractors, tillage and seeding equipment, as well as sprayers and combines.”

He says the short-line brand strategy for Farm King is to focus on dealer growth in the U.S. while working with existing dealers to increase their sales. 

More than 20 new dealers were signed to the Versatile line in 2014.

Sales revenues for the year were down 4% on 2013 at C$325.5 million but were still the third highest in the company’s history, emphasises Dmitry Lyubimov, president of Buhler Industries.

Net profit was C$12.5 million, down C$7.4 million from the prior year, but still the fourth highest annual profit.

He adds, despite an efficient business model and a very good start at the beginning of the fiscal year, the ag market downturn affected Buhler’s sales as well as its competitors, with decreased demand for farm equipment in the U.S. and Canada causing a significant drop in orders. 

Lindsay 1Q Revenues Decline 9%

Lindsay Corp. reported first quarter results for fiscal year 2015 on Jan. 6. Total revenues for the period were $134.8 million, down 9% from the same period a year ago. 

U.S. irrigation revenues for the company decreased 21% year-over-year while international irrigation sales grew 4.2%, driven by higher volumes in the Middle East, South Africa and Australia. This is the first quarter of positive year-over-year growth for international irrigation sales since the first quarter of 2014. Despite positive international irrigation revenues, total irrigation revenues for the first quarter saw an 11% year-over-year decline. 

C. Shon Williams, analyst with BB&T Capital Markets, says Lindsay’s U.S. irrigation sales results, “were notably poor in the period. Domestic sales have now posted negative year-over-year results for five out of the last six quarters. Management’s outlook for 2015 remains cautious, as they envision a weak commodity environment will continue to weigh on farm income and irrigation equipment demand.”

And now from the Ag Equipment Archives…

Early tractor designs consisted of a steel girder frame on which the engine and other major units were mounted, producing a number of problems. The first practical alternative came from the Wallis Tractor Co.’s Cub Junior tractor in 1913.

The Cub’s design had a curved structure of rolled steel plate to replace the steel girder frame. This provided structural strength as well as protected the engine and gearbox from dirt and water.

As always we welcome your feedback. You can send comments to kschmidt@lesspub.com. Thanks for watching; I’ll see you next time.