6 Machinery Trends Highlighted For Ag Retailers
With almost 40 years of experience working in the ag retail and application equipment sector, Arnie Sinclair is now leading Heartland AG Systems, which resulted from a 2019 merger of AG Systems Inc. and Heartland Ag. In 2021, Heartland AG Systems acquired Ag West Distributing in the Pacific Northwest, who like Ag Systems and Heartland Ag, has a long legacy of servicing ag retailers.
With the recent twists and turns in the ag retail industry—Sinclair reflects on top trends he’s seeing across ag retail, and specifically in the machinery segment.
1. Consolidation
A more condensed ag retail footprint is asking deeper questions about the machinery needed to cover all the acres and serve all customers.
“Consolidation in ag retail brings business opportunity. Synergies will continue to drive it and the labor situation will contribute to those decisions,” Sinclair says. “More of our customers are doing a closer job of analyzing their fleet and focusing on overall fleet management. With proper fleet management, we have had customers realize they are able to get by with 2 application units that cover the same acres as they may have been covering with 3 units out of one location, and able to move units from other locations as needed to improve their customer satisfaction. This also helps with personnel, as it reduces the number of employees they need to operate the equipment. Finding quality applicators and employees is a challenge for all retailers.”
2. Creative Recruitment for Talent
It echoes from all angles in the economy—the labor market is tight. Sinclair sees a bit of a silver lining for agriculture if employers are willing to get creative and prove how they are investing in the future.
“We are working with a firm that recruits at the high school level not just within our industry but bring awareness to ag. It’s about getting the younger generation to understand the opportunities and the different variety of opportunities in different fields, including technology, agronomy, sales, marketing, service and potential management,” he says. “It’s great to see some rural communities that are working to keep younger generations employed in their communities.”
3. Technology
Looking ahead, Sinclair sees technology continuing to contribute to solving stresses in labor demand.
“We see some of this technology now in the early stages. What we don’t know is exactly what opportunities technology will bring and how our industry will capitalize on it,” he says. “Technology is expensive, but it’s a big part of every piece of equipment that goes out.”
Automation is providing ease of use of equipment today—and longer term could augment human labor. But even in the short-term he says ag retailers need to invest in technology now to better serve their customers today.
4. Strike When the Iron Is Hot
Despite challenges due to supply chain constraints and increased input prices stressing the farmer balance sheet, demand for new equipment has been ramping up over the past two years.
“Our industry is cyclical and we want to take advantage of the upticks when we can. At the beginning of 2022, equipment sales are well ahead of last year,” he says. “However, we also know that availability of equipment from OEMs will be the limiting factor for growth in the next 12-18 months. We have already been given allocation of machines we will have to sell for the balance of 2022 and into 2023.”
5. Changes to Equipment Ownership
The supply chain snafus of the past two years coupled with increased cost of manufacturing will add up to more leasing of equipment rather than outright ownership.
“More equipment will be leased and you’ll continue to see that,” Sinclair says. “You look at the cost of the equipment, and the labor shortages and supply shortages OEMs are managing through. They can’t deliver on demand. There’s just overall shortness in the market.”
6. Every Machine Will Have to Earn Its Keep
Sinclair says the one-two punch of more technology and shortages in equipment will bring a new level of scrutiny to the iron at the ag retail facility.
“It’s about fleet management. More and more people look at telemetry and vehicle tracking to analyze each piece of equipment,” Sinclair says.
“It’s more than installing hardware. It’s understanding what it’s capable of doing. Making sure that everything, including the back office, is functional as well. In some cases, they may need more equipment to tender because if you have a piece of equipment sitting on the edge of the field waiting for a tender to be filled, it results in reduced profitability for our retailers.”
