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this episode of on the record is brought to you by Walter side power training group a global industry leader for highly engineered mission-critical powertrain systems and complete in service support for the world's leading off highway and industrial equipment manufacturers I'm executive editor Kim Schmidt 4-h and our group our Hopkinsville Kentucky welcome to on the record here is an update on what's currently impacting the AG diamond industry according to an October 14th report in The Wall Street Journal it appears steering company as well as other major manufacturers of farm machinery are once again emphasizing equipment leasing to keep sales moving leasing allows Deere to increase sales by delivering equipment to customers who otherwise might not be willing to buy in a down market however there's a longer-term risk that customers will continue to prefer leasing when the AG economy rebounds the report goes on to say leasing offers less reliable profit and more complexity than lending customers money with interests to pay for their equipment and as dealers know well the report says leases also weigh on the used equipment market more than a third of the financed purchases of deere's high horsepower tractors and construction equipment is being leased to farmers and builders and leasing levels are about twice the rate in 2012 when the US farm equipment market was booming because of high corn prices the report says according to the report CNH industrial also was relying more on leasing to support sales more than 40 percent of the high horsepower tractors CNH has sold annually in the US since 2014 have been leased up from 25 percent in 2012 according to the Uniform Commercial Code data on Finance purchases which cover most of the farm equipment sold in the u.s. reports The Wall Street Journal the fourth-quarter update to the 2019 equipment leasing and Finance US economic outlook released earlier this month by the equipment leasing and finance foundation suggests equipment growth decelerated during the past quarter investment in agricultural machinery fell 11% in the second quarter of 2019 and eased point three percent from one year ago the agriculture momentum index improved from ninety seven point nine in September to ninety eight point seven in October the highest level since late 2018 wholesale trade of miscellaneous durable goods improved 0.7 percent in July and shipments of farm machinery and equipment rose 3.2 percent in August overall the index continues to point to improved agricultural machinery investment growth over the next three to six months this week's dealer on the move is Cazenovia equipment the new york-based John Deere dealer has acquired Laberge and Curtiss of Canton New York this brings Cazenovia total locations to 10 now here is jackson Locka with the latest from the technology corner [Music] [Music] thanks Kim while strides have been made establishing precision as a standalone business dealerships continue to seek a better balance between revenue generated by hardware sales and service this mindset is reflected in a continuing trend toward a more balanced breakdown of precision revenue sources in the seventh annual precision farming dealer benchmark study however there are a few reversals in recent trends for the first time in three years dealers reported that half of their precision revenue came from hardware sales curbing a downward trend that started in 2016 the most dramatic year-over-year drop was in signal subscriptions from a high of 11 percent in 2018 to a low of just under 6 percent this year the way precision products are sold saw some subtle shifts in this year's study most notable was the continued three-year downward trend of aftermarket sales of technology to a low of about 41 percent in 2019 factory installed technology ticked up for the second straight year to about 37 percent while dealers selling used precision equipment dipped for the third straight year to a low of 5 percent interestingly 15 percent indicated they sell precision technology through other methods which could include service only sales or agronomic support Platte Valley equipment a John Deere dealer with four locations in eastern Nebraska closed out the first year of its III precision farming service program with around 25 customers now in its fourth year almost 80 farmers are enrolled and the program's 98% retention rate speaks to the value customers are getting out of the investment III which stands for enable engage and educate is unique to Platte Valley and it's all-encompassing package and 24/7 dedication to its subscribers Coryell le AMS specialist notes that a key to the success of the program is in its flexibility and reliability in meeting customer expectations some of these success stories you know are definitely with our in our service department with our uptime guarantee so basically if that machine gets inspected by us and it does go down in season and we can't get it fixed within 24 hours we're getting that customer loaner just to get them back up and running in a timely manner that to some customers is huge especially when they have a lot of ground to cover and you know weather is always unpredictable so oh well he adds that future growth of the dealerships III program will rely on expansion of connected support and the ability to anticipate breakdowns before they occur back to you Kim thanks Jack the Federal Reserve Bank of Kansas City reported growth and farm lending activity slowed in the third quarter of 2019 following nine consecutive quarters of year-over-year growth a decrease in the volume of farm operating loans drove the slowdown in non real estate lending following sharp increases in 2018 bones used to finance current operating expenses declined in the third quarter returning to the prior 20-year average feeder livestock and farm machinery loans also were lower and made up the remaining share of the decline in non real estate lending while loans for other livestock increased Kansas City Fed economists said total farm debt outstanding at commercial banks increased 3% as levels of real estate and non real estate debt rose the overall pace of growth was slightly higher than in the first quarter but similar to second quarter growth in 2017 and 2018 since 2016 loans for farm real estate have been the primary contributor of growth and farm debt continuing that trend farm real estate debt accounted for a majority of the growth and total farm debt at commercial banks in the second quarter short line manufacturers remain confident about the near future in the AG equipment industry in spite of a tough third quarter according to a new survey from AG equipment intelligence and investment bank RW Baird despite being a fragmented portion of the market and being generally made up of small businesses surveys respondents total 500 million dollars in combined revenue painting a clearer picture of where this small but important market is headed a majority of short line manufacturers otherwise known as specialty equipment manufacturers saw their business slowed and revenue fall below expectations over the last three months however a majority respondents forecast steady demand for their products over the next six months leaving room for some optimism between modest business declines when asked how their business had been over the past three months responses were mostly negative with 61% of shortline manufacturers indicating business was slowing overall one third replied their businesses were slowing modestly and over one-quarter of respondents said business was slowing significantly some 11% noted business had improved while 28% said their business levels had remained the same on a positive note when looking ahead to demand over the next six months short line manufacturers sentiment improved noticeably most respondents expected mansis remained stable twice as many respondents expect demand improvements as those who expect a man deterioration says baird senior analyst mcdo brain at 85 percent a strong majority of short line manufacturer's forecasts flat or positive demand over the next half year specifically nearly 1/3 of those surveyed expect improvements over the next six months while 16 percent expect a man to deteriorate and 53 percent anticipate no change from current conditions the agriculture industry is starting to show its age whether its farm equipment dealers or farmers themselves according to surveys AG equipment intelligence conducted five years apart the first one in 2014 and the second earlier this year the number of dealer principal 61 years of age and older has grown from 38 percent to 45 percent the aging of dealership owners is helping to fuel industry consolidation in many cases dealers who are ready to retire and have no succession plan seek out other dealerships as potential buyers the aging of these dealer principles and their desire to call it a career continues to be a significant driver of industry consolidation similar trends can be seen with farmers in his October 18th column in Illinois Agri news Allen Gabbard reports that the aging of baby boomer farmers is also changing the landscape of American agriculture he says the American Farmland trust a nonpartisan farmland conservation group based in Washington DC estimates the turnover of farmland to reach 371 million acres in the next 15 years that is four of every ten acres in private ownership today he goes on to say that farmers growing older is driving the trend the average age of all US farmers is currently fifty-seven point five years its accelerated by more than one year every five years current marking conditions may speed up the turnover as older growers throw in the towel and call it a career now here's AG equipment intelligence editor & Publisher Dave Kenickie with an exciting announcement hi this is Dave Kenickie editor of AG equipment intelligence and I would like to personally invite you to join us for the first ever AG equipment intelligence executive briefing on Wednesday December 11th in addition to my presentation of the 2020 dealer business outlook and trends survey results this one-day virtual event will also feature live Q&A sessions with the top farm equipment dealers farmers and specialty equipment manufacturers they'll provide their boots on the ground and candid perspective of how they see agriculture in 2020 you will be able to ask the panelists questions yourself as they share their successes pain points and thoughts and how 2020 looks from their vantage point as a virtual event all sessions including the live Q&A will be accessible from your computer tablet or phone allowing you to attend from home the office are on the go to learn more or to register please visit WWE in telogen scomp / 20/20 executive briefing we hope to see you tuned in on December 11th for a full day a valuable insight from all segments of the farm equipment industry that will equip you to strategically plan your business heading into 2020 thanks Dave and now from the implemented tractor archives in 1986 the Ford Motor Company had acquired Sperry New Holland and called the new company for New Holland Fiat then acquired for New Holland in 1991 and named the merged company and aged geotech in 1993 NH geotech changed his name to New Holland this 1995 model F 140 kept the Fiat a Green name in Europe even though at this point the company's name was New Holland with headquarters in turn Italy New Holland srews our deep and diverse from companies like broad a French company founded in 1870 laverda an American company started in 1895 and for to the American company founded by Henry Ford in Detroit in 1903 as always we welcome your feedback you can send comments and story suggestions to Kay Schmidt at lessor Mediacom until next time thanks for joining us [Music]