Deere & Company (DE) and Other Farm Equipment Manufacturers Preparing for Slowdown in Sales


Deere & Company (NYSE:DE) had earlier announced lay-off of about 600 of its workforce, which has since been increased to over 1,000. It’s not just Deere & Company (NYSE:DE), but almost all farm equipment manufacturers are witnessing a slump as agricultural growth slows down. While some companies are resorting to cost cutting in this phase, others are trying to battle it out by increasing their market share. Jane Wells reported on the slowing of sales expected by farm equipment manufacturers and Deere & Company (NYSE:DE)’s lay-offs on CNBC earlier today.


“For American farmers balance sheets are good, but this year their income is going to fall as grain prices get to a level, we haven’t seen in years. […] So, equipment makers are preparing for a slowdown in sales. Deere & Company (NYSE:DE) is laying-off over a thousand manufacturing workers. CNH Industrials is rolling out fewer new hardware products and more new software products to help farmers manage and AGCO plans to grow by grabbing market share,” Wells said.

Wells also mentioned that one of the sales representatives of these companies told her that the worst is yet to come in terms of sale. According to Wells, investors are already factoring in a decline in sales of the farm equipment manufacturers as can be seen by the stock prices of these companies.

Other guests on the program, who were all from the farm equipment industry had different views. While one of them feels that the drop in sales is not a major issue for now as the farm income levels are still way above the 10-year average, another one stated that this downturn would be witnessed across the whole agricultural value chain and farmers would be looking for cutting their costs either by cutting down on fertilizers or other inputs.

As of June 30, 2014 Warren Buffet’s Berkshire Hathaway owns more than 3.97 million shares of  Deere & Company (NYSE:DE).

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