Rabobank Report Finds Ag Equipment Dealers Must Transform to Improve Returns
St. Louis, Mo. (October 6, 2016) – A new report from the Rabobank Food & Agribusiness Research and Advisory group finds that because North American ag equipment dealers are facing a third consecutive year of declining sales, contracting net income and a weak intermediate-term demand outlook, these dealers must transform in order to improve returns on invested capital.
The report, “The Dealer’s Choice: Options for Equipment Sellers to Reinvent Themselves,” finds that the industry’s leading players have already reduced inventory levels and consolidated stores, and are emphasizing ancillary services; growth remains challenging, given negative farmer cash flows. While consolidation remains a viable option to improve profitability, Rabobank sees product extension as a better way to capture value as the next phase of technology and mechanization take hold on North American farms.
“Dealerships must reinvent themselves for the future and will have to pursue product extension strategies, including partnerships with Ag Technology companies, to thrive and survive,” notes report author Kenneth S. Zuckerberg, Senior Analyst Farm Inputs at Rabobank.
Given the sector dynamics, stagnation is a risky strategy, especially as farmers are becoming increasingly cost-conscious. The report explores options dealers can, and are exploring, including service capabilities, increasing the sectors served, selling/servicing high-tech equipment, expanding insight and increasing the variety of products sold.
“These dealerships will continue to face growth challenges as customers adjust to a new reality of lower commodity prices and income. There are opportunities for forward-thinking dealership groups, but courage and conviction will be key during the current period of financial stress and farmer anxiety,” says Zuckerberg.
A full copy of “The Dealer’s Choice: Options for Equipment Sellers to Reinvent Themselves” is available by contacting Sarah Kolell at Rabo AgriFinance.
About Rabo AgriFinance
As a leading financial services provider for agricultural producers and agribusinesses in the United States, Rabo AgriFinance adds value using industry expertise, client-focused solutions, and by creating long-term business relationships. Rabo AgriFinance offers a comprehensive portfolio of services that gives producers the right products to prepare for, and take advantage of, market opportunities. Rabo AgriFinance representatives offer a wide array of financial services and knowledge to help customers realize their ambitions. This comprehensive suite of services includes loans, insurance, input finance and effective risk management products. Rabo AgriFinance is a division of Rabobank Group, the premier bank to the global agriculture industry and one of the world’s largest and safest banks.
About Rabobank, N.A.
Rabobank, N.A. is a California community bank and a leading provider of agricultural financing and full-service banking products to California consumers, businesses, and the agriculture industry. With nearly 120 retail branches, we serve the needs of communities from Redding to the Imperial Valley through a regional structure that promotes local decision-making and active community involvement by our employees.
Rabobank, N.A. is a division of Rabobank Group, the premier lender to the global food and agricultural industry and a financial services leader providing commercial, retail, and agricultural finance solutions in 48 countries around the world. From its century-old roots in the Netherlands, Rabobank has grown into one of the world’s largest and safest banks. http://www.rabobankamerica.com