Deere & Co. hit by farm economy slump
Big farm equipment sales at Deere & Co. fell in the fourth quarter, reflecting a downturn in the agricultural economy. Deere’s profits slumped 46 percent from the fourth quarter of last year.
With commodities prices down, fewer farmers can afford expensive new John Deere tractors.
“All signs are that that business will remain under pressure into 2016,” said Morningstar analyst Kwame Webb.
A slowdown in the oil patch has also cut into Deere’s construction equipment sales.
Against that backdrop, Deere’s expanding its portfolio of high-tech gear and data analytics. Those tools help farmers do things like boost yields or use less fertilizer. Webb said Deere has signaled it’s spending as much on big data informatics as on big tractor research and development.
“That’s pretty noteworthy because large tractors are thought of as the big profit center of the business,” he said.
The expected payoff isn’t clear. But Chuck Studer with John Deere said some farmers will embrace the high tech stuff — even in a downturn — of it helps them figure out how to cut costs.
“I think the adoption of some of these precision technologies have been growing more rapidly than the general equipment market itself,” he said.
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