Brisk sales of farm equipment show mood of optimism

Hey there, time traveller!
This article was published 12/01/2013 (5010 days ago), so information in it may no longer be current.

It was a lovefest earlier this week at the Fort Garry Hotel where farm-equipment dealers from across Western Canada had their annual get-together.

Farmers are making money now. Commodity prices are up, the value of farmland is up and producers are investing in their business, which means buying equipment.

It hasn’t always been an easy business to be in.

How could it be when your customers aren’t making money?

“Agriculture is strong now and it’s exciting. Things are looking very optimistic in general,” said Cam Kay, president of the Canada West Equipment Dealers Association (CWEDA). “There is good cash flow in the industry. They’re putting more money into their land and generating more crops because of good management.”

Sales at the dealerships are up across the board. Equipment to be delivered for the 2013 crop year was ordered last fall so they all know they’re heading into the spring with continuing momentum.

Bob Mazer of Mazergroup, the longtime New Holland dealer and mainstay of the Brandon business community — who was named dealer of the year at this week’s CWEDA meetings — is happy the industry is no longer seen as being full of “dirt farmers and grease monkeys.”

“I’ve waited 45 years for the moons to line up,” said Mazer “Now people realize we’re not making any more land, we’re growing lots more people and we need to feed the masses. Agriculture is getting the recognition it deserves.”

And the dealerships are humming. Not unlike many other businesses that require multiple locations to operate, there is plenty of consolidation going on.

Mazergroup owns 13 New Holland dealerships throughout Manitoba and one in Saskatchewan. Mazer said he has three or four deals in the works.

“One of the large manufacturers said a couple of years ago to the dealers, that you’re either a buyer or a seller,” he said. “The status quo will not remain.”

On Friday, Calgary-based Rocky Mountain Dealerships Inc., one of the largest dealership groups in North America, bought the Shoal Lake and Russell locations of Murray’s Farm Supplies from Duane Kent.

“Business has been very good for the last few years,” said Kent, whose two small-town locations generated about $15 million in annual sales. “These are fairly optimistic times. There’s no reason to think commodity prices will not stay high.”

In Rocky Mountain’s latest financial results, it reported more than 15 per cent increase in same-store sales. The company owns more than 30 Case IH dealerships across the Prairies.

Because of the ever-increasing sophistication of the farm equipment, dealers need to grow carefully to properly manage their customers, said Kay, who is the general manager of a three-location group called Agland in the Lloydminster, Alta., area.

But he said the consolidation play makes a lot of sense to all parties including the mom-and-pop owners who want to sell.

“The business is more complicated than it used to be,” he said. “The dealerships are getting bigger, which helps the farmer because the dealers have better parts supplies and more specialized people to take care of customers better. Everyone is winning.”

It’s a business that, unlike the car and truck business, needs to be close to the customer.

“You don’t want to be hauling a combine 300 kilometres away,” Mazer said.

Year-end sales of two-wheel drive tractors in Canada in 2012 were up 3.9 per cent and the larger four-wheel drive sales were up 16.6 per cent.

The Washington-based Association of Equipment Manufactures (AEM), tracks sales of farm equipment.

In addition to tabulating actual sales, the organization also surveys farmers about their expectations of equipment sales every year, and the last couple of years shows increasing optimism on the farm.

In the AEM’s 2011 agricultural-equipment outlook survey, Canadian farmers figured equipment sales would decline 0.5 per cent in 2011, increase 1.0 per cent in 2012 and 1.5 per cent in 2013.

But the 2012 agricultural equipment outlook survey was markedly more positive. By that time, Canadian farmers had figured 2011 would grow by 7.6 per cent, 2012 would be up 4.8 per cent and 2013 would be up 2.2 per cent.

martin.cash@freepress.mb.ca