Question:
Heading into 2014, where are your greatest opportunities to grow the dealership’s precision farming business and what are the biggest barriers to increasing profitability?
Answers:
“Some of our greatest opportunities will lie in data transfer and management. Auto-steer for the bigger farms is a given, but there are still a fair amount of medium to smaller growers that are still adopting precision farming.
“Planters will continue to be hot. Everything from singulation to variable-rate application to down force will continue to sell. It is easy to show a producer profit and the savings from adding technology to their planter.
“One thing we struggle with is marketing and getting our name out there. Precision Planting has done an excellent job with marketing. It still boggles my mind, how in today’s world of more and more producers asking for fewer monitors in their cab, why they purchase one that only controls their planter.
“I believe you will start to see more and more service/support packages being sold by dealers. Many of the precision farming suppliers are suggesting to their dealers to start charging. For too many years, precision ag has been operating under the assumption of free support for life.
“As dealers, that comes at a huge cost. If you look at similar industries, you don’t get lifetime free support on your laptop or your car. John Deere has moved away from StellarSupport and put that back on the dealers.
“As precision farming dealers, we all struggle with competition. The hardest dealers to compete against are the ones that don’t charge labor or travel when doing installs. This also ties into my last paragraph, because the same dealers are not charging for support. We work on selling our dealership by having excellent support, stocking parts and having techs that specialize in just precision ag.”
— Derek Strunk,
Altorfer Ag Products,
Clinton, Ill.
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“The biggest opportunities I foresee are the integration from our primary OEM into more lines and their continued adoption of support for competitive brands, our ability to work well with our own and competitive vehicles and implements is what continues to drive our primary precision business.
“The biggest hurdle to profitability in the precision sales side is our competitors’ drive to integrate new equipment. Most OEM’s are aiming for total integration, where in larger equipment, the OEM display is required within the next few years. Getting into the market now and becoming the customer’s first choice will play a huge role in many aspects of dealers’ future success and profitability, both as a whole and in precision farming.
“On the service side, we are held back by one of our own assets. The ‘free’ service support we have become known for is getting harder to provide as systems become more complex. Moving to a billed support structure is something we are going to have to work hard at selling to our customer base.”
— Stephen Rose,
Torgerson's,
Billings, Mont.
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“Opportunities — cost saving technologies like row shutoffs and variable-rate, unmanned aerial vehicles and data analysis.
“Barriers — $4 corn, increased competition from other precision farming manufacturers and the cost of technology.”
— Phil Moskal,
Mid-State Equipment,
Janesville, Wis.
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“Great opportunities are in providing integrated services to customers that encompass equipment, technologies, support, service, agronomy, data management and trusted advisor relationships.
“Greatest challenges are customer recognition of the need to adopt advanced technologies, identifying an overall precision management strategy vs. ad hoc and piecemeal, customers not taking advantage of the technologies current to their equipment, recognition of the value of services provided and overpaying for third party services that do not entail an overall farm strategy.”
— Mitch Rezansoff,
Enns Brothers,
Winnipeg, Manitoba
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“The greatest opportunities to grow are going to be in data — in two venues. One is selling the modems for data transfer and wireless connectivity. The other is more software and analysis of the data.
“That being said, I think the single biggest hurdle now is the data. I have tried and tried to help customers figure out their data and quite frankly, we aren’t getting the message across. Data is becoming more important to more farmers then it ever was before. Being a precision dealer focused mainly on hardware, I feel I need to shift more toward data to help my customers and ultimately make more money for the business.
“Another avenue I think is still going to be strong in 2014 is water management. The thing I like about this area is we won’t have to sell a lot more equipment dollar value vs. something like a lightbar. This, really helps margins for our sales. Not everyone up and down the road is selling water management, unlike auto-guidance and yield monitors.
“One of the biggest barriers for me is how to charge for helping customers with data. The problem stems from other avenues that offer data services for free, but when they offer it for free a lot of times the farmer doesn’t exactly own the data any more. I feel that is my selling point in the data area, but how to charge for it exactly becomes blurred vision to me.
“Another major barrier going into 2014 is more tractors and planters are coming already hardware equipped, which means we have to focus more on service than hardware to keep profitability up. It’s tough to know how to charge for it.
“I would rather charge a customer for what he needs done than tell him ‘I am going to do x amount of work for x amount of cost.’ What I see out of my customers who also buy combines, tractors and planters from us, is they expect service to be covered already because they just made a new purchase.
“On certain pieces of equipment our dealerships sell, we need to add a precision charge when it’s sold. Put that money in a pot and as we have to service these units, pull from that pot. If it is taking more money than what we have set aside in the pot, we will have to up our charge when new equipment is sold.
“I have found that every company out there is great as far as parts warranty goes, but no one will pay labor. This is the only way I see where we can increase profitability because we lose way too much money writing labor off.”
— Lanty Armstrong,
Ag Technologies,
Rochester, Ind.
