Drought may lead to boon for farming equipment manufacturers in mid-term

August 22, 2012
Drought may lead to boon for farming equipment manufacturers in mid-term

At first glance, this year’s dry conditions may look like a disaster for both U.S. farmers and the equipment manufacturers that depend on agricultural activity for their own livelihood. However, the reality of the situation is more complicated.

Samuel Allen, chairman and chief executive officer at Deere and Co., recently said “This year’s drought could positively influence our outlook.”

J.B. Penn, the chief economist at Deere and a former official with the U.S. Department of Agriculture, explained that, although this season’s orders of farm equipment will be stifled by conditions, there is a strong chance that a significant rebound will occur next year.

Penn points out that the current tightness in the food market will lead to higher crop prices, which will buoy farmers’ financial situation during the next growing season, assuming production returns to normal levels.

This may lead to an increased willingness to invest in equipment. Crop insurance is another factor that will help farmers emerge from the drought on solid financial footing.

It can be difficult for companies to project how current trends will affect their mid- and long-term outlook. Businesses that lack the experienced financial staff to conduct this sort of specialized analysis can benefit from working with professional recruiters to quickly connect with the kind of high-quality financial professionals who can guide their development over time.

For companies not seeking to add new permanent staff members, working with a financial project consulting service can be the ideal solution. An interim investment analyst can help a company determine what sort of spending in the present could drive significant business growth in the future.

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