Precision Ag 2013 Channel Checks From a reputable sell side research report:
Following discussions with precision ag equipment dealers across the Midwest, we
have increased confidence in our FY13 growth projections. Our dealer checks suggest at least
mid-teen’s growth in the precision ag category in 2013 (which compares to flat to +5%
forecasts for farm equipment). This higher level of growth speaks to the secular theme
behind precision farming, with farms of increasingly smaller sizes seeing the benefits
and cost savings associated with these tools. Many of our dealers we spoke to noted
that precision ag has quickly transitioned from a ‘want to have’ product to a ‘need to
have’ to drive efficiency.
Dealers point to strong growth in precision ag category in 2013 – significantly
outpacing broader farm equipment demand.
After speaking with more than 10 precision ag dealers in four key crop producing states across the Midwest (IA, IL, NE, and MN) we believe sales of precision ag devices will experience at least mid-teen’s
growth in 2013. This compares to market projections of flat to +5% growth in heavy
farm machinery. We noted two significant trends during
our discussions with dealers: (1) precision ag tools are quickly becoming must-have
devices to improve efficiency and (2) adoption of precision ag is spreading to smaller
farm sizes.
Nearly all of the dealers we spoke with stated that their customers now consider precision ag tools a necessity due
to the realized benefits from improved efficiency on the farm. Farmers are currently finding
significant cost savings and with new product offerings and increased device integration
farmers are starting to realize yield improvements. There still are some farmers who do not yet
consider precision ag tools as a necessity, but as we heard from our discussions with dealers,
farmers who have used precision tools in the past are now unwilling to farm without them.
Precision ag tools have typically been used by large commercial farms because the cost/acre
is more compelling, but with increased offerings and improved farm efficiency, adoption by
smaller farms is beginning to ramp. Nearly all of the dealers we spoke with stated that smaller
farms (500 acres on average) are purchasing precision ag tools, where even part time growers
are making purchases. We heard that small farming customers are still realizing a pretty quick
return on investment, which speaks to the value and benefit these tools provide, regardless
of the farm size.