Farmers are sitting on their checkbooks instead of buying new equipment because of the Sino-U.S. trade war and planting delays in the United States, said the chief executive of Deere and Co., the world’s largest farm equipment manufacturer. Deere, which also makes construction and logging equipment, said overall sales fell 3 percent during May, June and July, led by a 6- percent drop in agriculture and turf, its largest division.
“John Deere’s third-quarter results reflected the high degree of uncertainty that continues to overshadow the agricultural sector,” said chief executive Samuel Allen on Friday. “Concerns about export-market access, near-term demand for commodities such as soybeans, and overall crop conditions have caused many farmers to postpone major equipment purchases. At the same time, general economic conditions remain positive and are contributing to strong results for Deere’s construction and forestry business.”
In a statement, Allen said Deere was “conducting a thorough assessment of our cost structure and initiating a series of actions to make the organization more structurally efficient and profitable.” Deere said it expects sales of agricultural equipment this year to be about the same as in 2018 for the U.S., Canada and Europe, flat to 5 percent higher in South America, and flat to down slightly in Asia.
Deere told analysts it would cut production at factories in Illinois and Iowa, including output of high-horsepower tractors, reported Reuters. The reductions would save about $25 million this year. Two other large equipment makers, AGCO and CNH Industrial, also have slashed production to prevent a buildup of inventory.