The world’s largest farm equipment manufacturer said sales were down by 5 percent worldwide – down 8 percent in the United States and Canada – in the third quarter – due to lower commodity prices “which have negatively affected demand for farm machinery and contributed to lower sales and profits for our agricultural equipment business.” Based in Moline, Illinois, Deere and Co said it expects equipment sales to be 8 percent lower in the fourth quarter and sales for fiscal 2014 to be run 6 percent below 2013.
“For the balance of the year, the company will be scaling back production in line with demand for our agricultural products,” said chief executive Samuel Allen. Sales of construction and forestry equipment were forecast to grow by 10 percent for the year. Farm equipment accounts for three-fourths of Deere’s business, said Bloomberg. Agco, a Deere rival in farm equipment, also is cutting production, said AgriMoney, and Lindsay Corp, maker of irrigation equipment, and AgJunction, a satellite technology company, have cautioned about decreasing demand.
Deere said the agricultural economy “remains in a relatively healthy state” while lower commodity price cut into farm income. “The decline is putting pressure on demand for farm equipment, especially larger models. At the same time, strength in the U.S. livestock sector is providing support to sales of mid- and smaller-size tractors. Based on these factors, industry sales for agricultural machinery in the U.S. and Canada are forecast to be down about 10 percent for the year.” Sales were forecast down by 5 percent in Europe, down by 15 percent in South America, “significantly lower” in the former Soviet Union, and flat in Asia.