At the start of 2018, the outlook for the U.S. agriculture industry was good – not great, but promising. The team here at RDO Equipment Co. shared in this cautious optimism. Now that the calendar year is coming to an end, we’ve watched growers experience much of what was predicted, including challenges resulting from low commodity prices and labor availability issues.
As we look ahead to what 2019 holds, the events of 2018 will play a role in that outlook. Breaking the industry into the three regions RDO Equipment Co. serves – the Midwest, Northwest, and Southwest – here’s how 2018 is setting the stage for 2019.
Midwest – Minnesota, North Dakota, South Dakota
Late in the summer of 2018, most industry professionals – growers, advisors, and analysts included –expected the fall harvest to be one of the easiest on record. It’s going to surprise no one when I say that prediction was flat-out wrong.
The weather proved to be the key factor in a fall harvest that was slow to get started, slow to gain momentum, and slow to finish, with many growers still finding themselves with fields of corn and soybeans well into December.
While a tough fall harvest poses challenges for the remainder of the year, its effects are felt into the following year as well – which will be the case heading into 2019. With harvest tying up growers longer than expected, much of 2019 field preparation work wasn’t completed. This will put more pressure on growers to get fieldwork and planting done in the small spring planting window.
Additional factors may affect #plant19. If it’s a late spring and growers can’t get into fields as early as they’d like, it could affect what they’re able to plant next year.
The overall unknown in commodity markets will drive 2019 planting as well, with the Midwest region not having the opportunity of much crop diversity to help them adjust. However, some are branching out and planting crops unique to the area, such as grapes, and those that are unique in general, like lavender. Additionally, the recently-passed farm bill presents an exciting opportunity for commercial hemp farming.
True, 2019 is going to be a tough year for the Midwest, however, these growers are no strangers to challenges. They’ve weathered storms in the past and there’s nothing but confidence that they will again.
Northwest – Western Montana, Central and Eastern Oregon and Washington
While the narrow diversity of Midwest crops may affect growers’ strategies in 2019, the opposite is true in the Northwest and will continue to help the region weather commodity price uncertainty.
Boosted by diversify of crops from potatoes to onions, and wine grapes to apples, Northwest growers experienced a solid year. RDO Equipment Co. is helping put grower customers in better position to capitalize on some of these crops with new solutions. The acquisition of Evergreen Implement brought Spudnik potato equipment solutions, while John Deere’s 5GN and 5GV Specialty Series Tractors complement RDO Equipment Co.’s specialty Silverline by Blueline offerings for orchard and vineyard growers.
The mechanized equipment for orchard and vineyard growers particularly will help address the continued challenge of labor for Northwest growers. Additionally, more precision agriculture technology offerings will be important as growers continue to demand more from machines to make up for fewer available workers in the field.
Southwest – Central Coast of California, Desert of Arizona and California
After the nationwide recall of romaine lettuce in November 2018, the Southwest region was once again hit hard by food safety concerns. Produce growers will continue to face headwinds in 2019 and, like the Midwest, this year will affect what’s planted next year. And, similar to the Northwest, Southwest growers will look to crop diversity opportunities as a solution.
From citrus fruits and dates to alfalfa and other forage crops, there are nearly limitless options of what Southwest growers are able to plant. Looking at forage crops, the export market should be slightly better in 2019. With 90% of forage from the Imperial Valley exported in recent years, export health is an important factor for growers looking to diversify into this area.
The Precision Product Specialist team at RDO Equipment Co. will continue to be key for growers in the Southwest those looking to diversify. Equipment and technology have changed, even in the past three to five years, and growers will need to know, first what’s available and, second, how to implement to be successful. Technology also comes into play in the Southwest, as labor challenges will result in more mechanization needed.
The Agriculture Equipment Outlook
Looking at agriculture equipment in general, it will be another year as a replacement market, continuing to address aging machines sold during the boom of 2010-2013.
Similar to the outlook for new construction equipment, demand for new agriculture equipment will outpace supply, with six to nine months a common timeframe for new machine delivery. John Deere and other manufacturers have continued to adjust production schedules, both to help dealers move existing inventory while putting themselves at less risk to volatile markets. The six-to-nine-month wait on new machines has become the new normal, so it’s now on us, the dealers, to help customers plan ahead and order equipment in 2019 to put them in the best position heading into 2020.
Finally, the low supply, combined with increased machine costs due to higher prices from steel and aluminum tariffs will continue to make newer used equipment an attractive option in 2019.
Better Positioned, Positivity, and Partnerships
I leave you with one final note of optimism: growers are resilient. Farming is often unpredictable, a rollercoaster, and a gamble. Growers have gone through challenging times in the past five years. While no one can say the next five aren’t going to be challenging as well, there aren’t any foreseeable, major economic crises on the horizon, and there’s optimism that the worst is behind us.
Adding to that, because of technology, both for equipment and for business management, growers are much better-positioned today to handle adverse conditions than they were, whether last year or 30 years ago. As dealer partners, RDO Equipment Co. is committed to continuing to do our part to help growers have a strong year in 2019.
About the Author
Keith Kreps is Executive Vice President of RDO Equipment Co. where he leads more than 900 team members across the company’s agriculture and irrigation divisions, and is focused on making RDO Equipment Co. a great place to work and a great place for customers to do business. He grew up on farm in rural Moorhead, MN, and has an additional 20 years of professional experience in the agriculture industry. Connect with him on Twitter @RDOKeithK.
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