HANOVER, Germany — When most of us think about buying new machinery, the high cost of acquiring it quickly comes to mind. Often forgotten is the high cost of not buying it.
The world’s largest farm show was held recently in Germany. Technology drips out of every pore in this event’s 80-acre skin. The 1,600 exhibitors from around the globe are more than ever offering a great deal of technology in the equipment they are marketing.
Major shifts in technology don’t just happen overnight. There are many steps along the way, and when the market doesn’t take them up, the development has a way of slowing.
Those are called market signals. Gaining market share in agriculture is important because those sales translate into research dollars, which in turn the companies use to invest in more technology, which is then consumed by the public generating more sales and more research dollars, and the cycle repeats. It means success for the companies and ultimately for farmers.
The problem is that machinery research budgets might start to run leaner if market signals are not being sent through sales.
The technologies being developed now are on the fast track to delivering additional productivity, which sometimes improves margins. But spending in many parts of the world has been on hold be-cause many producers had a good run of prices and yields before 2015.
Their sheds are full of newer machinery so producer motivation to upgrade, from a tax or from a standpoint of being able to more efficiently farm, might not be there.
The problem comes in not rolling it over. Farmers in the U.S. corn and bean game are hurting with negative margins or at the very least break-even numbers.
Like producers in other farming sectors, they too have newer lines of machinery but just can’t see their way clear to investing right now.
However, farmers will need to buy if the research and development cycle is going to roll on in publicly traded machinery companies. They will need to do so, even if some of what is available today is only partway down the path to super-productive technologies.
Remember, you can always roll it over again in a few years when the really good stuff comes out.