Correction: John Deere provided a statement for this column, but only part of it was used. The column should have also included this sentence: “John Deere completed this equipment deal through our dealer channel.”
It was a massive equipment deal, probably the biggest in the history of Western Canada. While a prime subject of coffee shop banter and social media discussions, it was never really reported in the mainstream agricultural media. Observers continue to wonder how it may change the farm equipment business.
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Monette Farms, based in Swift Current, Sask., has become a huge and diverse company. It farms a massive acreage at numerous locations in Saskatchewan and Montana and also has operations in Arizona, British Columbia and Manitoba. It is a customer every farm equipment dealership would love to have.
For 2023, Monette Farms was running green equipment rather than red. A long-time customer of Redhead Equipment and the Case brand, it is now John Deere green, although it did keep Bourgault drills handled by Redhead.
This information comes from several sources that claim the deal with John Deere involved some 300 serial numbers. When you’re buying new combines, tractors, sprayers and a host of other equipment, you can imagine a total price tag that exceeds $100 million.
However, it isn’t just the size of the deal or the switching of colours that has raised eyebrows; it’s the fact that John Deere went directly to Monette to make the deal happen. Asked for comment, John Deere said its dealers always have the opportunity to participate or not in these deals.
Monette Farms declined comment.
Sources say John Deere has a strategic acquisitions group that goes after large customers in an attempt to get them to switch brands. In this case, it was the U.S. office and not the Canadian office that targeted Monette Farms.
To appease dealerships most affected that will still have to do warranty work, John Deere provided some level of compensation — a participation payment.
Sources say Redhead bought the Monette trade-ins. All the red equipment didn’t show up at John Deere dealerships or at Ritchie Brothers auction sales.
Some observers believe this sort of deal would have been illegal in Alberta and some U.S. states because of laws prohibiting a manufacturer from selling directly to a farmer. However, it’s also possible that the deal might be structured in such a way as to avoid being offside with the law.
The deal was done in 2022, at a time of equipment supply constraints. While Monette Farms received an extensive line of new John Deere equipment, some dealers believe they lost their equipment allocation because of the deal and some farmers had to wait even longer for their new equipment.
John Schmeiser, chief operating officer for the North American Equipment Dealers Association based in Calgary, says a significant number of dealers have expressed concern about the deal, wondering if this is a slippery slope.
Will the big farm equipment manufacturers start targeting large customers directly, thereby bypassing their dealerships? Or will the deal with Monette Farms and a couple of similar deals in the U.S. remain the exception?
Certainly, the balance of power is shifting. Huge operations such as Monette Farms, however they are financed, are now larger entities than many dealerships or even dealer networks. They command tremendous purchasing power, and money talks. The trend to ever larger dealer networks continues.
You can bet that Monette Farms got a good deal. Otherwise, it wouldn’t have made the switch. No doubt other large farms are knocking on the doors of manufacturers asking what about them. So far, the deal appears to be a one-off, at least in Canada, but many are wondering what the future holds.
Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at kevin@hursh.ca.
