2014 – A Year in Review

Somehow I happened to fall into the last slot of the year for the DISTek blog. I am not complaining as it gave me a few more days to prepare. Obviously we still have a few more days left in the year (3.6% of the year as I write this), but by and large the business part of the year is grinding to a halt. As the Scrum gurus would tell us, we should have a retrospective from time to time, so here is mine for the year.

Bumper crops are great … except when they are not. In general, the corn belt had superb weather this growing season. That led to record yields at a nationwide level and that massive supply, amongst other factors, led to sharply reduced prices. Corn was over $8/bushel in 2012 and is now below $4/bushel. A similar story played out in wheat and soybeans as well. I know there are some relevant terms from my past economics classes like price elasticity of demand, but there are plenty of opinions on this topic and I will leave it to the reader to peruse those as desired.

Ag equipment manufacturers are not too bad off … yet. AGCO, CNH, and Deere all posted lower 2014 results than in 2013 by a significant margin. From 2010 to 2013, AGCO and Deere grew revenues by 56% and 45%, respectively (CNH combined with Fiat in that timeframe, so comparing their numbers is more difficult). In 2014, AGCO and Deere both decreased in revenue – actuals for Deere and forecasts for AGCO – with revenues similar to those seen in 2012. But in the bigger picture, the annual growth rate from 2010-2014 for both AGCO and Deere is about 8.6% which is not too bad overall.

The government can do some helpful things, but it seems to wait until the last possible moment … or a little later. For those that missed it, two weeks before the year ends Congress reinstated a one-year retroactive tax break for buying farm equipment. Some may call it just-in-time delivery, but I think most of us have other words to describe it. Regardless, maybe AGCO’s 2014 numbers will end up looking a little better due to a flurry of end-of-the-year activity after all.

Oil prices can fall off a cliff. I am by far no expert in this arena, but I suspect there is some heavy geopolitical weight being thrown around between the US, Russia, Iran, and Saudi Arabia. I have heard figures in the $100/barrel for a profitable shale-oil well, so sustained prices below $60 as they are today will likely cause a slow-down in the development of those. I do know that today’s prices make my fuel costs significantly less for the holiday travels. What I do not know is if those prices are going to drive prices down for various farm inputs such as fertilizers. They might also help the sale of trucks and lower-fuel-efficiency vehicles … though I would still take a Tesla for Christmas if anyone is still shopping for me.

All in all, 2014 was an exciting, challenging, and opportunity-rich year as most of them are. I am looking forward to 2015 with anticipation: exciting happenings and changes at DISTek, new technologies that are set for release, and the possibility of more end-of-the-year retroactive tax breaks. From us at DISTek to those of you reading – customers, partners, suppliers, and general web surfers – we thank you for reading our blog this year, wish you success in the upcoming year, and urge you to hold on tight as we continue to rocket down this technology roller-coaster with all its flips, lurches, dips, and rolls.