Over the past 25 years, the majority of land farmed in the Corn Belt has flipped from operations with less than 500 acres to those with over 1000 acres. The implication of this trend towards the larger farm operation managing a greater portion of production area is simultaneously being matched by the signification of smaller operations, which still account for > 80% of the farming operations. Nearly 50% of the farms less than 500 acres are smaller than 50 acres, and are frequently categorized as lifestyle farmers. The effects of this increasingly polarized customer base is having a dramatic impact on equipment providers this year. It is a key factor in why big tractor and harvester sales can be down by as much as 40% and small tractor sales are still realizing year over year growth!
The challenge for equipment providers is to best serve and market to the differing needs for each of these divergent customer segments. The larger farmer is looking for performance out of their equipment to cover maximum acres in a targeted farming window with minimized cost and increased precision.
Meanwhile, those in the lifestyle farmer segment want a basic range of functionality in a comfortable environment at minimized cost.
The larger farmer is looking for service and support characteristics of where he buys, while the lifestyle farmer is looking for more of a retail experience similar to how they make most other purchases. Providers with a footprint in both markets are feeling the pain of “doing the splits”! Appropriately scaled product and marketing strategies are needed now more than ever to effectively serve the large and small farm operation segments.
Both large and small customer segments present opportunities for growth for equipment providers. The cyclical nature of farming forces manufacturers and dealers to look for the segments of customers with the most opportunity in the current stage of the cycle, and to find ways to connect and stay connected with those customers.
Context’s proficiencies and knowledge in the equipment industry range from deep technical know-how on equipment functionality and precision technology integration, to strategic marketing and management training experience, to operational excellence in supply chain and channel distribution. The Context arsenal includes industry leaders and innovators who have served globally as vice-presidents, directors, and field employees of major equipment companies. We have the experience and expertise to credibly provide pragmatic, actionable solutions that are especially needed during times like these to focus equipment providers on their diverging customer base and best position for growth through the next turn in the commodity cycle.
Provided by Context Partner, Mark Nelson; Context Senior Associate, Doug Griffin; and Context Senior Associate, Kevin Monk. For further information contact firstname.lastname@example.org.