A recent study by Rabobank suggests the agriculture machinery industry could be headed for consolidation. DTN reports the study suggests we are about to see manufacturers merge, buy smaller companies and/or expand their offerings to include product lines not usually found on your local tractor dealer’s lot. The report, titled Contraction Today, Consolidation Tomorrow, says “consolidation in any sector or industry is a logical, natural response to difficult operating conditions or declining growth.” Lower commodity markets have led to less farmer spending.
The Rabobank report concludes that the downturn in equipment sales is both severe and persistent and that it will result in a reshaping of the industry. The report suggests three scenarios, being mergers, acquisitions and branching out into new product lines.