The Rural Voice, 1981-12, Page 127.3
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Farm and Commercia
Ken Janmaat, Seaforth
527-1858 after six
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the traditional buyer of this type of
equipment, the up and coming young
farmer who is expanding his operation. is
today an endangered species."
The president of ORFEDA, Fred Lobb,
says if the farmer is in good shape
financially, the dealers have nothing to
worry about. He thinks the figure of six
Huron County dealers going out of
business is based on a study by Robert
Lanning, an equipment distributor with a
wide knowledge of dealer problems. He
predicts a 30 per cent decrease in
dealerships across Ontario, not
necessarily Huron that will lose 30 per
cent of its twenty-two dealers.
Lanning's predictions are based on the
high interest rate and a decline in
purchasing by farmers.
Lobb sees a transfer of debt from new to
old machinery. He found offers by some
dealers "unbelievable". Some are willing
to trade for a very small margin. "Some
pay as much for an older two-year old
tractor as others sell a new one for," he
says.
He says most dealers are decreasing
their inventories as much as possible,
"but there is no profit on deals until the
used equipment is sold. If, for example.
we sell a piece of machinery for $50,000,
and take in a trade-in for S30,000 we have
$20,000 in hand. Add to this $1,000 for
service and warranties and we must sell
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PG 10 THE RURAL VOICE/DECEMBER 1981
the used equipment for $21,000 just to
break even. Before this problem time we
were looking at a few thousand above this.
"But now we look in the ads and find our
competitor offering a similar piece of
equipment for 521,500. We have no choice
but to sell at that price which gives us
$500. This amount is easily eaten up by
interest charges."
Lobb has found that most companies
give good support to their dealers.
However. there are some who are pushing
their dealers. These companies don't have
much in the way of reserves themselves.
But Lobb has nothing but praise for
most companies. They give interest-free
loans of up to eleven months to farmers.
Others. like New Holland. who used to be
quite hardnosed. now give considerable
more time for payment (at a price).
The president of the dealers' as-
sociation doesn't believe there is much
poor management in the farm equipment
business. He thinks a lot of people got
caught expanding at the wrong time. No
one foresaw the tremendous rise in
interest rates.
Lobb said he knew the high prices and
high volume sales couldn't go on. but
nevertheless. most dealers increased their
inventory. Many companies were pushing
hard in the good times.
Lobb admits he too got caught in the
sales talk. A few years ago his company
sold twenty-four Mixall manure
spreaders, with incentives provided by the
company. When the incentives were off
the next year, Lobb ordered another six.
The sales representative chided him for
his lack of confidence and convinced him
to buy twelve. still only half of the previous
year's sales. But today there are still six of
these spreaders on the lot, gulping
interest. "Is that bad planning. bad
management?" asks Lobb.
He finds there is a big difference in
different parts of the province. As late as
last May. a number of executives with his
association reported the best year they
ever had, but they are not the norm.
His company, on the southern edge of
Clinton, made many more sales this year
south of Clinton than further north. He
finds the cattle country worst, followed
closely by hog -producing areas.
Lobb refuses .to be negative. This is
reflected in the ORFEDA brief to the OFA
Task Force which says: "A vibrant, strong
and healthy Agricultural Industry could
lead this country out of its despondency.
We have available land and resources
unequalled anywhere, but we have to
restore the confidence of the farmer that
he is involved in one of the most basic and
necessary occupations and see that he is
rewarded accordingly."
There may be no other alternative.