According to the Wall Street Journal, Deere may be hurting itself in the long run by weakening its own market for equipment sales by increasing its financing offerings.
Along with giving out more short-term credit for seeds, fertilizer and other farm supplies, Deere has seen an increase in equipment leasing, allowing it to remain largely immune to the current downturn in the farming industry, the Journal said.
The Journal also noted that Deere’s increased equipment leasing and financing is only masking its plummeting equipment sales, specifically stating that net income from equipment sales fell 57% for the company from 2013 to 2016, compared to just a 17% drop on the financing side.
Still, the farming industry and the financial institutions that serve it have been feeling a continued drag since a peak in 2015. According to the Federal Reserve Bank of Kansas City, non-real estate farm loans in Q2/17 actually increased 4% but overall it has slowed in step with noticeable declines in farm income since 2015.
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