According to a Wall Street Journal report, Deere & Co. will tighten conditions for its equipment leases as farming customers continue to show a preference for leasing machinery due to the decline in the farming industry.

In its latest financial report for the three-month period ended April 30, 2016, Deere noted its operating lease portfolio of $5,456 million was up 30% or $1,261 million compared to $4,195 million a year earlier, while financing receivables were down from $24,737 million to $23,415 million at the end of the most recent quarter.

The company noted its operating profit for Q2/16 was $160 million, down 40% from $265 million a year earlier and said lower results were primarily due to higher losses on lease residual values, less favorable financing spreads and higher provision for credit losses.

According to the Journal report, the farm and construction machinery market decline has impacted Deere’s customer-finance unit, with leases now accounting for a larger volume. This in turn, says the Journal, has forced Deere to tighten lease terms as equipment rapidly depreciates in value.

The Journal noted that Deere has increased its leasing activity in recent quarters, but its finance unit and dealers have been left with more used equipment as customers have declined extensions or the purchase option when leases expire.