Farm Equipment Distributors

The US farm equipment distribution industry includes about 1,400 wholesalers and 5,000 dealers with combined annual revenue of $40 billion. No major companies dominate. The industry is fragmented: the 50 largest distributors hold about 35 percent of the market.

COMPETITIVE LANDSCAPE

Demand is driven by the health of the farming sector, which is tied to crop prices. The profitability of individual companies depends on good merchandising and efficient operations. Large distributors have few economies of scale but can offer customers a wider range of products. Small distributors can compete successfully by holding exclusive territory rights to popular products. The industry is capital-intensive: average annual sales per employee are about $350,000.

Large manufacturers of farm equipment, like Deere and AGCO, mainly bypass wholesalers and sell directly to networks of local dealers.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products include farm tractors, lawn mowers, irrigation equipment, and harvesting machinery. Tractors account for about 15 percent of industry revenue; lawn mowers, irrigation equipment, and harvesters for about 8 percent each. Other products include planting and cultivating machinery, spraying equipment, dairy machinery, snowplows, and snow-blowers.

A large number of products are tractor attachments. About 15 percent of industry revenue comes from sales of used equipment. Many dealers also have a large parts and service business. In addition to equipment and machinery, many distributors also sell other farm or garden products and supplies, such as seeds, feed, fertilizers, and pesticides. Dealers typically stock a variety ...