The Dig

On today's episode of The Dig, I am joined by Joe Wharton, director of marketing for Massey Ferguson, a global brand in agricultural machinery known for producing tractors, combine harvesters, balers, and other farm equipment. It is part of AGCO Corporation, a major agricultural equipment manufacturer and is headquartered in Duluth, Georgia, along with its parent company.
Hey, Johnnie. It's nice to meet you. And yeah, like you said, I'm Joe Wharton with Massey Ferguson and AGCO brand. I've been with AGCO about 15 years. Most recently, as as you mentioned, the Director of Marketing here for the last couple of years. So excited to have a chance to talk today.
Fantastic. No, great to talk with you. And I think it's an important time in the the ag and ag equipment industry. And so, you know, it's a great time to discuss what's going on at Mass Ferguson and talk about what's happening in the industry. And I think you know, best place to start is kind of, what are the trends that you guys are seeing in equipment financing, and maybe, how have the buyer behaviors sort of evolved, especially as this year's gone around, I know there's been issues with, you know, farm performance and with tariffs and so many other things. And so how is that sort of shaped? What's happening on on the customer side and on the, let's say, the financing side? Yeah,
there's no doubt that right now that the industry is dynamic is the nicest way I'll put it. You know, we've, we've got a lot of uncertainty in the industry. And, you know, I think farmers and people in the ag industry were used to a level of uncertainty, but, you know, this year, it seems to be quite high, but it doesn't really change, in my opinion, the fact that customers really just want smarter investments, not just lower prices. And so kind of what we're seeing is this includes a focus on, you know, cost per hour, cost per acre, performance, and then looking at total life cycle value. And so you've got a lot of customers asking, what's, you know, what's this machine going to deliver for my operation long term from a return on investment perspective? But the industry itself, there's no doubt that net farm income continues to be tight. And so you've got these multiple years of inflationary pressure, you've got elevated input costs, you've got high interest rates and then tariff uncertainty that's stressing farmer cash flow. And these, these tighter cash flows, you know, when we when we start thinking about, how is it affecting financing? It's really driven, you know, a pretty high uptick in leasing activity recently, especially when you talk about mid range and high horsepower tractors reaching kind of its highest levels in the last five years. So for Massey, you know, about five years ago, we were leasing only about, you know, 15, 16% of the total equipment we sell. And now into 2025, you're up at almost 30% and the industry is actually higher than that, the industry is almost up at 40% and so some of the growth for Massey that we've seen in leasing is is industry based and uncertainty based, and then a lot of it, of the uptick has come in the fact that we've had our residual values continue to improve so kind of as a function of our increased focus on farmers and the quality they require and making sure they have a positive experience, the residual values over time with the Massey high horsepower product have climbed, and as a positive consequence and outcome, we can now offer farmers some of the most aggressive lease deals in the industry, and so we've seen that segment grow a lot With all the uncertainty I mentioned before, but kind of allowing our farming customers to maybe de risk themselves in the near term by having that kind of fixed cost of ownership or fixed payments there. And you know, so that that's in the large ag segment. And then there's some differentiation in the rural lifestyle segment, if you'd be interested in hearing a little about that.
Sure. Yeah, happy to I think it's important, especially, you know, with do, and you're talking about the equipment side, right? Yeah, the, there's a lot of farmers operating the high space, but there are farmers in those smaller equipment spaces that still need products, still use product, and they're still considered commercial entities.
Yeah, certainly. So, you know, we have a mix of both. So kind of the the leasing trends I was talking about previously is in the large, AG, kind of commercial operation. And, you know, we like to think about the Massey business. We kind of have a tractor and a portfolio that could address every type of customer and rural lifestyle customers. They are also. Are beginning to explore, I think, financing options, not only earlier in their research process, but there's a growing desire there for flexibility as well. So it's, you know, seasonal payments, extended warranties, or even bundled with service plans. So some of the things that historically we've seen in that large x segment seem to be creeping into, you know, creeping into the rural lifestyle segment as well. And so we just want to make sure that we have the flexible and creative financing options to address the entire portfolio and all the different customer types we do see. Rural lifestyle buyers are kind of financing at higher spec machines, the machines that offer kind of professional grade controls with beginner friendly usability, is how we like to talk about it. You know, we're able to provide kind of a boost in efficiency, boost in fuel savings, and if we can do that on the back of some creative financing options, we really can drive kind of a winning return on investment for our buyers. And that's that's all we like to think about. From a Massey Ferguson perspective, it's, you know, we're talking about financing. But even from an engineering perspective, everything starts with what kind of return on investment can we provide the farmer? Ultimately, at the end of the day, they're buying a tool for their operation, and they need to get an output from that financial output, and so we're trying to position ourselves at offering the equipment at the right price with the right financing tools to give the customer that ROI. So that's our goal, and we're working really hard to do that.
Gotcha one thing I'd be real misfitting asked about. You talked about how the rural lifestyle segment has started to take on some of those flexible finance from the commercial, AG, was there just anything in particular that started that? Or is that just over time, just how the industry has kind of moved?
I think it's over time the industry's moved that way. I think, you know, I think some of the inflationary pressure has has caused that as well, right as as prices of everything have risen, I think the customers have had to get a little bit more savvy. And I think generally that industry understands creative financing options, maybe a little bit more than they did in the past. So when you're talking about maybe balloon payments or seasonal payments, even packaging things like genuine care or ag co protection, you know, service and maintenance into your financing options are things that that, even in the real lifestyle segment, people are wanting to kind of control their total cost of ownership, And they do that by purchasing and financing some of those flexible options up front.
Got you know that that makes a ton of sense. And yeah, this sounds like this. There's this wide pool of customers that you guys are serving. And you know, when you're looking at such a a big group with with the rural lifestyle and with commercial ag and their different needs and their different demands, it just in that, in the agriculture industry as a whole, you know, how do you guys adjust and tailor the approach to kind of meet those different needs, hit them where they are, get them the exact financing stuff they need, or even even the products they need, just because, you know, everyone's different to the some of the points you made earlier, and it's just getting exactly what they need with all The different flexible financing options, because you've talked about several that are, that are options for them, and, you know, each customer is going to be a little different. Yes, it's, it's the really
exciting part of being, of working with Massey Ferguson, is the opportunity to work with, you know, the entire range of buyers, right from, you know, new landowners with little ag experience to kind of all the way to the other end of the spectrum, which is multi generational producers that are managing tight planning windows, tight harvest windows, high acres demands. And so kind of each of those groups, in my opinion, expects something different, and we have to have the flexibility to think about those business model different, and those customer needs differently. And so kind of new buyers want machines that are, in my mind, at least simple to operate, but flexible enough to grow with them. And you know, so when we think about the seaweed, I think some of the models we offer, the 1m and the one GC, the garden compact, we're giving customers intuitive controls, shuttle shifts, mid mounted PTO options that can handle everything from a garden chore up to some small scale livestock support. And then when you start thinking about, on the other hand, large acreage buyers, their focus is primarily around like performance, uptime, compatibility with precision implements and technology. And so they're wanting a little bit different equipment, equipment that's smart, that's powerful, easy to maintain, um, and so we have a high horsepower range, like the 9s and the 8s series have been updated to reflect that, with some technology, uh, capabilities. Um. Um, you know, and then I guess, to really directly answer your question, we just really have to tailor our marketing, our product training and our financing options to do what's best for the customer to satisfy that need. And so Matthew Ferguson, what we like to do is, it's a pretty simple so you had to do it's listen first match later. Every bottle is kind of backed by the same commitment of reliability, comfort and support. And so ultimately, we want to just make sure that every customer, regardless of the new landowner, up to a production and customer, we're helping them kind of achieve better outcomes in their operation. So that's agronomic and economic outcomes kind of no matter the segment. Those are the two guiding principles. Is we want to help our customers to achieve better agronomic and or economic outcomes.
Gotcha, that tracks, you know, especially to your point about matching the product to the customer. I know there's a joke I heard that you need a computer science degree to operate a tractor now, so just the ability to sort of adjust to where your customers are at and exactly what they can manage from a product standpoint of what's going to best fit their needs. I think that makes a ton of sense. Yeah,
one of the pillars at Massey is is being straightforward and accessible and so kind of, you know, those are the the brand terms. But really, what we're trying to talk about is, how quickly can you learn to be efficient on your machine? You know, labor in the production ag climate is, is a continuing stressor for a farmer. You know, how do we source and find affordable labor, and what's the skill set of that labor today, and the capabilities of that labor today different than it was maybe a decade ago? And so to your point, as technology increases and skilled labor shrinks, what we have to do is provide a solution to a farmer that's straightforward, simple to operate, so that the farmer, or as laborer, can get consistent results. And so we design all of our equipment with that in mind to try to solve that growing concern for the farmer.
Gotcha, I think kind of building off that, you know, what's one lesson messy Ferguson has learned that might help others kind of navigate the industry with, you know, whether it's the labor side or the economic side, the agronomic side, like, what? What's one big lesson that you feel like you guys have learned that can translate and help the
industry. I think the thing that we've we've been learning, and continue to learn so we've been on a journey with this farmer first mentality. It's, it's, really know your customer segments inside and out, know your customer inside and out, understand their priorities, their pain points, and understand what value really means to them. So for a long time, for a tractor manufacturer, any any manufacturer, it's, it's easy to kind of get obsessed with the product. And, you know, we, every year we put out a better version of the product, right? You can fall into that trap. And really, what we've tried to do, from a farmer first perspective, over the course of the last four or five years, with leadership of our CEO, Eric hansodia, in that period of time, is from the ground up, understand the farmers priorities, pain points, and what value they're trying to achieve, and then design products that address those needs, as opposed to just kind of improve slightly improving your track year over year. It's improve the value that the farmer is seeing every year, because, you know, customers aren't just buying machines, they're buying solutions to their specific challenges. And you know, your sales approach to include financing should reflect that directly as you talk as since we're talking about equipment financing, I think creative financing, I mentioned it earlier, is increasingly important. It's really an obligation for AGCO and for Massey Ferguson to achieve our farmer first goals, and so that's why we've seen such a shift towards flexible and customizable programs. So it's creative financing solutions that allow us to best support the farmer and their equipment needs. So that's adjusting trade cycles to keep up with technology and efficiency improvements that the industry has seen. That's utilizing things like interest waivers, equity builders, short term leases there's addressing that total cost of ownership I mentioned earlier, which is packaging things with extended warranties, genuine care, which is service contracts, is helping customers address cash flow considerations. So longer terms, lower payments, pro put leases, balloon payments. And then there's the, you know, the levers we have to help customers maintain. Fleets, which is Echo, plus Parts and Service financing. Really, it's just about having a full toolbox of solutions. It's really needed to support our customers, to help them navigate this ever changing industry and economy. And so it's just really, how do we have a full toolbox and menu that addresses all the different types of customers and their different needs across North America.
Get to know that, that full toolbox aspect, I know, especially kind of bringing up all the things you guys have done and how you're addressing the total cost of ownership, right, the the financing element that goes into that right, finding a a way to address service and support in kind of the the current landscape, especially going beyond sale, right? That's still a to your point. It's still a finance component, right? That's still fits in with what they're doing. And so just as you guys have sort of seen that change in the industry, right? How have you sort of found ways to focus on that? The best time you talked about the whole toolbox, is there any tools in particular that have just been more beneficial resonated better, especially with the commercial ag segment or with the rural lifestyle segment, that just these tools that fit better for them?
Yeah, so, you know, on the service piece, right? You know, I think the understanding is that, you know, loyalty kind of follows service, not just specs, and so that's for lenders and dealers, but it just helps kind of create this seamless ownership experience, and that's where you get the loyalty from. And so, you know, part of that toolbox is making sure that we're partnering with our dealers and and customers, making sure that we're offering strong post sales support. And so the primary way we do that is, you know, through some of those maintaining fleets programs add CO plus, which is, you know, Parts and Service financing option we have for our customers is one way to do it, and then it's also within our financing or lease payments, including genuine care. Again, I'll mention it a second time. It's the way we brand service packages and then extended warranty, which is branded ad code protection. We'll include all those in lease or finance payments. And so again, the customer is able to control his total cost. I think, for rural lifestyle customers, it comes in the form of security, understanding, maybe, hey, this is my, my first equipment purchase on a piece of small land. And so what's my total cost going to be for this type of investment. And then, most importantly, I think, for a commercial producer, some of those commercial producers think about a tractor as an input cost, and so they can control that input, the full total cost of input, like they would fertilize your seed or anything else. And so we just like to make sure that we have the financing options to include all those things into the payments.
Okay? Now that, uh, makes sense. I think, with all that in mind, one of the other things I want to to get into is, you know, as people try to address the industry and figure out exactly how they're going to find success, right, given everything you've experienced in your career, and obviously I'm here as a director of marketing. You know, what advice would you give to a dealer or a lender trying to stay ahead in today's market and to kind of navigate where things are right now and start to move toward the future?
I think it's, you know, so again, I think it's back to understanding your unique customer, right? I mean, that's, that's really the advice is, is understanding the customer and making sure that you're addressing those needs. And so I don't want to read, I'm going to find myself maybe rehashing some of the stuff we just talked about, if I'm not careful. But you know, maybe another way to look at it is, you know, the importance of simplicity. Maybe is something that is a lesson we've learned at Massey Ferguson, clear product value, intuitive operations, a really straightforward buying process resonates across all customer types. So oftentimes, overspeed, complicated equipment to your point earlier, can create more hesitation than excitement. And so Massey Ferguson being straightforward, not only in its machine offering, but being straightforward in its financing options as well is really important to us. Another thing to think about. You know, farmers are resilient and forward thinking. So when you show up with solutions that truly make their work easier and more efficient, you know, you can garner that loyalty as well. And I think that likely extends outside of the agricultural industry as well. But you know, if. Course, I'm a bit one track mind when we think about these types of things, and it's the last piece I'll offer is, you know, you know, relationships still matter. So our most loyal customers are successful dealers are those that are grounded in mutual trust with their customers and then their dealer and their their OEM. And so it comes with that mutual trust, which is associated with long term service, and customers, I think, Value Trust over trends and dealers who do a good job embodying this, and and financers that do a good job embodying this, especially during times of uncertainty supply chain, or tariff for pricing fluctuations, those are the ones that can build lasting relationships. I think, guys, you know, the
relationship thing is definitely something that I hear all the time in the industry, and it translates dealer, lender, manufacturer, all up and down the food chain. And I, you know, I think it's great to hear you guys saying that as well. One last thing I wanted to get into, you know, looking ahead, what's something that you're excited about? What's a trend, initiative, something going on you guys, internally or even externally, about where the industry is heading?
Yeah, I mean, I think at
Massey first, and we're really excited about how data and smart technology are becoming more accessible, not just for large scale farms, but also for small and mid sized operations. Things like sustainability and efficiency are driving this innovation across our entire portfolio, with things like fuel saving engines, soil conscious designs and precision ready tools. So it's kind of this return to customer first simplicity. It's not all about the flash related to the data and smart technology, but it's about the functionality. That's where Massey really shines, you know, allowing the customer or farmer to pay for the options that they find a return on investment with, and not package everything together. Where to get the option you want, you have to pay for a lot of extras. And I guess most of all, at Massey, we're just excited about empowering the next generation rural landowners, first time farmers, family operations that see Massey Ferguson not only as a transaction, but a partner to grow with. You know, so whether they're on five acres or 5000 they're bringing that passion, creativity and purpose, and we're we're proud to be the brand that grows with them, and just driving that achieve better. Mindset that I mentioned earlier means more than farming better. It means living better, building smarter, and getting the most out of every acre. So again, it's it's just, it's something to be really excited about. We finally have a portfolio that I'm confident can drive those better agronomic and economic outcomes for our customers, and that makes our job as marketers and sales salesmen so much easier when we know that we've we've got the product that can help our customers out solve those, those problems for them.