Help power Marketplace this winter when you support the show today. Donate Now!

Farm equipment benefiting from high crops sales

Stacey Vanek Smith Nov 25, 2010
HTML EMBED:
COPY
An Iowa farmer pulls a corn planter behind his John Deere tractor. With the increase in demand for alternative energy, some farmers have elected to switch to growing corn to produce more profitable ethanol fuel. Mark Hirsch/Getty Images

Farm equipment benefiting from high crops sales

Stacey Vanek Smith Nov 25, 2010
An Iowa farmer pulls a corn planter behind his John Deere tractor. With the increase in demand for alternative energy, some farmers have elected to switch to growing corn to produce more profitable ethanol fuel. Mark Hirsch/Getty Images
HTML EMBED:
COPY

TEXT OF STORY

JEREMY HOBSON: Later this morning John Deere reports quarterly earnings. The company, which is the largest maker of farm equipment in the world, has been thriving this year.

Marketplace’s Stacey Vanek Smith takes a look at why.


Stacey Vanek Smith: 2010 has been a very good year for farmers. And a very good year for makers of farm equipment — sales are up about 25 percent from a year ago. Commodities analyst Dan Manternach says farmers are springing for new tractors because they’re getting more money for their crops.

Dan Manternach: That is truly a perfect storm, where you’ve got rising inflationary fears, plus a good old-fashioned squeeze on supply and demand.

The supply and demand part is coming from China and India, which are getting wealthier and importing more food. The inflation part is coming from investors, who are worried about the dollar losing value. Normally they’d buy gold, but Manternach says gold has gotten so expensive, those investors are moving to other commodities, like food.

Manternach: Right now wheat is a better buy than gold just as a store of value. Because governments can’t print more wheat either, they can’t print more corn.

Investors maybe hurt if food prices reverse, but makers of farm equipment could be safe as long as the global demand for food keeps growing.

I’m Stacey Vanek Smith for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.