John Deere Cuts 600 Jobs Amid Agricultural Economic Slump: How Commodity Cycles and Reduced Farmer Spending Are Impacting the Industry
John Deere has announced it will cut approximately 600 jobs at its factories in the Midwest this week. The company, known for its tractors, has experienced a sales slump this year, much like its competitors in the industry. As one of the world’s largest manufacturers of farm equipment, John Deere is often considered a barometer for the agricultural economy. So what is causing this downturn?
According to Pat Westhoff, an agricultural economist at the University of Missouri, farmers have less money to spend this year due to the decrease in crop prices. He noted that while there are different stories for each crop, there are common themes affecting the industry. Factors such as the war in Ukraine, extreme weather conditions impacting some commodities and high demand following the pandemic have influenced the market.
Westhoff explained that there have been increases in global production since then, resulting in prices returning to levels seen before the spike. Kristen Owen, an analyst at Oppenheimer, noted that commodity cycles typically follow a pattern of three years of growth followed by three years of decline. She added that many farmers had already purchased necessary farm equipment during the prosperous times.
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