Deere and Company announced it has tightened conditions for equipment leasing as lower farm incomes are leading farmers to lease rather than purchase equipment.
Dow Jones reports that the fall in worldwide commodity prices has eaten into Deere’s sales and profits for nine straight quarters. The farm and construction machinery market slump has impacted Deere’s customer finance arm. Leases now account for a growing volume of business, forcing the company to tighten the terms for renting equipment that has rapidly depreciated in value. Leases make up a quarter of the company’s financing deals, compared with 15 percent in recent years. As Deere has stepped up its leasing activity in recent years, its finance unit and dealers are left with more used equipment as producers walk away when their lease expires. Deere said it’s restructuring leases to share more of the risk of further declines with its dealers.