MIDWEST-SOUTHEASTERN EQUIPMENT DEALERS ASSOCIATION Serving farm, outdoor power, farmstead mechanization and industrial dealers MARCH THE INSIDER 2021

MAINSTREET INDEX ROCKETS TO RECORD HIGH RURAL ECONOMIES EXPAND

or the fifth time in the past six months, the Creighton University Rural Mainstreet Index climbed above Fgrowth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region, the index increased to its highest level since the survey launched in January 2006.

The overall index for March soared to a record 71.9 from February’s solid 53.8. The index ranges between 0 and 100 with a reading of 50 representing growth neutral.

The March farm equipment-sales index rose to 63.5, its highest reading since February 2013 and an improvement from the 62.7 reading in February.

About 69 percent of bank CEOs said that their local economy was expanding.

“Sharp gains in grain prices, federal farm support, and the Federal Reserve’s record-low interest rates have underpinned the Rural Mainstreet Economy. Only 3.1 percent of bank CEOs indicated economic conditions worsened from the previous month. Even so, current rural -+economic activity remains below pre-pandemic levels,” said Ernie Goss, chair of regional economics at Creighton University.

The new hiring index rocketed to 72.9 from 51.9 in February. Despite recent solid job gains for the region, data from the U.S. Bureau of Labor Statistics indicate that nonfarm employment levels for the Rural Mainstreet economy are down by 218,600 (non-seasonally adjusted), or 5 percent, compared to pre- COVID-19 levels.

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530 Wall Street, Ste. 100, Madison, 53718 (800) 236-6332 The confidence index, which reflects bank CEO expectations for the economy six months out, climbed to a healthy 76.7 and up from 64. U.S. AGRICULTURAL EXPORTS PROJECTED TO STRENGTHEN IN COMING DECADE

U.S. agricultural exports in fiscal year 2021 are expected to increase to $152 billion, up 12% from the previous year, and nearing the record set in 2014. Through 2030, exports are expected to grow 1.9% annually as the world’s economies rebound from the COVID-19 pandemic, resuming an expansion near the pre-pandemic growth path. Key to these trade projections are the outlook for the rebound and the longer-term resumption of robust economic growth in , Africa, the Middle East, and , important developing country markets where food import demand is most sensitive to rising incomes.

Rising 2021 export values are also supported by higher near-term prices for a range of commodities, including soybeans, cotton, wheat, and meat products. The near-term price trend is anticipated to be followed by generally stable prices through 2030. High-value products, a category that includes horticultural and animal products, as well as processed and semi-processed grains and oilseeds, accounted for 69% of U.S. agricultural exports in 2020. That share is expected to drop to 64% in 2021 as export values of bulk commodities such as soybeans, cotton, and wheat surge. Exports of high-value agricultural products are expected to resume outpacing the growth in bulk commodities in fiscal years 2022 through 2030, while foreign competition is projected to continue to limit growth in U.S. bulk commodity exports over that same time period.

U.S. FARMERS ARE PLANTING MORE ROW CROPS THAN EVER

U.S. farmers are expected to plant a record amount of acres this year to take advantage of high agricultural prices after years of tough market conditions. The USDA projects farmers will plant 182 million acres of corn and soybeans in 2021. That is an all-time high and up roughly eight million acres from last year. Driving the jump is soybean acreage, which is expected to rise nearly seven million acres from last year.

Page 2 “If realized, this would approach the highest planted soybean area figure on record,” said Mac Marshall, vice president of market intelligence for the United Soybean Board. That record dates back to 2017, when farmers planted 90.2 million acres of soybeans, according to USDA data. Behind the increase lies a sharp rise in soybean prices over the past eight months—67 percent since June 1. Prices have been lifted by surging demand for U.S. soybeans in China, where the country continues to rebuild a hog herd that was decimated by African swine fever in 2019. As of late February, Chinese buyers had purchased 35.9 million tons of U.S. soybeans since the start of September— up nearly 24 million tons from the same period a year earlier. “The Chinese are buying even as prices are rising,” said Seth Meyer, chief economist for the USDA. Meyer said that he expects China’s demand for U.S. products to stay strong throughout 2021.

The trend is one indicator among many that financial outlook for agriculture is good in spite of facing a year in which farmers will experience a 45 percent drop in what they will receive in direct government payments compared to last year. The USDA also cautions that its outlook for stronger crop acreage in 2021 is predicated largely on favorable weather conditions in the Corn Belt, which some forecasters do not expect. That is because of La Niña, a weather phenomenon characterized by cooler-than-normal waters in the Pacific Ocean, which cause dry weather in parts of the globe and heavy rain in others. Source: Wall Street Journal FARMERS REMAIN COMMITTED TO BIG PURCHASES

February’s Ag Economy Barometer reading changed little compared to January. The subcategory that measures farmers’ willingness to make big purchases drifted slightly downward but remains impressively high. The overall index for February was 165. That compares to 167 in January.

The Ag Economy Barometer assesses producer sentiment through telephone surveys of 400 farmers. It monitors their opinions on current economic conditions and expectations for the future. As has been the case for the past months, farmers feel better about current circumstances but waver in their hopes for what’s ahead.

February’s Current Conditions Index value of 200 is near its all-time high. The Index of Future Expectations, however, dipped to 148. This marked the third time in the last four months that the Future Expectations Index declined, leaving it 20 percent below its October peak.

The Farm Capital Investment Index, which assesses farmers’ willingness to make significant investments on the farm, fell to 88 in February compared to 93 in December and January. Still, the index in February stood at its third-highest reading since data collection began in 2015 and was 16 points higher than before the pandemic began.

Farmers in February were a bit less optimistic regarding their upcoming farm machinery purchase plans than they were in December and January. The percentage of producers who intend to increase their machinery purchases in the upcoming year dipped to 9 percent. It was 15 percent the prior two months. In February 2020, in the days before COVID-19 dominated our lives, the overall Ag Economy Barometer was 168.

The Insider - March 2021 USE YOUR WEBSITE TO BUILD YOUR WORKFORCE

In spite of all that 2020 presented, companies reported that the chief threat to their profitability was an inability to attract a skilled workforce. Some companies have employed a series of creative strategies to find the right people, we offer you these tips on turning your company’s website into a powerful recruitment tool.

STEP ONE: CREATE A CAREERS PAGE Careers pages are becoming increasingly important as a hiring tool. They account for 94.1 percent more hires than they did four years ago. A stagnant careers page with dated job postings, broken links, old news, and outdated content can result in good candidates leaving your website.

Kristine Sexter, suggests companies market job opportunities on their website with the same focus they bring to marketing their products. It is an entry point to the opportunities and the culture. Consider too that everyone who might look at the careers page, and strive to design it as a resource in which they will see themselves as a fit regardless of their gender, experience level, or ethnicity.

STEP TWO: MAKE IT MOBILE-FRIENDLY If your careers pages are not mobile-friendly, you are missing qualified candidates. Today, 77 percent of Americans own a smartphone, edging higher than those with a desktop computer. Job seekers use mobile devices, and companies can recruit more competitively when they accommodate that preference. In the manufacturing industry alone, 53.8 percent of job seekers apply on a mobile device.

STEP THREE: SIMPLIFY Job seekers are committed to finding a job but are limited by time. Sexter advises: “Do not bury, nor make it difficult, for right-fit talent to find a list of your current openings and apply for them.”

A hard-to-use application process will shape how applicants see you as an employer. They will not hesitate to abandon an application process that is difficult, especially if they have an alternative available. Provide a simple way for them to upload their resume.

Research suggests that reducing the time it takes to complete your application by 10 percent can increase your applicant pool by 2.3 percent for mobile job seekers.

STEP FOUR: SHOWCASE YOUR CULTURE Why should someone want to work for your company? Job seekers today want to know more about a company’s culture and reputation. You need more than a list of openings and responsibilities to hold their interest. Share your company story with compelling content that distinguishes your organization. Post photos of the company picnic, your employee of the month, longtime employees, retirement parties, etc. Highlight your employer brand with information on company growth, benefits, job training, and community stewardship—anything that might resonate with the people you want to attract.

“Employees feel greatly honored when they know that their achievements are placed prominently on the main website for the whole world to see,” Sexter says. And, “research shows that customers, and potential customers, greatly want to do business with companies who value their workforce.” Source: Amy Elise Humphries marketing coordinator at Driven Digital.

Page 4 The Insider - March 2021 NUMBER OF FARMS IN U.S. DECLINES IN 2020

The total number of farms in the United States is estimated at 2.019 million for 2020, down 4,400 farms from 2019, according to the February 2021 Farms and Land in Farms report issued by USDA’s National Agricultural Statistics Service. The number of farms in all sales classes declined. In 2020, 51.1% of all farms had less than $10,000 in sales and 81.5% of all farms had less than $100,000 in sales. In 2020, 7.4% of all farms had sales of $500,000 or more.

Total land in farms, at 896,600,000 acres, decreased 800,000 acres from 2019. States losing land in farms include: Indiana, 100,000 acres; Minnesota, 100,000 acres; Missouri, 100,000 acres, and Texas, 500,000 acres. All other states held steady.

The biggest change for 2020 is that producers in Sales Class $10,000 - $99,999 operated 550,000 fewer acres than in 2019, 186.550 million acres in 2020 compared to 187.100 million acres in 2019.

In 2020, 30.1% of all farmland was operated by farms with less than $100,000 in sales, while 40.8% of all farmland was operated by farms with sales of $500,000 or more. Those numbers nearly mirrored 2019 data. The average farm size for 2020 is 444 acres, unchanged from the previous year. Average farm size increased in the $250,000 - $499,999, $500,000-$999,999, and $1,000,000 or more sales classes and remained unchanged in all others.

Average farm size changed by an acre or two in several states. The largest farms are in Wyoming and Montana, with 2,147 and 2,156 acres, respectively. The smallest farms are in Rhode Island, at 55 acres; Connecticut and Massachusetts, at 69 acres, and New Jersey at 76.

The states with the greatest change in average farm size are North Dakota, moving from 1,506 acres in 2019 to 1,512 in 2020; and Nebraska, moving from 982 acres in 2019 to 987 in 2020.

Page 6 CONTAINER WOES: ‘BUSIEST PERIOD IN WORLD TRADE—EVER’

Shippers and freight forwarders criticized container lines in a new survey organized in Global Shippers’ Forum.

The industry association’s survey, carried out by MDS Transmodal, assesses eight key performance indicators (KPIs). “Importers and exporters around the world are paying record high shipping rates but receiving appalling levels of service reliability,” asserts Global Shippers’ Forum in the review.

For most of 2020 and thus far this year, the container market has been overheated due to extraordinary demand for moving goods from Asia to the U.S. or .

These factors have, among other things, led to shortages in empty containers, significant rate increases, and bottlenecks, especially in U.S. ports.

Looking at service as a KPI, the survey found that predictability dropped further in the fourth quarter 2020 and that an increasing number of ships did not reach their port of destination on time.

Of the survey’s eight KPIs, three are red, three yellow and only two green.

One of the red KPIs revealed that freight volumes on export routes from the Far East passed pre-pandemic levels in the fourth quarter 2020. This “was the busiest period in world trade, ever.”

The carriers also were criticized for “carrier costs and revenues” because of average price increases of 25 percent in unit revenues, even though ship costs have only increased moderately in the same period. “The recent extraordinary patterns of world trade have maxed-out the available capacity of the container shipping fleet, forcing rates to their current eye-watering levels,” said the forum’s secretary general. “On top of that, shippers are having to play guess-work on the arrival dates and times of their containers. Top rates for declining service levels—this cannot continue.”

The container majors acknowledge the problems but say they are not to blame for the bottlenecks in .

According to ONE chief executive Jeremy Nixon, Asia has long invested in its port infrastructure, building larger terminals and erecting more cranes. “The total productivity we see is generally 50 percent higher for ships when we call on ports in Asia, compared to North America,” Nixon said. Source: Shipping Watch

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TRAVEL COMEBACK? AIRPORTS REPORT BUSIEST DAYS IN MARCH 2020

Airline executives said they are starting to see a path out of the coronavirus pandemic as more passengers resume travel, following a series of days when airport volumes hit their highest levels in a year. The pandemic brought travel to a near halt a year ago. U.S. airlines carried 60 percent fewer passengers in 2020 than in 2019, bringing passenger traffic to the lowest level since the mid-1980s, according to the Bureau of Transportation Statistics.

Major U.S. airlines lost about $35 billion in 2020, but passenger numbers are climbing, and United and Delta said they could stop bleeding cash this month.

Airports screened nearly 1.5 million passengers on Friday. That compares to about 621,000 on the same weekday last year and 2.5 million in 2019, according to the Transportation Security Administration. The comparison offers a dramatic contrast in one year’s gain but brings into focus how far the industry has to go to be restored to 2019 levels.

Governments are offering both hopeful signs and caution.

The Centers for Disease Control and Prevention still advises against travel. Meanwhile, some states, including New York and Connecticut, are relaxing rules requiring that inbound travelers quarantine. State and local governments—even in heavily restrictive states such as Michigan and Illinois—are allowing restaurants to seat some patrons indoors again, which encourages travelers.

“There has been progressive growth in U.S. domestic bookings every week since the beginning of the year,” said Olivier Ponti, vice president of insights at ForwardKeys, a travel analytics company.

Airline executives have long said that travel demand would roar back once more people are vaccinated. While many international borders remain closed, airline executives said there are signs that pent-up demand is returning.

“Our last three weeks have been the best three weeks since the pandemic hit,” said American Airlines CEO Doug Parke. Source: The Wall Street Journal

The Insider - March 2021 Page 10 MANUFACTURER NEWS CNH INDUSTRIAL INVESTS IN ELECTRIC, AUTONOMOUS COMPANY

The partnership with Monarch Tractor will aid CNH’s developments in electrification, automation and other advanced technologies for off-road equipment.

CNH Industrial has announced it completed a minority investment in Monarch Tractor, a U.S.-based agriculture technology company. Monarch has developed an electric tractor platform which combines a fully-electric powertrain with autonomous technologies to help advance farming operations. According to CNH, the strategic partnership will be an important step toward further enhancing long-term sustainability and achieving zero-emissions farming.

“Monarch is pioneering tractor technology that incorporates electrification, autonomous use, and data management. These are three of the key pillars supporting sustainability, productivity, and profitability, both for CNH Industrial and for our farming customers,” said Scott Wine, Chief Executive Officer, CNH Industrial, in the company’s press release announcing the minority investment in Monarch. “We are incredibly excited to work with Monarch to develop and deploy their ground-breaking technology ecosystem, which we believe has applicability across our entire Off-Road business. This partnership underscores our commitment to rapidly improving our alternative propulsion and precision farming portfolio, while extending our world- leading sustainability credentials.”

Electric, autonomous tractor to improve farming efficiency

Monarch introduced its fully electric, autonomous tractor to the market in December 2020. It combines electrification, automation, machine learning and data analysis onto a single machine. The intent is to help farmers not only reduce their emissions but also improve their operations.

Data collection and analysis will help farmers better manage their operations by providing them with more information on their crops, how they are working in the fields, as well as machine performance. Automation will help to make working more productive while also helping overcome labor challenges currently facing the industry. Because it is not necessary to have an operator on the machine, fewer workers are required and those who are working on the farm can focus on other tasks while the tractor does its work.

MACDON EXPANDS IN WINNEPEG

MacDon is adding more than 300 jobs at its manufacturing plant in Winnipeg— an increase that will allow for the addition of a third shift.

Business development vice president Gene Fraser said the jobs will be in fabrication, machine shop, welding, painting and assembly.

The Insider - March 2021 Fraser said the global market for new is good, and there’s pent-up demand because there was not an abundance of used equipment available last fall. As a result, dealers are placing orders to fill the pipeline.

“Another factor that’s carrying more weight each year is the growing demand for implements in all categories capable of precision farming,” Fraser said. “There’s no point in developing a new machine if it doesn’t have that capability.” Source: The Western Producer

AG ‘LED THE WAY’ FOR ALAMO IN 2020

Alamo Group Inc. recently reported results for the quarter and year that ended Dec. 31. The company’s Agriculture Division “led the way” in a year that included record net sales.

For the fourth quarter, net sales in agriculture increased by 10.5 percent. Income from operations for the fourth quarter increased by 20.7 percent and 13.3 percent for the year. Alamo’s overall net sales for the full year increased by 4 percent. Because of a decline in industrial net sales in the fourth quarter, the company saw a decline of 3.8 percent in overall net sales for the quarter.

A report from Alamo Group said that the ag divison “continues to benefit from somewhat improved overall market conditions that started in the second half of 2020 and has resulted in the division finishing the year with a record level of backlog that bodes well for the 2021 outlook.” Backlog was up 35.6 percent compared to the end of 2019.

The company went on to say, however, that the division is “experiencing some operational issues related to the pandemic as well as longer lead times and cost inflation in purchased components.”

Alamo Group President and CEO Ron Robinson said this: “While operations have stabilized to a certain degree, new challenges continue to emerge. Lead times for input components are growing and we are seeing more inflationary pressures than we have seen for several years. The labor market is also tightening, particularly among certain skill sets such as engineers, mechanics and skilled shop floor workers. Transportation costs are rising and U.S. and international ports of entry are experiencing delays.” Net income for the quarter was down 15.5 percent. Net income for the full year was down 10 percent. The results for the fourth quarter and the full year included the effects of the acquisitions of Dutch Power, which was complete in March 2019, and Morbark, which was complete in October 2019.

KUBOTA AIMS TO CUT EMISSIONS BY 30 PERCENT

Kubota aims to reduce carbon emissions from its farming and construction equipment by 30 percent by 2030, joining the growing ranks of companies pushing to decrease their carbon footprint. Europe has imposed tough restrictions on diesel fuel typically used in agricultural and construction equipment. Kubota plans to offer electric versions of mini and compact used to maintain parks and similar tasks. The electric version of the equipment will be manufactured in or Germany starting in 2023.

Page 12 The company also intends to develop models powered by hydrogen fuel cells and make use of biofuels. Kubota aims to leverage both new power sources and fuels to “help resolve societal issues,” President Yuichi Kitao said. The goal is to achieve companywide carbon neutrality by 2050, he said. Source: Nikkei Asia

FARM TRACTOR SALES CONTINUE HEALTHY UNIT SALES GROWTH FOR FEBRUARY

U.S. farm tractor unit sales continue closing in on twelve straight months of growth, while Canada also continues a long growth streak according to the latest data from the Association of Equipment Manufacturers (AEM).

U.S. total farm tractor sales rose 41.1 percent in February compared to 2020 while U.S. self-propelled combine sales fell 18.8 percent. U.S. unit sales grew across almost all segments, with the biggest gains continuing in the small sub-40hp segment (gaining 46.8 percent). 100+hp took second place in February, up 45.7 percent, while the mid-range 40-100hp segment climbed 28 percent. Four-wheel-drive units slowed slightly, down 3.4 percent for the month.

For Canada, February monthly tractor and combine sales grew across all segments, with the sub-40hp segment leading the way, up 81.5 percent, 100+hp units and 4WD units grew big as well, both up nearly 58 percent. Total farm tractor sales grew healthily, as a result, 61.1 percent for February 2021 while combines delivered 23.3 percent more units.

“This growth streak has been going in the U.S. since April, and in Canada since June,” said Curt Blades, Senior Vice President of Ag Services at the Association of Equipment Manufacturers. “However, we’re closely watching the bigger units, which are more dependent on the strong commodity prices we’re experiencing right now, to see if this trend continues.”

The Insider - March 2021 OFFICERS & DIRECTORS OF THE ASSOCIATION

OFFICERS DIRECTORS 5330 Wall Street, Suite 100 CHAIRMAN Jeremy Brooks Jim McCartney Brooks Sales, Inc., Monroe, NC Madison, WI 53718 AC McCartney Farm Equipment, Durand, IL Mike Carley Ph: (608) 240-4700 VICE CHAIRMAN Birkey’s Farm Store, Champaign, IL Toll Free: 800-236-6332 Bubba Cooper Fax: (608) 240-2069 Delta Group, Greenville, MS Kevin Sommer www.mseda.com Service Motors Company, Dale, WI IMMEDIATE PAST CHAIRMAN John Maus Jared Nobbe Greenway Equipment, Morrilton, AR Sydenstricker Nobbe Partners, Waterloo, IL

PRESIDENT-CEO Ken Snow, Jr. Gary Manke, CAE Snow Tractor & Equipment Co., Ayden, NC Madison, WI Chris Turnage Tennesse Tractor, Alamo, TN

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