Trevor Whittington: Middlemen exist only if you allow them to

In the early 1980s, a group of WA farmers grew tired of the growing disparity between the tractor prices offered by their local dealer and what American farmers were paying. They decided to bypass the local dealer network and order directly from the US, proving that middlemen exist only if you allow them to. This move didn’t last long for two reasons. First, dealers likely got a wake-up call and reduced the price gap; and second, their control over spare parts probably helped pull the farmers back in line. But today, in a world where parts can be easily sourced online and large manufacturers have established plants on every farming continent to take advantage of lower wage rates, is there an opportunity again to put downward pressure on the price of imported new farm machinery? No doubt someone would already be doing this if it were easy to benchmark what Argentine or Russian farmers pay for the exact same tractors designed in the US but manufactured in South American or Asian factories. This raises the question: Why is it so difficult to find global prices in this age of the internet for the same equipment? I suspect it’s because big manufacturers are being secretive about the prices they set in different markets, just as they are about the origin of the components in their machines. Even the local price is hard to find. When a new tractor is quoted to a farmer, it seems like the pricing secret is revealed only if they make the effort to visit a dealer. Why can’t at least the Australian, or even West Australian, list prices be advertised? Or are prices different for each farmer, depending on their location and who they are? It seems to me the agricultural machinery world is stuck in the past, insisting farmers kick tires and talk to a dealer before they’ll reveal the price on offer. It’s an old-school approach, especially when global companies such as Tesla, Honda, and Mercedes have adopted fixed online pricing, eliminating the need to even visit a dealership. When you’re ready for a new car, you simply go online, select options at set prices and avoid sales pressure. The inefficiency of scattered dealerships with expensive car yards is gone. Interestingly, when other car manufacturers tried this model in Australia, dealerships fought hard against fixed, non-negotiable pricing. Why? Because it cuts into their profits. Dealers make more money when salespeople negotiate, which results in customers paying more. Most farmers who buy new machinery stick with the same brand as their previous purchase, often not doing more than sitting in the cab (if a new one is even available) before writing the check. So why aren’t big machinery manufacturers offering fixed, non-negotiable transparent pricing? It’s well known that established brands offer limited pricing flexibility to dealers in the same regions, but this is not the same as a national or global fixed price in US dollars plus transport costs, leaving only the trade-in value to negotiate. As it stands, we don’t know the national or international price differences for the same new machine in Moora (Australia), Moree (Australia), Manitoba (Canada) or places such as Manaus (Brazil), Mendoza (Argentina) or even Moscow. But from what I can find the price gap is up to 25 per cent, with the American-made tractor selling in Australia for around $600,000, while the same Chinese-made tractor marketed to Russia sells for $500,000, and the Argentinian version goes for around $450,000. Why the big difference? It’s not just the labour cost difference — $15/hour in China, $20/hour Argentina vs $60/hour in the US. It’s simply that John Deere charges whatever the market will bear. So why aren’t we importing the Chinese-made versions? Mostly because manufacturers won’t allow it. And where are the entrepreneurial farmers bringing them in through agents? It’s because the local market seems conditioned to pay a premium and Australian farmers tend to believe that Chinese products are inferior. This belief holds as long as they don’t look too closely at where many of the components in their new tractor, header or car come from — like their next Ford Ranger. Fun fact: Ford not only makes them in Thailand, Argentina, South Africa, Nigeria and the US, but from 2026 they’ll also be made in China. I’ll be curious to see the reaction from Ranger enthusiasts when the first Chinese-made ones arrive; no doubt “it’s all good, nothing to worry about”. After all, HiLux fans are loyal to the ones made in Thailand, even though many components are made in China. In conclusion, it’s time to stop supporting Trump’s “Make America Great Again” agenda or protecting European unionised workers. We need to reconsider our views on farm equipment made outside the traditional US and EU factories. We should no longer accept the price premium demanded for buying Western-designed equipment made with expensive labour. It’s not our job to secure jobs for first-world, unionised employees. If we don’t change, we’ll continue allowing middlemen and global manufacturers to profit from our loyalty. The internet has shown the market is wide open for direct importing from the global plants producing the cheapest big green, yellow or red machines — or any other colour, for that matter — wherever they’re located. Perhaps it’s even time for the next generation of Australian farmers to board a plane and visit the John Deere, CNH, Fendt, Massey and Claas factories in China and South America to see what deals are available by buying direct. Trevor Whittington is CEO of WAFarmers