Wednesday, August 15, 2007

Connect these dots...

Item #1: John Deere announces handsome profits.
Net income climbed to $537.2 million, or $2.37 a share, from $436 million, or $1.85, a year earlier, topping analysts' estimates. Sales grew 5.9 percent to $6.63 billion, the Moline, Illinois-based company said today in a statement.

Overseas machinery revenue increased by 30 percent, and the company said U.S. and Canadian retail sales of agricultural equipment gained momentum. That growth countered lagging demand in the construction and forestry division, which has been hurt by the slump in the U.S. housing industry.

``Higher North and South American agricultural equipment demand expectations, driven by a resurgence in farmer cash flow'' boosted sales, Andrew Casey, an analyst with Wachovia Capital Markets LLC in Boston, wrote in an Aug. 7 note. He rates the stock ``outperform'' and raised his third-quarter profit estimate to $2.05 a share. [More]

Item#2: Ag employers warn of labor shortages crippling entire sectors:
The agricultural sector, which depends heavily on migrant labor, may be the hardest hit. "It's going to be crazy," says Eli Kantor, a Beverly Hills-based immigration attorney: "There will be major disruptions to the economy of Southern California, [which is] heavily dependent on immigrant labor. There will be crops rotting in the fields." Kantor says he expects some of his clients to lay staff off, while he expects others will "take their chances." [More]

What do these developments suggest to me? American agriculture may be gravitating to growing crops that lend themselves to machine harvesting, while many fruits and vegetables will be increasingly imported.

Just in time for country-of-origin-labeling.

This oughta be train-wreck fascinating.

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