There are various factors affecting the demand for John Deere's products. These factors can be categorized as Financial, Crops, Crop Prices, Line Stock Prices, Farm Equipment and the competition. Financial factors include interest rates, credit availability, currency exchange rates, monetary and fiscal policies set by the government, net farm income and government regulated price floors on the agriculture segment. Crops/Crop Prices include planed acreage, grain export and crop prices of wheat, corn, soybeans and cotton. Live Stock prices that affect the demand for the company's output are primarily the prices of Dairy, Beef and Hogs. Animal diseases like "mad cow", "foot and mouth" and crop pests and harvest yields play an important role in the live stock prices and in turn affect the demand. Farm equipment category consists of resale demand for used farm equipment, farmer's attitude towards farm equipment and new equipment prices which play an important role in the demand of the new equipment. John Deere faces a strong competition around the world, more in Europe than in US. The company realizes that demand for farm equipment is same in Europe as in the United States, but the current market share captured by John Deere in Europe is much less and hence there is a lot more room to grow there. Of these factors, the most important factor seems to be the ability of the farmer to buy the new equipment. This in turn depends on the prices of the new versus used equipment, and any financing available to buy the new equipment along with farmer's net income. World wide competition, which also affects the demand of the company's products, cannot be ignored. As far as substitutes for the firm is concerned, John Deere faces competition at home and abroad. Recent merger of New Holland NV and Case Corp to form CNH had become a threat to John Deere in the equipment industry and John Deere had to do major price slashing to gain market share from these...
