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  Deere & Company

  One John Deere Place,
  Moline, IL 61265 USA

19 January  2005

Division of Corporation Finance

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington D.C. 20549

Attention:      Todd
Hardiman

                        Stephanie
Hunsaker

Subject:          Deere
& Company

                        Form 10-K for the year ended October 31, 2004

                        File No. 1-4121

Dear Mr. Hardiman and Ms.
Hunsaker:

Set forth below are the
responses of Deere & Company (the “Company”) to the January 5, 2005 letter
from the staff pertaining to its review of the Company’s Form 10-K for fiscal
2004, filed on 21 December 2004. For the staff’s convenience, we have repeated
the relevant comment below in bold.

Cash Receipts from Sale of Inventory

We note that Deere & Company
sells inventory to distributors, dealers, and general and mass merchandisers.
We also note on page 7 that Deere & Company, through the dealers it owns,
may also sell directly to retail customers. We note in Notes 8 and 9 that Deere
& Company has a number of receivables, including trade accounts and notes
receivable, retail notes, wholesale notes, revolving charge accounts, financing
leases, and operating loans. We understand that some of these receivables are
originated by Deere & Company’s credit subsidiaries, but it is unclear
which of these receivables relates to the sale by Deere & Company of its
inventory. We do note on page 7, however, that one component of financing
receivables, wholesale notes, represents financing of inventories sold by Deere
& Company to dealers. It appears that your accounting policy is to classify
all changes in financing receivables in investing cash flows. This policy, when
applied to financing receivables resulting from the sale of inventory appears
in the period of sale to have the effect of presenting in Deere & Company’s
consolidated statements of cash flows an investing cash outflow and an
operating cash inflow for the amount of the loan even though there was no cash
inflow or outflow to Deere & Company on a consolidated basis. In subsequent
periods, this policy appears to reflect cash receipts from the sale of
inventory as investing activities

 in Deere & Company’s consolidated
statements of cash flows. If our understanding is correct, we believe such
classifications to be in error.

Classification of the cash flow
effects of receivables from the sale of inventory as investing activities in
Deere & Company’s consolidated statement of cash flow does not comply with
the requirements of SFAS 95. Paragraph 22a of SFAS 95 states that cash receipts
from the sales of goods or services are operating cash flows. Paragraph 22a
clarifies that classification as an operating activity is required regardless
of whether those cash flows stem from the collection of the receivable from the
customer or the sale of the customer receivable to others; regardless of
whether those receivables are on account or stem from the issuance of a note;
and regardless of whether they are collected in the short-term or the
long-term. It is important to note that SFAS 102 did not change this
requirement. SFAS 102 addressed in part whether loans made by financial and
similar institutions were sufficiently similar to product inventory of
non-financial institutions such that the cash flow effects of those loans
should be classified in the statement of cash flows in the same way as the cash
flow effects from the sale of inventory, as operating activities. SFAS 102 did
not alter the requirement in paragraph 22a to classify cash receipts from the
sale of inventory as operating activities. As the SFAS 95 basis for conclusions
indicates in paragraphs 93 to 96, the FASB considered and rejected classifying
any portion of the cash receipts from sale of inventory as investing
activities.

If you present in Deere & Company’s
consolidated statement of cash flows inventory cash flows between the
registrant and/or its consolidated subsidiaries as an investing cash outflow
and an operating cash inflow in the period Deere & Company sells inventory
and there is no cash inflow to Deere & Company on a consolidated basis from
the inventory sale, we believe such a presentation represents an error in Deere
& Company’s consolidated financial statements. Similarly, if you present
cash receipts from receivables generated by the sale of inventory as investing
activities in Deere & Company’s consolidated statements of cash flows, we
believe such classifications represent errors. Such errors, if material, would
require restatement of Deere & Company’s historical financial statements.

Please tell us whether
our understanding of your policy and its effects are correct. If they are
correct, please also tell us in your response how you plan to address the
matters raised above. Please also address the following and consider the need
for clarifying disclosure:

a)              Tell us which of the receivables
identified in Notes 8 and 9 relate to the sale of inventory and where the
related cash flows are classified in the consolidated statement of cash flows.

b)              Tell us to what the financing lease
receivable disclosed in Note 9 relates and where the cash flows from these
transactions are classified in the consolidated statement of cash flows and
why.

2

After careful consideration of your comments, we continue to believe
our accounting for these transactions is correct and consistent with the
authoritative literature. To provide a common understanding of our business
activities and our accounting, we are presenting below an overview of the
transaction flows. As the Company is large and complex, there are various minor
deviations from the general process flow. However, substantially all  (approximately 95%) of the Company’s sales
transactions occur as follows:

The
Company ships equipment to its independent dealers, with title and risk of
ownership passing to the dealer at that time. At the time of shipment, a trade
receivable is created with certain terms and due dates. At the conclusion of
the term of the trade receivable, or earlier, the dealer will settle the trade
receivable.

This settlement will generally be funded by the
independent dealer in one of three ways:

1.               The equipment is sold to a
retail customer. The dealer receives payment and, in turn, pays the Company.

2.               Funded from borrowings -
typically a line of credit or other borrowing facility.

3.               Funded from on-hand cash balances.

(We have also provided as
an attachment a graphic depiction of the transaction flows.)

In scenario one, the
payment from the retail customer could come from the customer’s on-hand cash
balances, financing from an external bank, or financing from the Company’s
Credit Operations, through one of its retail financing programs. In scenario
two, an external bank or the Company’s Credit Operations, through one of its
secured wholesale financing programs, may provide the financing. In either
scenario one or two, when the Company’s Credit Operations are involved, a
separate discrete transaction has occurred whereby a loan has been made to
either the independent dealer or a retail customer. In either instance, the
trade receivable that arose from the initial sale by the Company to the
independent dealer has been extinguished. Further, in each of these scenarios
involving the Company’s Credit Operations, a separate credit approval would be
required.

We have classified all
changes in trade receivables (items referred to in Note 8 of our consolidated
financial statements) as operating activities as these receivables arise from
the sale of inventory. The settlements of these trade receivables arising at
the time of the sale of equipment to the independent dealer have been
classified as operating cash inflows without regard to how the independent
dealer funded the settlements. We believe this is consistent with Statement of
Financial Accounting Standards (“SFAS”) No. 95 paragraph 22 that states:

3

“Cash inflows from operating activities are:  a. receipts from the sale of goods including
receipts from collections or sale of accounts and both short- and long- term
notes receivable from customers arising
from those sales” [emphasis
added].

Further, we believe that the loan made after the term of the trade
receivable is a separate, discrete transaction that is very different in nature
from the trade receivable extended to originally sell the equipment. We believe
these wholesale note transactions are the types of loans the Financial
Accounting Standards Board was referring to in paragraph 17a of SFAS No. 95.
Additionally, the users of our financial statements, including the rating agencies,
view the trade receivables very differently from the way they view the
financing receivables. Historically, the rating agencies have provided
significantly different leverage guidelines for obtaining equivalent rating
objectives for each of these receivable categories. Consequently, we believe
the accounting being used both complies with SFAS No. 95 and best serves the
interest of the readers of our financial statements.

The terms and due dates of the trade
receivables are set forth within the dealer agreements and vary by
product.  Based on a study of Company
sales transactions in 2004 prepared solely for purposes of responding to the
staff inquiry, trade receivables were settled by the dealers as follows:

1.               Approximately 80% were paid
prior to terms expiration when the equipment was sold by the dealer to a retail
customer.

2.               Approximately 17% were paid
at the conclusion of the trade receivable terms with dealer’s cash, from
proceeds from external borrowings, or from a borrowing base operating line of
credit provided to the dealer by the Company’s Credit Operations.  Such a borrowing base operating line of
credit is offered to some John Deere dealers in the U.S. and is a loan
facility, which may be used by the dealer for various purposes, including for
working capital.  The borrowing base
securing these lines of credit includes dealer receivables and inventories of
both new and used whole goods of John Deere and non-John Deere equipment
manufacturers.  The dealer may draw or
make payment against the line at any time as long as the amounts borrowed are
within the borrowing base limits.  Due to
the nature of the operating line of credit, draws and repayments may be made
from time to time for a variety of reasons and do not relate to specific
inventory purchased from Deere or other companies.

3.               The remaining 3% went to
term and were settled from the proceeds of a separate line item borrowing from
the Company’s Credit Operations.

The weighted average length of time to
payment or subsequent loans to the dealer (i.e., end of terms) in items 2 and 3
above has been approximately five months.

4

We have classified all changes in financing receivables (items referred
to in Note 9) as investing activities as they generally (1) do not arise from
the sale of inventory but rather from a separate transaction related to loans
to outside customers of the Company’s Credit Operations.

The financing lease
receivables disclosed in Note 9 relate to leases of equipment by the Company’s
Credit Operations to retail customers. The equipment is initially sold by the
Company to an independent dealer. If a retail customer chooses to finance the
purchase of equipment from the independent dealer through a lease with the
Company’s Credit Operations, the equipment to be leased is purchased from the
independent dealer by the Company’s Credit Operations. (The dealer originates
the lease.) These leases meet the criteria for financing leases under SFAS No.
13. The cash outflows for these receivables are included in the investing
activities in the Statement of Consolidated Cash Flows.

In conclusion, we
believe our presentation in our Statement of Consolidated Cash Flows is
consistent with SFAS No. 95 and the many considerations included in the Basis
for Conclusions. Further, we have consistently applied the standard for many
years and believe our presentation is a faithful representation of the
economics of the underlying transactions, promotes the neutrality of the
financial information presented, and provides the reader of our financial
statements with a transparent and accurate description of the cash flows
associated with the economic substance of a series of discrete transactions.

Intercompany Trade Receivables Transactions
and/or Allocations

Please tell us and
clarify in your disclosure how, if at all, the trade receivable transactions
described in Note 8 between what management refers to as “Equipment Operations”
and “Financial Services” impact the classification of cash flows related to
those trade receivables on the consolidated statement of cash flows. In your
response, please reconcile the disclosure in Note 26 that these cash flows have
been eliminated from the consolidated statement of cash flows with the
disclosure in Note 8 that such transactions have “substantially no effect on
consolidated net income.” That is, if they are not eliminated entirely from the
consolidated statement of income and you present your cash flows from operating
activities using the indirect method, it is unclear how those intercompany
transactions and/or allocations are eliminated from the statement of cash flow.
If, as it appears, “Equipment Operations” and “Financial Services” are
discretionary distinctions by management used to describe pieces of the consolidated
results of operations, then it appear that such transactions and/or allocations
should have no impact on the amounts presented in the consolidated financial
statements.

(1)  For sales by dealers owned by the Company (which
represent approximately 5% of Company sales), a portion of these sales
transactions is financed by retail notes issued by the Company’s Credit
Operations.  We have classified these
retail notes as financing receivables in Note 9 and also as investing
transactions due to the nature of the notes as described in paragraph 17a of
SFAS No. 95.

5

The transactions
referred to have no impact on the Statement of Consolidated Cash Flows. In the
Statement of Consolidated Cash Flows, the changes in trade receivables are
classified as operating activities. All intercompany amounts have been
appropriately eliminated from the respective consolidated financial statements.
The comment that these transactions had substantially no impact on consolidated
net income was included in our 2001, 2002 and 2003 filings, but was not
included in our 2004 filing. This comment referred to the entire series of
transactions associated with the sale, including changes in the way the
receivables were levered. When the trade receivables were sold to the Company’s
Credit Operations, the Company was able to employ higher leverage and therefore
there was a de minimus effect on
consolidated net income. In an effort to provide the reader with a transparent
view of the transaction and its effects during the initial sale periods, this
comment was included.

Consolidated Statement of Cash Flow Subtitles

We note that Deere & Company
classifies changes in “Receivables” within operating activities and “Collections
of Receivables” and “Cost of Receivables Acquired” within investing activities.
The similar nature of these descriptors makes it difficult to discern the basis
for the different classifications. Please use more precise descriptors that
clearly convey the basis for the differing classifications as well as how the
amounts presented relate to the footnote disclosure of trade accounts and notes
receivables in Note 8 and financing receivables in Note 9.

In future filings, we will change the descriptors on the Statement of
Consolidated Cash Flows as follows:

“Receivables” to “Trade Receivables and Other”

“Collections of Re