Reduced demand for farm and industrial equipment resulted in a drop in John Deere and Co.'s third-quarter sales and net income, company officials said yesterday.

Sales for the quarter that ended in July 31 totaled $1.36 billion, compared with $1.4 billion in the comparable peroid of 1979. Net income was $27.6 million (45 cents a share) compared with $97 million ($1.60) a year ago. On a fullydiluted basis, per-share earnings were 44-cents during the third quarter compared with $1.53 last year.

For the first three quarters of the fiscal year, sales increased from $3.67 billion in 1979 to $4.02 billion this year. However, net income was $183 million ($3 a share) compared with $271 million ($4.47) last year. On a fully diluted basis, net income per share was $2.89 compared with $4.27 for the same period last year.

Deere chairman William A. Hewitt said, "Production schedules were reduced considerably in North America and overseas during the past three months in response to lower demand. The lower production volumes have resulted in higher costs per unit of production."

The Royal Dutch-Shell Group of Companies yesterday reported second-quarter profits fell 4.2 percent from those of a year ago to $1.6 billion and said the current oil glut could continue to cut into earnings through 1980.

Dirk de Bruyne, a managing director of the British-Dutch oil giant, said while the industrialized world appears to have emerged from the "shock peroid" of 18 months of esclating oil prices, petroluem use in the West probably will continue to drop through 1981.

He also predicted at a news conference in The Hague that Saudi Arabia, the Organization of Petroelum Exporting Countries' largest member, would reduce its 9.5 million barrels-a-day oil output and could raise its crude oil price as much as $4 per 42-gallon barrel this year.

Royal Dutch-Shell is the only major international oil company so far to report a profit decline in the second quarter. It is owned by two holding companies and is the world's second-largest oil company behind Exxon Corp. of the United States.