Farm Machinery Sales Remain Solid

Farmer Iron

Farm equipment industry watchers see crop prices and wonder about equipment sales, so far so good actually.

Published on: May 21, 2014

It's like waiting for a crash at a NASCAR race. Ag industry observers are watching to see when farmers might 'blink' and stop buying equipment. Of course, it could happy at any time, but we also know that running the most efficient equipment has a payback as well. It appears, according to industry stats, that you agree.

In the latest Association of Equipment Manufacturers Flash Report for April, sales remain near previous year levels and well above the five-year average. There is some weakness in larger equipment - with sales for 100-plus horsepower tractors off 5.7% this year; four-wheel drive tractor sales are down 7% and combines are down a little over 8%. That’s softness that might be expected at this time of  year.

TREND LINES: The black line is current-year and its mirroring previous year sales so far - and is also well above the five-year average.
TREND LINES: The black line is current-year and it's mirroring previous year sales so far - and is also well above the five-year average.

There's a growing pile of late-model used equipment on dealer lots that you may be turning to instead of buying new. That's good news for dealers who make more on used equipment than new equipment, and perhaps a little weaker for new equipment sales. However, it's not a wholesale run for the door, you need equipment that does the job and many times that means new.

Smaller equipment sales are regaining strength. Under 40 hp tractor sales are up 8.4% this year and the 40 to 100 hp class has seen sales rise 3.8% so far this year. Returning strength in the housing market and a slow-but-steady recovery from the 2008 market collapse is helping here. Landowners, not necessarily farmers, buy a lot of smaller equipment which boosts the market.

Whether you're looking at new or used equipment, it appears you'll have plenty to choose from in 2014. We'll keep watching the stats to see if the trend continues. During a media event in Denver last year, Jim Walker, head of sales for North America at Case IH, told us that a slight pull back in the market would give the industry time to "breathe." The fast rise in equipment sales stressed manufacturing and pushed logistics systems to the limit as well.

A little slowdown - not a big one mind you - would help companies get their houses in order. This First Quarter slowdown in larger equipment may be just what the industry needed. That remains to be seen.