2010 Looks to Be Slow for Equipment Sales.

Farm machinery industry forecasts positive growth – eventually.

Published on: Jan 22, 2010

The historic economic slowdown hit everyone – including U.S. machinery makers. But the industry seems to be hanging in there, despite its losses in 2009 and expected weakness this year.

           

The Association of Equipment Manufacturers' (AEM) most recent survey predicts a slow 2010 for most machine types, in part because of weaker world demand due to recession.

 

Manufacturers anticipate overall continued weakness in U.S. and Canadian tractor sales in 2010. Double-digit decreases are expected for big ticket items like four-wheel-drive tractors, following relatively flat business in 2009. Combine (harvester) sales are predicted to drop in the double digits for 2010 after 2009 sales growth.

 

The slow sales forecast parallels U.S. farm income figures. U.S. Department of Agriculture figures show net farm income declined 34.5% in 2009. The overall level of farm-business equity capital is expected to have fallen in 2009, as farm sector asset values declined by 3.5%.

                       

The good news is that unit sales are expected to be better in 2010 compared to 2009, and then continue to climb toward positive growth territory in following years. Sales of tractors and combines are predicted to start rebounding through 2011 and 2012.

           

Combine sales in 2010 are expected to decrease 12% in the U.S., followed by a 7% drop in 2011 and no growth in 2012. A similar pattern is seen for Canadian combine sales - an expected 2010 decline of 13%, a 2011 decrease of 8% and no growth in 2012.

           

Sales of four-wheel-drive tractors in 2010 are predicted to decline 19% in the U.S. and drop 18% in Canada. In the U.S., business is then expected to increase 2% in 2011 and 3% in 2012. For Canada, 2011 business is anticipated to be flat, with a modest 4% gain following in 2012.