What’s Behind the Latest Trend in Farm Equipment Sales

Ag tractor sales in the U.S. and Canada continued rising into January 2022, while combine harvesters slowed for the month. The monthly data recently announced by the Association of Equipment Manufactures found U.S. farm tractor sales gained 1.5 percent in January compared to 2021, while combine sales fell 41.4 percent. Curt Blades, AEM Senior Vice President of Industry Sectors and Product Leadership, says compared to the five-year average, the January sales are strong.

“The best way to explain the January numbers is in context of where we were this time last year. However, we have to remember this time last year we were seeing remarkable gains across all categories. So, to be flat is pretty good, even to be down just a little bit is also pretty good considering we’re well above that five-year trend. across all categories.”

The biggest growth sectors in ag equipment recently have been the biggest units, 100-plus horsepower and articulated four-wheel drive tractors. Blades explains what is driving that demand.

“The ag economy in general has had some nice signs of life. There’s a lot of attention being paid to commodity prices. Clearly there are also some concerns with input prices. But I think in general, there’s a lot of optimism out there. So, if you say farmer buying row crop tractors, farmers buying articulated four-wheel drive, those are good things, it’s showing that there’s some optimism out there. There’s also some pretty cool technologies that people are taking advantage of, whether it’s in tractors or combines, we see the growth of precision agriculture and tractors that can drive themselves, it’s pretty amazing when you see farmers really making some significant updates and the machines that take advantage of this technology to have maximum uptime and more efficiency and really just run good operations.”

The elephant in the room is the supply chain, and ag equipment is affected as well. However, equipment manufacturers are navigating those challenges to ensure producers get what they need during planting and harvest time.

“With ag being considered an essential business, many of our manufacturers have really been at full capacity. However, we are in a global environment. So, you’ve got microchips, or whether it is foam cushions for seats, or whether it’s transportation, those supply conditions are very real. What we recognize in the ag industry is it’s really critically important because we have some seasonality here. So, manufacturers have been really working closely with the dealers and with their supply chains to make sure that we put a high priority on things like wear parts and those parts that are necessary to get through planting and we get some harvest. And then the other things that are needed like new equipment, They’re kind of layering and then based on the priority with again a high sense of pressure put on the things that are required to get through planting and harvest.”

Ag equipment sales have not just been positive since mid-2020, but significantly so. Blades explains what is driving those trends and what the future may hold.

“We’re in a bit of a replacement market where the fleet is older than it should be. But the real driver in the volume has been the smaller horsepower tractors and that is obviously going to include some farms, but it includes a whole lot of people that are on acres or big homesteads or smaller farms that may have historically had some disposable income, they might have gone out to eat a little bit more, gone on a vacation, but instead because of the pandemic they’ve been investing a little bit more in their homestead. We see that really been kind of the driver for the last couple years. Is that trend going to continue? I’d like to say that it will, but we never know for sure what the future is going to hold. There are some signs of optimism across the board in ag equipment but there’s also some storm clouds out there for agriculture, so I hate to predict on what the feature is that I’m cautiously optimistic that these trends will continue.”

You can find the latest report online at www.aem.org.

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