Machinery exports falling

NEW ORLEANS, La.  —  Canada leads the rest of the world when it comes to reducing its imports of farm machinery from the United States.

It is a big buyer of American farm equipment, at US$2.2 billion, so the 17 percent reduction in purchases last year was part of larger fall in export sales of 13.5 percent overall, according to the U.S. Department of Commerce.

The American Equipment Manufacturers Association told its members that the $7.4 billion export trade was down less than in 2014, but 2015 was the third year in a row that trade dropped in the industry.

A strong U.S. dollar has hurt sales, said Charlie O’Brien of AEM at the Commodity Classic meeting in New Orleans last week.

“Asia and Central America are up, but mostly exports remain soft.”

European purchases dropped 22 percent to $1.5 billion, while South America, led by Brazil with its low currency and political instability, was off 35 percent, buying only $653 million worth of equipment and technology last year. Brazil alone fell 50 percent to US $208 million in sales. Australia and the surrounding region fell by four percent to $702 million.

Mexico was up, rising 11 percent to $1 billion, as was China  by 47.5 percent to $471 million and Chile by five percent to $153 million.

A jump in commodity prices in 2008, which mostly held until 2014, allowed many farmers to upgrade their machinery. The dramatic fall in commodity prices and the levelling off to near break-even values have left growers with most of the tools they need and little new income to buy more.

Jim Walker, head of Case IH North America and an AEM board member, said in Louisville last month that he doesn’t expect a return to the machinery buying frenzies of a few years ago any time soon.

Modestly higher commodity prices and new markets in Asia will likely form the future growth trend for the industry, machinery company leaders said at Commodity Classic.

AEM’s analysis of the trade shows lower year-over-year declines in sales. The final quarter of 2015 was the lowest decline since the fourth quarter of 2012.

Domestic U.S. sales volumes are also down to half what they were five years ago.

Contact michael.raine@producer.com

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