Equipment sales on rebound after bottoming out

Farm machinery sales might have bounced lightly off the bottom of a market that has seen a multi-year decline.

“We might be coming up from the bottom. March was better than (March 2016),” said Charlie O’Brien, vice-president of agriculture for the Association of Equipment Manufacturers.

The sales of new 4WD tractors in the United States grew in March by 20 percent from a year earlier. However, sales for the first quarter of this year remain off by 12.8 percent, year over year.

“Canada has done quite a bit better in that regard,” said O’Brien.

Year-to-date, Canadian producers have had a greater appetite for the machines with sales growing 14.1 percent, while March jumped 60 percent with 109 machines purchased from a national opening inventory of 350 for that month. Their American cousins took home 229 of the tractors from an inventory of 755.

“It really has been a three year down cycle, but there is some signs that things are stable and improving for the industry,” said O’Brien.

Canadian farm machinery dealers did see increased quarterly sales for combines year over year with nearly 61 percent more sold than in 2016, with 307 moving to farms versus just 191 last year.

Tractors over 100 horsepower and two-wheel drive were up five percent for the quarter with 744 sales. However, March was very busy relative to last year with 70 percent more machines bought than a year earlier for that month.

In the U.S., the same tractors remained off by about 14 percent for the whole period.

Combines did rise south of the border with March numbers improving by 11 percent year over year. However, year-to-date sales remain off by 16 points.

O’Brien said most of the manufacturers have already made “the hard choices adjusting their operations to meet demand.”

Supplies of new equipment are tight with many dealers ordering into the fourth quarter of the year to get new machines.

Jim Wood of Rocky Mountain Equipment said the large, prairie-based Case IH dealer has seen a recent improvement in sales.

“There isn’t much available. Farmers are planning well in advance where they can,” he said.

“I think in many cases it is coming from those producers that don’t flip their gear every year or two. They are getting four or five seasons in or taking on some additional land and choosing to buy.… And for the most part, unlike in the U.S., they are seeing respectable profitability on some crops and it lets them make some strategic business choices.”

O’Brien said international markets that had been in very tough straits are now improving, such as Brazil, which is adding to sales optimism when places like Western Canada are also getting better.

“In the U.S., we are hearing some things from the new administration about tax reform and reduced regulations that are causing some cautious optimism for both farmers and manufacturers,” he said.

“And for dealers, a lot those large numbers of later model, larger machines have been flushed through the system, so they are in better shape to serve their markets.

“Not the best of times, but we might be headed up instead of down.”

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