Double digit sales growth in farm machinery is beating 2008 numbers as pent up demand and incomes rise
The agricultural equipment market continues to show strength coming off a very strong 2020.
“The March sales numbers, this is year-to-date, we’re seeing substantial double-digit percentage growth in all categories,” said John Schmeiser, chief executive officer of the Western Equipment Dealers Association.
“These numbers are unprecedented and surpass the largest numbers that we’ve ever had in percentage growth going back to 2007, 2008. Now keep in mind that the 2020 numbers were before the pandemic.”
Total Canadian tractor sales to March 2021 are up 84 percent compared to the same time in 2020, including a 40 percent increase in four-wheel drive tractors and an 86 percent increase of total two-wheel drive units sold.
Schmeiser spoke at a Ritchie Bros. Canadian agricultural virtual panel discussion, where he said the year-over-year growth numbers are phenomenal, which are based on dealer reports, and that WEDA forecasts equipment sales will be strong for the remainder of the year.
“We have close to 60 percent of our dealers reporting that they have ordered more equipment for 2021, with 21 percent of dealers increasing orders by more than 10 percent,” Schmeiser said.
“These numbers are the highest that we have seen in the past five years.”
Another metric WEDA follows to understand the agricultural equipment market is the price of used combines.
“For the first time in nine years, we have used combines gaining value, or seeing increased pricing based on the longer that you’re sitting on a dealer’s lot. And I’m sure that’s not news our customers like to hear, but I think it really speaks to the demand for used equipment.”
He said pandemic-related supply chain challenges continue to affect equipment manufacturers, and the question remains if the manufacturers will be able to deliver all of the equipment dealers have ordered.
The essential services designation for equipment manufactures enabled cross border trade throughout the pandemic, which was crucial to the trade because many agricultural equipment components are manufactured in northern Mexico.
“There is very little difficulty for us and getting a completed tractor or combine across the (United States)-Mexico or the U.S.-Canada border. However, when it came to trying to get a part or harness or an electric component, we are facing a lot of unusual delays because of COVID-19,” Schmeiser said.
“The wait time for parts tripled in some cases and still today manufacturers have cut back production, just solely because of availability issues on components.”
He said Canadian equipment manufacturers faced the same issues, and some delivery dates for new equipment have been pushed back 10 to 12 months.
“All these issues have created a demand for used equipment, and you know fortunately for equipment dealers, a lot of them have their used inventory cleaned out. However, in conversations with manufacturers, we feel that the worst is behind us and efficiencies in the supply chain have improved.”
He said there continues to be optimism within the WEDA membership.
“There are three key indicators that we track that drive equipment sales. Commodity prices, co-operative weather and interest rates. All of those have been in alignment for us, that’s created a pent-up demand for new equipment and the newest technology.”