Canada’s farm equipment business is feeling the effects this year of the multitude of troubles hitting the farm sector.
Continuing low grain prices are driving western Canadian sales of large tractors and combines below last year’s depressed levels.
Wet weather and low grain prices across much of Ontario may be behind a sharper-than-expected drop in sales of the smaller two-wheel drive tractors. Public concerns about manure contamination of water supplies are putting a dent in sales of box-type manure spreaders.
This is the grim snapshot of the machinery industry offered this month by the Burlington, Ont.-based Canadian farm and Industrial Equipment Institute.
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“To be honest, the rest of the year looks flat, negative, and I don’t see anything that would improve the picture,” CFIEI president Brent Hamre said.
“We very much depend on the health of the farm community and we all know what is happening there.”
Since the 1980s, the industry has been in a tumble, with sales at less than half of heyday levels.
After a spike in 1997 and 1998 when prairie farmers still had some Crow Benefit buyout money to spend, the machinery industry has sunk into the doldrums.
This year, the institute predicts four-wheel drive tractor sales will be 630 units, compared to 1,124 two years ago.
Combine sales are projected to be 948 this year, compared to 2,076 two years ago.
And first-half sales figures included in the updated industry outlook cast doubt on whether even the modest earlier sales projections will be met.
“The most troubling downturn is in the overall farm tractor sales results this year to date,” Hamre wrote in the summer update. The most troubling region is the Prairies where “the continuing low prices for grain on the world market make it very difficult for Canadian farmers to afford the cost of upgrading aging equipment.”
In Ontario, “there are worries about sales prospects for the larger two-wheel drives because of the bad year that is shaping up here,” said Hamre.
Problems also are brewing in the manure spreader business.
“Due to the ongoing concerns about protecting the nation’s lands and streams against contamination by livestock manure, sales of box-type manure spreaders continue to fall year-to-year in favor of new machine technology designed to control the runoff of manure,” Hamre wrote in his summer assessment.
He predicted unit sales will drop to 442 this year, 30 percent below 1998 levels.
One bright spot in the industry is the market for square balers, expected to be up six percent this year “because the dairy sector continues to perform profitably for the most part.”
However, sales of round balers, more prevalent in the West, are expected to decline in 2000.
For the machinery manufacture and sales industries, it is shaping up to be another year to endure, said the CFIEI official.
“All of these data, when added to the mix, suggest that farm equipment manufacturers, chemical suppliers and many other businesses engaged in agribusiness in Canada can’t look for much improvement in sales of their products, at least for the remainder of this year,” said Hamre.
