With grain farmers expected to earn more money this year, implement dealers are gearing up for what could be the highest demand for farm equipment in years.
“I know just talking to other people in the industry, they’re suggesting that it hasn’t been quite like this since the mid-’70s,” said Duane Smith, general manager of Jay Dee’s Equipment Ltd. in Swift Current, Sask., and president of the Canada West Equipment Dealers Association.
Grain prices have soared because of tight supplies, strong food demand from Asia and booming biofuel development. That caused Agriculture Canada to forecast a 40 percent increase in net cash income for crop producers this year, putting farmers in a buying mood.
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This year, grain farmers were buying new combines as early as January and February, but there are already reported shortages of certain types of equipment.
“New combines are out until November, new sprayers are not available until the next production year, there’s limited supply of row crop tractors,” said Smith.
New equipment isn’t all that’s being scooped up by farmers. Used machines are also in demand. Smith said farmers usually hold off buying used combines until June when they have an idea of moisture levels and the state of the crop.
“For those that aren’t new buyers but are used buyers, they’ve realized that if they don’t make decisions quickly they aren’t going to be able to get the particular used equipment they want.”
While the demand is welcome, said Smith, it also creates challenges for equipment dealers. Fewer used units on the lot means fewer rental units are available.
Increased sales were also noted by Chris Hinrichsen, general manager of Farm World Equipment, a Case New Holland dealership in Kinistino, Sask. But his company might not enjoy the kind of buying surge seen by dealerships in the western and southern parts of the Prairies.
“We’ve had some tougher years up here,” Hinrichsen said. “We had a frost in ’04, we’ve had some late, poor quality harvests in ’05, ’06. So the guys are very, very optimistic and that’s what’s made our sales where they are today….But it’s not like it maybe should be had we been coming off of three good years.”
Still, Hinrichsen believes sales for January to March are up 25 percent when compared to the same period last year. Things looked bleak in late 2006, he said, and he was amazed at the turnaround.
“I’m already having difficulties in delivery dates on my equipment.”
Hinrichsen believes the increase in sales is based more on optimism for 2008 rather than local farmers having more money in their pockets today.
“They’re going to have quite a year, I would say, and that typically spills over into more equipment purchases.”
Although grateful for more sales, Hinrichsen said his profits depend on how much supply he’ll be able to get this year. Demand for farm equipment has gone up around the world.
“The manufacturers are actually probably going to feel more of the benefits of this than individual dealers.”
