Brent Hamre, president of the industry group representing Canada’s farm machinery manufacturers, is starting to hear the occasional optimistic economic prediction about the farm economy.
Then, he looks at the dismal year his industry is having, with sales of combines and heavy tractors falling sharply and he shakes his head in wonderment.
“Where is this optimism coming from?” Hamre asked during an Aug. 6 interview from the head offices of the Canadian Farm and Industrial Equipment Institute in Burlington, Ont. “I hear it but then I talk to my members and they are thrashing about, trying to find customers who are willing to spend and they are not finding them. I don’t understand.”
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The latest piece of optimism came at the end of July when Statistics Canada published its business capital spending estimates for 1999. As part of a national record level of expected capital investment this year, the federal agency predicted the food processing industry will increase investment 15 percent to $1.5 billion.
On the farm side, the agency predicts farmers will invest more than $4.2 billion in 1999, $100 million more than last year.
The increase comes on the animal production side, where capital investment is predicted to exceed $2 billion.
Crop production farmers are predicted to remain relatively stable in their capital investment, spending $2.167 billion on equipment, buildings and repairs.
“There will also be spending on maintenance and repairs beyond that,” said Gilbert Paquette of the capital stock division of Statistics Canada.
“Investment intentions in agriculture are quite stable this year.”
This prediction followed a presentation Hamre heard recently at the American farm equipment manufacturers’ annual meeting. He said an economist from the United States Department of Agriculture talked about improving commodity prices starting in 2000.
“I don’t know where she got those numbers or where they are coming from,” said Hamre. “My questions did not receive very satisfactory answers. I just don’t see it.”
Bad year
Meanwhile, back in the Canadian market, the industry is having one of its worst years ever.
By the end of June, 438 four-wheel drive tractors had been sold, down 41 percent from last year. Just 290 combines were sold in the six months, down more than 56 percent from 1998 sales in the same period.
Even machinery commonly sold in Eastern and Atlantic Canada, including forage harvesters and balers, have seen a dip in sales.
Hamre said a 31 percent increase in sales of small tractors to golf courses and municipalities is sustaining the industry right now.
“Golf courses are opening everywhere.”
