Worldwide economic unrest along with political unrest both here and abroad has placed a black cloud over the U.S. agricultural economy and has slowed large equipment sales to almost a crawl.
America’s farmers have found themselves on the front lines of an ongoing trade war, but recent news on three major trade fronts has farmers across the heartland cautiously optimistic.
2019 is developing into a very unique year for equipment sales. For the past several decades the under 40 horsepower class of tractors represented more than 50% of the total tractors sold in the U.S. In 2019, we expect this class of tractors will represent between 62-65% of the total tractors sold as sales for the larger tractors slide even more.
We heard from an old friend, and now an ex-equipment dealer, last week. He said he’s thrown in the towel, sold his single-store John Deere dealership and is now looking at other possibilities for what to do with the rest of his working career.
The downturn that we are experiencing today is certainly as dramatic as those early ones, but today farmers are not encumbered with massive debt and the current interest rates are very reasonable for those who have debts to service. This certainly is not a pleasant experience for anyone in the industry, but there is much more optimism than in previous downturns.
According to the Assn. of Equipment Manufacturers’ latest sales figures covering the first half of the year, only mid-size tractor sales during the first 6 months of 2019 showed a deficit compared to the first 6 months of 2018.
The July 18 Kansas City Federal Reserve Bank’s Ag Finance Databook reports that growth in the average size of farm operating loans boosted agricultural lending in the second quarter of 2019. The size of farm loans has continued to rise and loans exceeding $1 million recently have had a significant effect on the overall volume of new loan originations.
While the majority of producers are still buying their equipment outright, there continues to be a number of farmers who have been nudged toward lease contracts in order to conserve capital and still have new, dependable equipment with which to farm their land.
2019 continues to unfold as a good year for the smaller horsepower tractors and equipment which are driven by the U.S. general economy, and a weak year for production agricultural equipment sales as net farm income continues to decline.
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In this episode of On the Record, brought to you by Associated Equipment Distributors, we take an initial look at the Dealer Business Outlook & Trends Report and what dealers are forecasting for 2025.