Equipment makers

LOUISVILLE, Ky. — Farm income remains stagnant, but equipment manufacturers are sensing signs of recovery in the ag economy.

While many farmers have put major buying decisions on hold as grain prices plateaued, they were out in force recently at the National Farm Machinery Show here.

David Webster, director of national accounts at AGCO, is upbeat. One reason may be a shortage of good used equipment on the market, making purchases of new machines more appealing.

“Last year, we refer to the industry as bouncing along the bottom. But we’re seeing some areas of recovery this year,” Webster said. “Premium used equipment is starting to dry up in certain categories. There wasn’t that much premium used machinery being generated.”

Mike Cleveland, vice president of sales for the ag division of Great Plains, doesn’t expect a quick turnaround. But he believes sales are slowly coming back.

“It’s not 2013 and 2014, but it seems like things have calmed down some,” he said. “Grain prices are not as good as they could be. But Great Plains had a good year in 2017, and we’re pretty optimistic about 2018. We’re not going to set a bunch of records, but we’re looking forward to the year.”

Mark Lowery, regional marketing manager at New Holland, also sees light at the end of the tunnel.

“We’re cautiously optimistic,” Lowery said. “We’re starting to see improvement in the industry, both in traditional hay and forage as well as cash crop machines. I think all manufacturers are seeing more traffic, and that has boosted our optimism.”

Farmers seem to be putting more thought into their purchases. Webster sees a more cautious approach compared to a few years ago.

“Farmers are putting a lot of deliberation into their buying decisions. There isn’t impulse buying,” he said. “We believe that today, when a farmer buys a piece of equipment, it’s something that he needs.

“There has been more growth in Canadian dealers. There is growth on a smaller scale in the U.S. as well. We’re forecasting an industry that will improve in 2018, and we were already starting to see that in January.”

AGCO introduced two new planters here in February under its White Planters brand. They are built for both conventional and no-till systems. At the World Ag Expo in Tulare, Calif., the company debuted a new baler under its Hesston by Massey Ferguson brand. It is designed to save farmers money through higher density and reduced trucking costs.

Webster said that the focus is on efficiency, as farmers strive to trim costs while increasing production in a flat market.

“When growers are upgrading equipment, their productivity is an important thing,” he said. “They’re looking to have more ROI on that piece of equipment.”

Cleveland sees a tipping point in terms of farm succession. As family members take over farms, they are looking to add acreage or upgrade equipment.

“There are a lot of farmers who were about ready to retire; a lot of farms are changing hands,” he said. “What’s driving ag equipment sales today is, people need something to farm more than they did in the past.

“Everybody talks about that 5,000-acre farm or that 10,000-acre farm, but I see it across the board. Small family farms are picking up the farm next to them. Everybody is picking up a little bit as guys are retiring.”

Sales are increasing in the self-propelled sprayer market, executives reported. AGCO’s Webster believes it is driven in part by the difficulty surrounding drift problems associated with dicamba, which became a restricted-use product this year.

Factors outside of agriculture are also affecting the farm industry.

A series of strikes at the ports in Los Angeles and Long Beach over the past several years weakened the hay industry, as livestock producers found other suppliers. A stronger dollar further damaged the ag economy. But things are changing.

“It’s great to see that recovery,” Webster said.

Manufacturers also reported movement in the small-tractor segment.

“When we look at growth that continues to outpace all other sectors it is in the compact and sub-compact tractor up to mid-range,” New Holland’s Lowery said. “That will continue. All those are outpacing the rest of traditional ag segments. We think that has stabilized and what’s driving modest growth.”

Nat Williams is Southern Illinois field editor, writing for Illinois Farmer Today, Iowa Farmer Today and Missouri Farmer Today.