Farm Industry News Blog

Is the machinery buying frenzy over?

Farm equipment manufacturers project slight slowdown in sales over next three years.

Sales of agricultural equipment are expected to taper off in 2012 through 2014, with exports sales anticipated to increase the most. That’s according to the Association of Equipment Manufacturers’ (AEM) annual business "outlook" survey, issued in December.

The survey asked U.S. agricultural machinery manufacturers to predict unit sales in the next three years following the uptick in 2011, driven by high commodity prices, low interest rates and increased export demand.

However, higher steel prices and the state of the general economy are expected to temper that growth. Survey respondents predicted the U.S. agricultural machinery business to grow 4.9 percent in 2012, 2.9 percent in 2013, and 2.8 percent in 2014, compared to a projected 6.4 percent in 2011.

"The general economy has stalled somewhat in recent months, and we are always aware of the potential for boom-and-bust cycles,” states Charlie O’Brien, AEM agriculture sector vice president. “Manufacturers are assessing the business landscape for any possible slowdowns in domestic demand as well as overseas."

According to the report, projected U.S. sales by category of equipment are as follows:

For 2011, U.S. sales of combines are expected to decline 0.3 percent by year-end, with declines predicted in 2012 of 4.8 percent, 0.5 percent in 2013 and 3.0 percent in 2014.

For 4-wd tractors, U.S. sales are predicted to gain 5.4 percent in 2011 and 0.2 percent in 2012, then drop 2.0 percent in 2013 and 4.8 percent in 2014.

Sales of 2-wd tractors in the less-than-40-hp range are expected to grow from 2011 through 2014 in both the U.S. and Canada: For the U.S, gains of 1.4 percent are predicted in 2011, 3.2 percent in 2012, 4.3 percent in 2013 and 4.8 percent in 2014.

Sales of 2-wd tractors in the 40- to 100-hp range are also expected to be positive 2011 through 2014 for both the U.S. and Canada. For the U.S., a 3.3 percent growth is seen for 2011, 3.9 percent for 2012, 4.3 percent for 2013, and 6.6 percent for 2014.

For over-100-hp  2-wd tractors, in the U.S., gains are predicted for 2011 of 2.7 percent, 2012 of 2.8 percent, 2013 of 1.3 percent and 2014 of 0.6 percent.

For the full survey results, go to www.aem.org and click on the market information section.

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