High commodity prices have led to a spike in machinery buying on Midwest farms. We asked the full-line equipment manufacturers what industry trends they see among their customers. They came back with seven clear machinery-buying trends.
Strong sales continue
The farm equipment-buying boom in 2011 is expected to continue in 2012 but at a slower rate than last year, according to the annual business outlook survey of the Association of Equipment Manufacturers (AEM). Manufacturers surveyed expect the business in the United States to grow 4.9% in 2012 compared to last year’s growth of 6.4%. Sales are expected to remain positive in 2013 and 2014, but at slightly lower levels, 2.9% and 2.8%, respectively.
Most of the activity is concentrated in large commercial farm equipment, says Barry Nelson, John Deere. “With the current great economy in agriculture, most of our large, commercial ag machines are selling extremely well,” he adds. “This ranges from large row-crop tractors, 4-wd tractors, combines, sprayers, cotton harvesters and planters.”
With the increase in net farm incomes, farmers are investing in the high-spec, premium products that they may have bypassed in less profitable years, says Kyle Russell, senior director of marketing, Case IH North America. These high-end items include autoguidance packages, remote vehicle monitoring systems, and tractors and combines equipped with tracks in place of less-expensive wheeled vehicles.
“We’ve seen our take rates on our Quadtrac double in the last two to three years,” Russell says. “Farmers have long known the benefits of tracks, which are improved flotation, better traction and the ability to handle wet field conditions. Adoption has just been a matter of whether farmers were willing to pay the price tag.”
Another reported trend is the move to bigger equipment. Farm consolidation has required farmers to cover more acres in a season. They see larger machinery as one solution to that problem amidst a dwindling labor supply.
“A practical example of that is the popularity of our Case IH Steiger 600 tractors, with an industry-leading 670 engine hp,” says Bill Preller, senior director of specialty business, Case IH North America. “Sales of this tractor, since we launched it, are exceeding our expectations. We’re seeing the same trend extend across all of our product lines.”
Conor Bergin, AGCO’s senior marketing specialist for 100+ hp tractors, says across the industry the high-horsepower 4-wd market has increased 3.1% since 2010. He says track tractors like the Challenger MT700C and MT800C series are helping to drive this market in the Midwest.
AGCO’s Kevin Cobb, manager of marketing for combines, is seeing the same trend to upsize in his sector. He says while combine sales across the industry were actually down year-to-date through November, the larger class sizes (Class VIII and higher) are showing positive growth. “Class VIII + now represents 24.2% of the U. S. combine market compared to 21.8% in 2010,” he says. “Demand is being driven by several forces including larger planters, higher-capacity grain handling, and the risk of crop loss due to later harvest.”
Farmers are trading in older, smaller planters for newer planters so they can obtain the latest precision planting features like automatic row shut-off and variable-rate seeding. “The planter industry is up almost 17% in 2011 over 2010,” reports Tom Draper, AGCO manager of marketing, seeding and tillage. “While strong commodity prices have helped fuel this growth, the increase is also driven by growers’ demand for greater precision in planting. New technologies are giving growers the opportunity to do just that. The recent trend also shows a decline in the average size of planters being sold.”
Move to self-propelled
Higher farm profits have driven investment in self-propelled sprayers, according to Mark Sharitz, AGCO marketing director of application equipment. Self-propelled sprayers sales across the industry were up 8.5% in 2011 over 2010 and up 7.2% in 2010 over the prior year. Overall, the self-propelled sprayer market has doubled in size since 2004 with most of this growth going to the professional producer.
Sharitz explains that while pull-type sprayers are still in use, self-propelled units allow more control over application time and cause less crop damage. Self-propelled sprayers are easier to operate than just a few years ago, making them less intimidating to drive.
This relatively new method of tillage is a trend all by itself. The popularity of vertical tillage is due to its ability to size crop residue with light incorporation at high speeds. As a result, there are many competitors entering the category.
One of these new products is the Sunflower 6630 vertical tillage system introduced in 2010. AGCO’s Draper says that, since its introduction, the tool has reached high sales figures. “The Sunflower 6630 allows growers to size even the toughest residue and do moderate incorporation at a speed higher than standard tillage tools,” he explains.
Farmers are updating all of their equipment now instead of buying one piece at a time, according to Case IH’s Russell. “They are not just buying a tractor or just a combine but purchasing tillage tools and updating planters,” he says. “They are looking at packages of equipment for their entire fleet.”