(Resource News International) — Farm equipment dealers in Canada are selling out for 2008-09 as producer demand for farm equipment rises to the highest levels seen in years, according to industry officials.
“It’s so busy that manufacturers are out of equipment,” said Alex Loewen, general sales manager for Deere Country Equipment in Steinbach, Man.
“We are a John Deere dealership and I cannot get a combine until 2009, a four-wheel drive until 2009, and low-crop tractors are also done until 2009. Some inventory is available in August and September of 2008 and I can still get small tractors and hayers in for July or August,” he said.
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Doug Warrener, New Holland’s ag manager for Western Canada, said the problem for agricultural retail sales this year is one of supply, rather than demand.
“Sales are strong for all categories of big equipment. Anything related to cash crops or small grains is certainly very strong. Seeders, big tractors, combines, spraying equipment, for anything like that sales have been very brisk.” Depending on the product, wait times of six months to a year are not uncommon, he said.
Loewen and Warrener both agreed sales for good; used equipment have also been strong.
“It’s tough to get equipment now,” Loewen said. “Other dealers are calling to ask for used equipment. We have a little bit of used equipment on our yard but it is all moving before it hits the showroom.”
Record-high commodity prices are the reason for the increased demand this year. With more money in their pockets, producers in Canada and the U.S. are deciding to purchase farm machinery while they can afford it.
“When farmers have money, they see opportunities to get the machines they need and to make improvements on their farm operations,” said an official with John Deere’s head office. He noted that since joining the company in 1980, he has never seen such high North American demand.
“We’re doing the best we can to get things done in a timely basis but the demand has exceeded what we anticipated earlier on so we’re trying to make adjustments now,” he explained.
According to John Deere’s 2008 first-quarter report released Feb. 13, net sales for the 2008 fiscal year are expected to increase 17 per cent over 2007. The report also says the industry outlook for ag equipment retail sales in Canada and the U.S. forecasts a 15 to 20 per cent increase for 2008, up from the Nov. 21, 2007 forecast calling for a 10 to 15 per cent increase.
The company announced Feb. 28 it will spend US$90 million to expand manufacturing capacity for large, high-horsepower tractors at its plant in Waterloo, Iowa in response to heavy demand.
Gene Hemphill, manager of North American industry affairs for New Holland, said “there’s been good news for the farmers and they don’t hear good news that often. As a result, they’re all buying equipment. For manufacturers it’s a spike in the market cycle.”
New Holland is working hard to meet producer demand, Hemphill said, but he noted the solution is not as easy as simply increasing production. He said the company is working closely with regional sales managers to identify the areas where demand is highest and also to correctly identify which equipment is most sought after.
“The company is also looking at the various inventories in different regions to make sure the equipment that’s left across the country is being utilized, transferred to where it is needed most. We’re trying to make sure that every farmer gets the piece of equipment he wants in a timely manner,” he said.
Looking forward, Warrener believes the optimism regarding commodity prices will last for a couple of years.
“Certainly everything we’re doing is geared toward trying to pre-order and pre-sell for next season’s use so we can manage this improvement in the farm economy.”
“It’s about time this happened,” Warrener added, referring to the spike in grain prices. “Farmers have been plugging along for years trying to be profitable in a low-commodity priced market and now it’s finally their turn.”
