Sales of tractors and combines in both the Canadian and U.S. markets are expected to drop significantly in 2010 from 2009 levels.
The Milwaukee-based Association of Equipment Manufacturers, a trade association for over 800 makers of farm, forestry, construction, mining and utility equipment, said last week that it expects to see double-digit decreases, percentage-wise, in sales of combines and four-wheel-drive tractors in 2010 from 2009 levels.
That follows “relatively flat” sales in 4-WD tractors, as well as sales growth in combines, in 2009, the association said in a release.
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For all sizes of two-wheel-drive tractors, however, declines are expected to be less steep than the drop seen during 2009, the AEM said.
For other types of farm-related equipment in the AEM’s annual survey, overall 2010 demand for most products in the U.S. and Canada is expected to improve after 2009 business declines.
Specifically, in Canada, 4-WD tractors are expected to see an 18.3 per cent drop in sales in 2010 compared to a 19 per cent drop in the U.S. and a 12.3 per cent increase in Canada in 2009. Canadian sales are then expected to rise by 0.7 and four per cent in 2011 and 2012, respectively.
Canadian sales of self-propelled combines, for another example, are expected to drop by 13.3 per cent in 2010, eight per cent in 2011 and 0.3 per cent in 2012, following a 7.5 per cent increase in 2009. U.S. combine sales are expected to drop by 11.8, seven and 0.3 per cent in 2010, 2011 and 2012 after an 8.5 per cent increase in 2009.
“The recession reached the agricultural sector in 2009, and the drop in equipment sales in most categories is attributed to a combination of the fall in commodity prices, significant drops in net farm income, the tightening of credit throughout the ag equipment distribution channel, and the overall reduction in economic confidence,” AEM vice-president Charlie O’Brien said.
“The recession is expected to continue to drive negative growth rates in many equipment categories in 2010,” he said, but added “it is important to keep in mind that the larger equipment has been coming off of some very good production years, specifically the 100-horsepower tractors, which were at a 25-year-high watermark in 2008.”
Market uncertainty is also expected to catch fire from “legislative issues,” the AEM said. As examples it cited cap-and-trade; increasing food production while cutting agriculture’s contribution to greenhouse gases; mandatory U.S. country-of-origin labeling; and emission standards that are expected to raise the cost of powered farm equipment.
AEM’s annual survey polls its member manufacturers on sales predictions for a variety of farm-related equipment, and bases its forecasts on the average of responses from companies in each product line.
The association, which also operates offices in Ottawa, Beijing, Washington, D.C., and Namur, Belgium, lays out its forecasts on “industry-wide expectations” rather than individual members’ performance, and on unit sales rather than company profitability.
