The precipitous drop in farm machinery sales seen in recent years will likely begin leveling off in 2017 but the industry’s outlook remains glum, experts say.
Manufacturers aren’t expected to see sales rebound until 2018 or 2019, when crop prices are projected to strengthen, Langemeier said. “Eventually, people will have to buy machinery, but 2017 isn’t the year they will do that,” he said.
Unit sales of large tractors and combines have decreased by more than half since 2013, the most recent peak, according to the Association of Equipment Manufacturers.
In 2016, farmers bought 26 percent fewer combines, 26 percent fewer four-wheel-drive tractors and 22 percent fewer two-wheel-drive tractors over 100 horsepower compared to the previous year, according to AEM.
The steep decline in commodity crop prices has stabilized, so the deterioration of demand for farm machinery probably won’t be as brutal in 2017, said Eli Lustgarten, an industry analyst with Longbow Securities.Even so, sales of large equipment will likely fall another 5-10 percent, he said. “It’s a weak market.”
The Association of Equipment Manufacturers doesn’t expect positive sales news in the coming year, but the group hopes that 2017 will at least mark an end to double-digit declines, said Charlie O’Brien, the organization’s senior vice president.
Manufacturers learned their lesson from the agricultural downturn of the 1980s and were prepared to be “more nimble” when the “abnormal times” of unusually high commodity prices ended, he said. The adjustment has involved lay-offs and factory closures, O’Brien said. “It’s a constant effort to right-size operations.”
Dealers have done a good job of clearing out inventories of used combines, but still face a surplus of used large tractors.