Milwaukee,
26
August
2021
|
15:30 PM
Europe/Amsterdam

AEM Explains Farmer Optimism, the Supply Chain and Effects on Tractor, Combine Sales

 

“There are definitely two different markets for ag tractors and combines,” explains Curt Blades, Senior VP of Ag Services for the Association of Equipment Manufacturers (AEM). “You have farmers that are using small tractors. You also have a lot of folks that might have an acreage, or a small or large homestead where they need a tractor to perform some chores there.”

In the 2nd Quarter of 2021, the money that had been diverted by the pandemic from travel and other Covid-affected activities into the small tractor market has started to return to normal use. Sustained ag commodity price gains, however, have resulted in farmers continuing their buying spree for larger tractors and harvesters, as reflected in AEM’s monthly Ag Tractor and Combine reports.

“We’ve seen a little bit of softness in the under-40 horsepower market, compared with the sizable numbers from last year,” said Blades. “What I’d really like to point out with the 2nd Quarter sales numbers are the row-crop tractors and the ag tractors. Row crop tractors have been performing quite well for the 2nd Quarter of 2021. We’ve also seen positive numbers in articulated four-wheel-drive, and even combines are showing some real signs of life in the market.”

Blades says the biggest driver of those big-ticket equipment sales are the higher than usual commodity prices and farmer confidence that those prices are going to stay where they are for a while.

“At the end of 2020, we started to see some solid commodity prices,” Blades said. “And that’s continued on through 2021 all the way up until the 2nd Quarter, which is good news.”

In Canada’s 2nd Quarter, the smaller tractor market has held on a little more strongly.

“We did see a little bit of a slowdown in the growth of the under-40 horsepower tractor market in the U.S., and that hasn’t happened as quickly in Canada,” Blades explained. “But we’re still seeing those markets operate in tandem with one another.”

However, the supply chain, especially in terms of the availability of semiconductors, is restricting the available inventory of equipment across all segments. Total tractor inventory at the end of the 2nd Quarter of 2021 (as indicated in the July 2021 report) is down more than 37 percent compared to the same time in 2020 in the U.S, while combine harvester inventory is down nearly 13 percent. In Canada, the story is the same with 2021 tractor inventory down 28 percent versus 2020, and available combines down 21 percent.

“Everyone knows about the supply-chain issues that are hitting the entire industry, whether it’s buying tractors, combines, trucks or pinball machines. There is clearly some pressure in the supply chain right now,” Blades said. “We continue to work hard with our manufacturers, and manufacturers are working closely with their suppliers and their dealers to make sure there are parts available as we get into harvest, and as we get into the busy seasons.”

Blades says AEM knows the demand for new equipment is high and the association is doing everything it can to work with its member manufacturers to get machines on dealer lots and keep order times down as much as possible.

About the Association of Equipment Manufacturers (AEM)

AEM is the North America-based international trade group representing off-road equipment manufacturers and suppliers with more than 1,000 companies and more than 200 product lines in the agriculture and construction-related industry sectors worldwide. The equipment manufacturing industry in the United States supports 2.8 million jobs and contributes roughly $288 billion to the economy every year.