16 / 46
16
Oct. 27, 2016
2016 Logan County Fall Farm Outlook Magazine
Lincoln Daily News
I
n the past few years, high corn yields that have
resulted in lower commodity and lower farm
profits have also had an affect on equipment
sales around the U.S. and in central Illinois.
This trend has been occurring for a couple of years.
In an October 2015 Illinois Farmer Today article
discussing the connection between lower corn
prices and equipment sales, Nat Williams said,
“Tighter profit margins largely due to falling grain
prices have slowed sales of tractors, combines, and
other high-dollar pieces.”
In the same article, vice president of industry
relations with the North American Equipment
Dealers Association, Joe Dyke said, “There is no
question that new equipment sales have dropped
off considerably, and probably will until the farm
economy picks up.”
Food commodities trader Olam International Ltd.
believes low grain prices will continue in 2017.
Their chief executive officer, Sunny Verghese
says, “Wheat prices have fallen to their lowest in
10 years, while corn is at levels last seen during the
global financial crisis, as farmers in key growing
regions, including the U.S. and Russia, harvest
bumper crops. Low grain prices have been a boon
for consumers and companies such as Nestle
SA and Kellogg Co. but are hurting farmers and
agribusiness including Deere & Co., the world’s
largest manufacturer of tractors and combines.”
A September 2016 Tractor and Combine Analysis
from the Farm Equipment Manufacturers
Association’s Charlie Glass likewise predicts lower
equipment sales will continue. Glass says, “Net
farm income for 2016 is expected to be around
$94 billion and that is more than a 30% decline
from the record level seen in 2013. Even when the
$7 billion in insurance payments are added to the
projected net farm income for 2016, it is still 25%
lower than the 2013 high point. As we have noted
repeatedly, net farm income is a major indicator of
the next year’s equipment sales and this does not
bode well for an increase in unit sales for 2017. “
Data from the Association of Equipment
Manufacturers shows a decline in sales of larger
tractors and combines in 2016.
The “United States Ag Tractor and Combine
Report” for September 2016 from the Association
of Equipment Manufacturers (AEM) shows sales
in the US of four wheel drive tractors used by
cropping farmers are down by 32.4 percent since
this time last year.
Combine sales have seen a similar, though smaller,
decrease. AEM says, “Combine sales in the US
dropped by 24.2 percent between 2015 and 2016.”
How commodity prices and profits
are affecting equipment sales
By
Angela Reiners
Continued ►