WEST ALLIS, Wis. — The Association of Equipment Manufacturers has released its annual forecast for U.S. and Canadian agricultural machinery sales, providing an overall snapshot of manufacturers’ predictions for 2009 business.
Tractor sales in the U.S. for 2009 are expected to be strongest for four -wheel drive tractors and the 100-horsepower-and-over 2-wheel drive tractors, with Canadian sales strongest for two-wheel drive tractors in the under-40-horsepower range.
For combines, stronger growth is seen for the U.S. market than for Canada, according to the association’s survey predictions.
For other types of farm-related equipment covered in the survey, demand is expected to be mixed for both the U.S. and Canada.
Machinery component sales, except for engines, are anticipated to increase during 2009 for both countries.
International trade group
The Association of Equipment Manufacturers is the North American-based international trade group for the off-road equipment manufacturing industry, and it annually polls its agricultural machinery manufacturers on sales predictions for a variety of farm field and farmstead type equipment.
These companies account for a majority of agricultural equipment sold in the U.S. and Canada.
Each forecast in the survey is the average of responses from companies in each product line, predicting industry wide expectations rather than individual company performance, and unit sales rather than company profitability.
The association’s ag industry outlook for 2009 covers 24 types of farm field and farmstead type equipment.
At the time of this forecast, the market remained strong especially for four-wheel drive and the larger two-wheel drive tractors, as well as combines.
Growth in these product sectors had been fueled by increased energy demands (in part being met by ethanol production), increased commodity prices and increased net farm income, according to Charlie O’Brien, Association of Equipment Manufacturers vice president of agricultural services.
“Net farm income is a driver of equipment sales, and producers’ balance sheets overall are strong as a result of increases in net farm income, as well as increased asset accumulation and debt management. Farm debt-to-asset ratios are at an all-time low,” O’Brien said.
“The expectations were that farm equity would grow $283.5 million in 2008. Of course, the world has changed with the collapse in financial markets and continued fallout from the housing market collapse in the U.S.
“Certainly, recent economic conditions are testing the market’s confidence. But, people need food. The global population is growing, and is expected to increase 23 percent by 2025 and total 9 billion by 2050. It is predicted food production will need to increase by 50 percent by 2025 and double by 2050. Also, the demand for energy continues to rise,” O’Brien said.
Equipment will be needed to plant and harvest crops to meet both food and fuel needs. Consequently, while there will certainly be some short-term impact as a result of the overall economic slowdown, agriculture can rely upon these sound fundamentals for business longer term.
Tractor and combine sales
Combine sales are expected to increase 9.3 percent in the U.S. and gain one percent in Canada, according to the survey.
Sales of four-wheel drive tractors are predicted to increase 4.4 percent in the U.S. but show no growth for Canada.
U.S. sales of two-wheel drive tractors are expected to gain 3.3 percent for the 100-HP-and-over range; remain level (down .1 percent) for the 40-100-HP sizes and decline 11.2 percent for two-wheel drive tractors under 40 HP.
Canadian sales of 2-wheel-drive tractors are expected to increase 5.6 percent for the under-40-HP range and grow 1.6 percent for the 40-100-HP tractors, and remain level (up .3 percent) for tractors 100 HP and over.
U.S. forecast
For farm field equipment other than tractors and combines, 2009 U.S sales are predicted to be the strongest for planters, with a 9.3 percent increase, and for self-propelled sprayers, with a gain of 6.3 percent.
Sales gains are also expected for windrowers/swathers (up 3.3 percent), field cultivators (up two percent), chisel plows (up 1.7 percent), post hole diggers (up 1.6 percent), forage harvesters (up 1.5 percent) and rotary cutters (up 1.5 percent).
U.S. sales in 2009 are expected to be essentially flat for several equipment types: rectangular balers (down .5 percent), box scrapers (down .5 percent), disk harrows (down .3 percent), mower conditioners (up .1 percent) and tractor backhoes (down .7 percent).
Declines are foreseen in U.S. sales for farm loaders (down 2.8 percent) and round balers (down 2.3 percent).
Canadian forecast
Canadian ag equipment sales in 2009 will be on the plus side, according to the survey, for self-propelled sprayers (up 4.3 percent), forage harvesters (up four percent), rotary cutters (up 2.7 percent), round balers (up two percent), box scrapers (up two percent), rectangular balers (up 1.7 percent) and tractor backhoes (up 1.3 percent).
The 2009 Canadian sales of other equipment in the survey are predicted to be essentially flat: chisel plows (up .5 percent), disk harrows (up .5 percent), farm loaders (down .7 percent), field cultivators (up .7 percent) and mower conditioners (up .4 percent).
For component sales in 2009, the electronic components segment is anticipated to increase 8.8 percent for both U.S. and Canada.
Hydraulic components are predicted to gain 7.8 percent for the U.S. and 6.7 percent for Canada.
Sales of powertrains are predicted to increase 2.5 percent for the U.S. and 1.5 percent for Canada.
Engine sales (air cooled/diesel) are predicted to be flat for both markets — down .7 percent for the U.S. and down .3 percent for Canada.
Industry factors
The outlook asked farm equipment manufacturers to rate anticipated changes in more than 15 factors that have emerged as significant influences on machinery sales.
For the U.S., more than 60 percent anticipate an increase in planted acreage and an increase in grain exports.
The outlook for Canada is more subdued, with 34 percent expecting gains in planted acreage and 43 percent predicting grain exports to increase in 2009.
For U.S financial factors, slightly more than 50 percent of respondents anticipate credit availability to remain about the same, with another 32 percent expecting a modest decline.
Some 52 percent expect interest rates to remain the same, with 35 percent saying they will increase modestly.
Some 47 percent predict U.S. farm cash receipts will be modestly up, and 30 percent say they’ll stay about the same.
Net U.S. farm income is anticipated to be modestly up by 55 percent of respondents, while 24 percent predict a modest decline.
Looking at the financial situation for the Canadian ag equipment market, 79 percent of survey respondents predict no change in credit availability, and 13 percent expect a modest decrease.
Some 58 percent expect interest rates to remain the same, and 33 percent predict a modest increase.
Net farm income is expected to stay the same for Canada, say 17 percent of respondents; 67 percent see a modest increase and 17 percent predict a modest decline.
For Canadian farm cash receipts, 21 percent forecast no change; 62 percent see a moderate increase and 17 percent expect a moderate increase.
Replacement demand for equipment in the U.S. is expected to remain the same (44 percent of respondents) or increase modestly (47 percent).
For Canada, replacement demand for machinery is anticipated to stay the same, say 39 percent of respondents, while 35 percent predict modest increases and 22 percent expect a moderate decline.
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