National Farm Machinery Show: U.S. farm economy is going strong

LOUISVILLE, Ky. — One look around the National Farm Machinery Show, Feb. 16-19, and you quickly picked up signs the farm economy is going strong.

Equipment in exhibits boasted hand-lettered “sold” signs. Manufacturer reps and salesmen were busy. Attendees was up, and both exhibitors and visitors seemed upbeat.

“It’s been nonstop,” said Dave Gunkelman, regional sales manager for Salford Farm Machinery. “There’s just a lot of happy farmers, and there are definitely guys here on a mission.”

Little inventory

But as the ag industry steps further out of the economic doldrums that struck in late 2008, there’s one hangover: No one is stocking inventory like they used to, as manufacturers and dealers pay closer demand to market supply and demand.

“The days when you could stop at a dealership and take something home off the lot are over,” said Nelson Witmer, president of Witmer’s Inc., an AGCO dealership in Columbiana County. “You have to pre-order and pre-plan.”

Exhibitors at the national show agreed, including Dennis Hohlbinein, a salesman for Unverferth Manufacturing Company.

Hohlbinein, whose district includes Ohio, said the most of the factory inventory is out and any inventory left is at the dealers, and even that was spotty.

He estimates the lead time on a new order is between 30-60 days.

Unverferth produces grain handling, hay handling, tillage, seed tenders, wheel products and bulk handling equipment for planting.

Grain markets

Hohlbinein attributed the growing ag economy to the booming grain markets, saying there is no doubt the higher grain prices have farmers looking not just to replace equipment, but to get bigger equipment.

“The demand is going strong for new equipment,” Hohlbinein said. “A farmer used to purchase something that would handle 750 bushels, and now they are wanting equipment to handle 2,000 bushel,” said Hohlbinein.

Salford’s Gunkelman said the big draw to their exhibit were the vertical tillage implements.

“Farmers are looking for ways to be more efficient with the land they’re farming,” he said.

But he cautioned, too, to preplan your purchases. The company has a six-week lead time on its RTS (Residue Tillage Specialist), it’s sold out on drills, sold out on the new RTS HDXT, and is 12 weeks out on other implements.

World view

Phil Kimmel, Farm Credit Services, said the farm loan sector saw a lot of activity in the last quarter of 2010, but it seems to be leveling off.

Kimmel attributed the activity to potential tax changes and the grain prices. In addition, many loans have been secured in areas with lots of farmland activity for real estate.

They haven’t seen much of an uptick in the operating loans sector, however, he said, because many farmers have the liquidity because of grain prices for the inputs needed.

“Farmers have a good cash position right now,” Kimmel said.

He said not only do the grain markets look good for the rest of 2011 and possibly into 2012, but the cattle markets are also looking good.

He explained that more protein is being consumed worldwide, which is also affecting our markets.

“What’s going on around the world is having a bigger impact on our economy than what’s happening in our backyard,” Kimmel said.

For example, he said the use of ethanol and the drought in Russia is also hitting our marketplace, which can be good for producers.

Livestock

Exhibitors like Eby Trailers, also reported a much better mood than in the past couple of years at the National Farm Machinery Show.

Steve Rittenhouse, a salesman for Eby Trailers, said livestock producers feel more comfortable with prices for their livestock.

“They’ve already seen the bottom in the market and feel good about the future,” Rittenhouse said.

Kirk Swensen, regional sales manager for Eby, said the high grain prices aren’t scaring the livestock producers because they know that the livestock prices are increasing to go along with the grain prices.

“It’s all hooked together… better beef and hog prices,” Swensen said.

Swensen added the consumer looking for a trailer for around their house is also starting to buy again, signaling a turnaround in the general economy.

Looking ahead

Shawn Smeins, with Rabo AgFinance, said the company has also seen an increase in loans for real estate and operating loans.

“Clients may be borrowing more, but they are locking them in with the low rates for a longer period of time,” Smeins said.

He added that way clients are using the correct risk management tools to handle the volatility in the marketplace.

Smeins emphasized farmers need to be sure their lenders know the operation and its goals.

“Make sure your have a good banker who knows you and your operation,” Smeins aid.

Comparison shopping

The National Farm Machinery Show features more than 850 ag-related displays under roof in the eight connected exhibit halls at the grounds of the Kentucky Exposition Center. It can be overwhelming, but it also offers a great opportunity for side-by-side comparisons of equipment.

“I don’t mind them comparing,” said dealer Nelson Witmer, who brought a busload of 50 eastern Ohio and western Pa. farmers to the farm show.

And there’s no place else like Louisville to see the latest technology firsthand.

(This report was compiled by editor, Susan Crowell and reporter, Kristy Foster.)