Farm equipment sales forecast for 2009
According to a release published in High Plains Journal, equipment sales are forecast to be strongest in the US for higher powered tractors and stronger for combines than in Canada, based on survey results from the Association of Equipment Manufacturers.
January 5, 2009 By High Plains Journal/Association of Equipment Manufacturers
January 5, 2009
The Association of Equipment Manufacturers has released its annual forecast for US and Canadian agricultural machinery sales, providing an overall snapshot of manufacturers' predictions for 2009 business.
Tractor sales in the United States for 2009 are expected to be strongest for 4-wheel-drive tractors and the 100-horsepower-and-over 2-wheel drive tractors, with Canadian sales strongest for 2-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 AEM survey predictions.
For other types of farm-related equipment covered in the AEM survey, demand is expected to be mixed for both the US and Canada. Machinery component sales, except for engines, are anticipated to increase during 2009 for both countries.
AEM 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 United States and Canada.
Each forecast in the AEM 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 AEM ag industry outlook for 2009 covers 24 types of farm field and farmstead type equipment.
AEM Vice President of Agricultural Services Charlie O'Brien provides some perspective:
"At the time of this forecast, the market remained strong especially for 4-wheel-drive and the larger 2-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.
"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.
"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.
"Equipment will be needed to plant and harvest crops to meet both food and fuel needs. Consequently, while we will certainly see some short-term impact as a result of the overall economic slowdown, agriculture can rely upon these sound fundamentals for business longer term."
To view this story in its entirety, go to: www.hpj.com/archives/2009/jan09/jan5/Farmequipmentsalesforecastf.cfm?title=Farm%20equipment%20sales%20forecast%20for%202009