Farmers and ranchers are people too. And, just like other people, when their incomes rise they spend more. Except producers tend to invest the money on machinery and equipment. Thus, the latest sales figures from the Association of Equipment Manufacturers come as no surprise. Higher commodity prices and improved farm income has led to increased farm equipment sales.
Figure 3, from the Association of Equipment Manufacturers, shows monthly tractor and combine sales between 2018-2021 along with the 5-year sales monthly average. Equipment sales surpassed previous years’ sales beginning in April of last year and have continued to do so ever since. Sales during the first five months of 2021 have grown even higher. Year-to-date through May, total farm tractor sales are up 26 percent, or nearly 28,000 units, compared to the same period last year. Combine sales are up over 200 units, or 13 percent. In addition, the Rural Mainstreet Report by Ernie Goss of Creighton University say its survey shows the best growth in agricultural equipment sales since 2012.
Increased purchases of equipment along and supply chain issues are creating shortages and waiting times for both new equipment and parts. Shortages of microchips, steel, plastics, and tires, along with labor shortages, are slowing production and deliveries of equipment and parts. Reuters reported tractor supplies are the tightest in 18 years. Progressive Farmer reported a Texas farmer spent hours calling and searching for a sprayer part and drove five hours round trip to obtain it. No doubt Nebraska farmers could tell similar stories
Once again, COVID-19 is mostly to blame. Manufacturers cut production last year due to an expected downturn. When the demand for equipment and parts instead increased, manufacturers struggled to replenish inventories. The struggles show agriculture isn’t immune from the supply chain troubles plaguing other economic sectors. Producers should plan accordingly, particularly with harvest season only a few short months away.
Figure 3. U.S. Tractor & Combine Sales