Slumping Equipment Sales

Rising input costs and profit challenges for crop producers continue to be reflected in poor equipment sales. Equipment dealers and manufacturers had a particularly poor month in September. According to the Association of Equipment Manufacturers (AEM)’s monthly Ag Tractor and Combine Report, September tractor sales were down 16.4% and combine sales down 10.9% year-over-year. Sales of 4-wheel-drive tractors were down 20.2% with just 233 units sold. For the year, tractor sales are down 12.6%, with 4-wheel units down more than 23%. Last year nearly 155,000 tractors were sold during the first nine months of the year compared to this year’s sales of just over 135,000 units. Year-to-date sales of combines are off 9.4%.

Figure 2. U.S. Unit Sales of Tractors & Combines

September’s Purdue University-CME Group Farm Capital Investment Index underscores the difficulty for equipment manufacturers and dealers. The index is based on responses to a monthly survey of 400 farmers across the U.S. The September index dropped 6 points to 39, the lowest reading since the fall of 2024. A year ago, the index exceeded 50 points. The lower reading evidences farmers’ increasing reluctance to purchase equipment. In addition, the Farm Financial Performance Index fell to 90 in September, down 13 points from August. The decline indicates greater pessimism among farmers about their financial prospects.

Figure 3. Purdue University-CME Group Farm Capital Investment Index

Farm finances in general remain solid because of high cattle prices, steady land values, and an influx of federal government assistance. Yet producers remain cautious in their spending because of rising input costs, sluggish commodity prices, and great uncertainty. This caution will continue to afflict equipment manufacturers and dealers.