Many people were happy to put 2020 in the rearview mirror after experiencing a variety of challenges triggered by the coronavirus pandemic.
But for the ag equipment industry, the past year generally turned out better than expected.
Sales from January through November increased 16.4% for farm tractors and 6.4% for combines in the U.S. compared to the same stretch in 2019, the Association of Equipment Manufacturers (AEM) reported.
“All things considered, it looks like we’re going to end 2020 on a high note with tractor and combine sales combined,” Curt Blades, senior vice president of ag services for AEM, told FarmWeek.
“A lot of it has been the under 40 horsepower tractors. We’ve seen about a 20% increase (in those sales) for the year.”
Sales of under 40 horsepower tractors increased about 30,000 units to a total of 182,461 the first 11 months of 2020 compared to 2019. Small attachments and implements also sold well as people invested in their homes and properties amid stay-at-home orders as part of coronavirus mitigation efforts.
“Certain segments of the market are doing particularly well,” Blades said. “We’re seeing a lot of first-time buyers as people invest more in their homes.”
Sales of larger tractors also increased in 2020 by 11.9% for 40 to 100 horsepower tractors and by 1.2% for 100-plus horsepower tractors. Sales of four-wheel drive tractors increased 4.7% during the same time.
“We’ve seen nice growth in the 40 to 100 horsepower tractors and even 100 horsepower and over are up,” Blades said.
“Tractor and combine sales are capital decisions, not entered into lightly,” he continued. “You’ve got to feel pretty good about what your business looks like the next few years. A combine or even a large tractor are approaching a half-million-dollar investment.”
Drivers of large equipment sales include better-than-expected farm income, government payments, the desire for new technology to improve efficiency and possible capital investments to help with 2020 taxes, Blades noted.
“We’ve seen reports farm income is expected to be up in 2020, largely because of government support,” he said. “But, also, there’s some pretty good crops out there, and there’s been a market rally. These all contribute to the overall sales picture.”
Looking ahead, Blades believes the equipment industry can carry some of the momentum into this year.
“At this time last year, economists were pointing to 2020 being a down year (for equipment sales), which turned out better than expected,” he said. “Economists still point to 2021 being a good year for farm income, which tends to translate nicely into capital equipment sales.”
AEM’s ag-related priorities for this year include working with the new administration and lawmakers to make sure farmers have an adequate safety net and demand for their products, access to rural broadband so they can take advantage of new technology and recognize ag could play a key role addressing environmental issues.
“Farmers are the original conservationists, stewards of the land,” Blades added. “Farmers are part of the solution.”