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Tightening farm margins haven’t slowed many farmers from purchasing new equipment heading into harvest.
The big question remains availability of products as tight supplies continue to expand wait times for new equipment and maintain pressure on the used market.
“The amount of equipment pre-sold before it’s even built is more than I’ve ever seen,” Britta McSparen, program manager for DLL, an equipment finance company for more than 60 years and subsidiary of Rabobank, told FarmWeek at the Farm Progress Show in Boone, Iowa.
“There’s still a struggle with the supply chain,” she noted. “It’s impacting trades. Some farmers have to fill a gap if they give up their trade-in before they have their new equipment.”
McSparen advises farmers work with their equipment dealers to secure short-term rentals or demonstration equipment if they’re trading in used machinery and are on a waiting list for a new tractor or combine.
Supplies remain tight, though, so farmers generally are very active when shopping for new equipment, according to Brent VerPloeg, director of program management for DLL’s food and ag global business unit.
“With what little equipment is out there to buy, those who can do it are doing it,” VerPloeg said. “It’s not that farmers aren’t buying, there’s just not enough to buy.”
U.S. farm tractor sales declined 21% in July compared to 2021, the Association of Equipment Manufacturers (AEM) reported.
But, sales of heavy duty ag tractors remain strong with 100-plus horsepower, two-wheel drive and four-wheel drive tractors both up 22% in July. Economic struggles in the U.S. so far have had a bigger downward impact on consumer and recreational tractor sales, according to McSparen.
Mid-range tractor sales declined 16% in July while sub-40 horsepower tractors sales dipped 28%, AEM reported.
Meanwhile, combine sales increased for the second straight month in July, up 9.2%.
“Right now, the trends we’re seeing in farm equipment unit sales tracks with trends we’re seeing in the overall economy,” said Curt Blades, AEM senior vice president of industry sectors, product leadership. “The sectors that are still positive, harvesters and row crop tractors, are high-dollar units. Farmers don’t invest in this kind of equipment unless they feel certain enough future markets will allow them to pay for them.”
VerPloeg has not seen any significant issues in ag equipment financing despite recent economic headwinds.
“If we get an application in our office and the farmer has a history of being successful, it’s probably an approval,” he said. “They (farmers) don’t care about the financing program. They care more about when can they get (the new equipment).”
An environment of rising interest rates typically boosts interest in lease programs instead of loans for new ag equipment. But, that hasn’t been the case yet, with strong demand for both financing options, McSparen added.