Bumping my way past crowds, tractors and equipment at a couple major shows in the last few weeks was a key indication that farmers are still out there interested in buying. The latest figures from the Association of Equipment Manufacturers does not dispute that point, in fact February numbers show some strong growth for most sectors, except combines.
In the February Flash Report, sales of 40 to 100 horsepower tractors rose 14.6% over the same month a year ago, for 100-plus hp tractors, the number is up 14%. Four-wheel drive tractor sales rose 12%. And combines took a dip in year-over-year sales down by 53.7%. And under-40 hp tractors saw a slide of about 2% too.
While the dip in combine sales is not a bright spot in the figures, overall equipment sales keep pushing up the 5-year average, and in the last two months of 2011 sales pushed past that long-term average.
The mood at the shows I attended was great, farmers are looking and they want the newest, most efficient tools to get the job done. How long this demand will last is directly related to total farm income numbers, which remain at near record highs for now - and while predicted to dip in the next year won't slide too far.
However, longer-term numbers are a concern as you talk to anyone in this farm business. The running commentary is "this has been a great ride, but how long can it last?" Most producers are banking some of their hard-earned cash in anticipation of what we all know must happen, the cycle will turn. But for now farmers are also reinvesting in their businesses, making significant capital investments in their operations in a move to boost productivity and efficiency in their operations.
Capital purchases are never an easy decision. Add in that demand has manufacturers pushing hard to fill orders and it's apparent that for now 2012 is a very solid year. Those soft combine numbers are one interesting data point, and year-over year drops of 50% are a concern.
You can check out the February Flash Report online to see overall tractor and combine sales figures. Inventory estimates show an increase across the board - except in combines, where companies are tightening supplies. Makes sense given those softer sales numbers.