Most of us have heard the predictions of a bumper crop this year. For farmers that can be good and bad – good because a big harvest means the bins will be full and farmers will have plenty of crop to sell. But bad because a bumper crop typically means lower prices. Farmers who priced their crop in advance may be able to take advantage of good prices and a bumper crop, but experts are forecasting farmers’ net income may drop.
Farm machinery sales may be negatively affected by the drop in income.
“From a farmer’s perspective, they are looking at a huge crop – the size they’ve never seen before,” said Rich Guebert, president of the Illinois Farm Bureau. “Farmers in the Dakotas still have last year’s crop in the bin. We don’t’ have rail cars like we used to. We’re going to see piles of corn on the ground around the state and throughout the Midwest.
“It will be a tough time for machinery dealers as farmers start to tighten their belts,” he added.
The best tightening has already started for some farmers.
Farm machinery sales the first half of the year declined 8.7 percent for 100-plus horsepower tractors, 11 percent for four-wheel drive tractors and 15.2 percent for combines, according to the Association of Equipment Manufacturers.
CNH Industrial, makers of Case IH, reported second quarter net sales increased almost 1 percent, but ag equipment profits during the same period declined 14 percent.
John Deere’s second quarter featured similar results as net sales and revenue declined 9 percent.
Moline-based Deere responded last month as it intends to indefinitely lay off more than 600 employees at four production facilities, including East Moline and Moline, due to slumping demand.
Deere & Co stated that “to remain globally competitive, the company must align the size of its manufacturing workforce with market demands for products.”
Equipment manufacturers seem to respond to the situation by offering farmers new options to improve efficiency and reduce inputs. Most major manufacturers rolled out new products and updated lines last week at the Farm Progress Show in Boone, Iowa.
Deere last week introduced a new large square baler, a new windrower and forage harvester among other products. The largest tractors made by Deere, the 9R and 9RT that feature up to 620 horsepower, also were on display.
Meanwhile, Case IH last week introduced a Magnum Rowtrac tractor that pairs an oscillating rear-track system with front tire options to fit almost any row width. The new tractors could benefit specialty crop producers and row crop farmers.
Hopefully, there will be cash in farmer’s pockets to purchase new items.