A Quieter Farm Machinery Show

Jim Patrico
By  Jim Patrico , Progressive Farmer Senior Editor
As the National Farm Machinery Show prepared to open last week, exhibitors had lots to show but no blockbuster announcements from the majors. DTN/The Progressive Farmer photo by Jim Patrico)

It's no secret farm machinery sales are slowing. So it won't come as a surprise that major manufacturers didn't have any blockbuster new product introductions at last week's National Farm Machinery Show in Louisville. Don't get me wrong; everyone had something new to sell. And the show itself was plenty busy. On its 50th anniversary, the NFMS drew more than 310,000 attendees.

But 2015's was a different show. In previous years companies like John Deere, Case IH, New Holland and AGCO often rolled out something really big in Louisville. Last year, for example, was the year of the planter. Deere, Kinze and Precision Planting all had game-changer products to reveal including super-fast planters and planters that can carry and precisely place two different hybrids. Lots of big news; plenty of buzz.

This year, by comparison, was quiet.

For months, I've watched market analysts report on slumping sales, especially of high horsepower tractors and combines. Farmers had bought those aplenty when corn and soybean prices soared in recent years. Now that commodity prices have come back to earth, observers expect farmers to put their wallets back in their pockets and farm machinery companies' revenues to dip. So I went to Louisville with no great expectations of grand announcements. Manufacturers, I reasoned, are likely to hold back great innovations a year or two until the market loosens up.

In talking to exhibitors -- both large and small -- I learned that low commodity prices and the tighter machinery markets they created are only two factors in machinery companies deciding to forgo major new product introductions. Another key factor was the Environmental Protection Agency's clean air initiative that mandated less pollution from diesel engines. For several years, companies spent millions to develop new technologies to meet Tier 4 regulations. The race to Tier 4 Final goals ended for most categories of engines last year. But running the race exhausted companies' R&D budgets and occupied much of their engineers' time.

Even without Tier 4 investments, R&D budgets run in cycles (Five years is a common cycle length for each category of machine.) So 2015 likely penciled out as a slower new product year anyway. Of course, lower commodity prices didn't help.

Speaking of cycles, I also saw a surge in Louisville of new small tractors and small tractor brands. In the early 2000s and right up until the Great Recession, new owners of small acreages went on a buying binge and 40-hp and under tractors sold like leather coats at a biker convention. During the Great Recession ... not so much.

Now there seems to be a new migration to the country, or maybe those 10-year-old tractors are too old for country gentlemen.

Here is what Agrievolution, an international association of farm machinery manufacturers reports about small tractor sales in the U.S. and Canada: "In both countries, the 'semi-professional segment' below 40 hp makes up about 50% of the market volume. While demand for these lower power categories had calmed down considerably between 2009 and 2011, i.e. in the course of the financial and subprime crisis, a clear recovery could be observed in the past two years, with sales exceeding the 100,000 units mark again in the US alone."

The same Agrievolution report suggests that total new tractor sales -- including utility, row-crop and high horsepower tractors -- this year could be down as much as 20%. If so, 2016 could also be a quiet year.


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