One Tractor Month, Two Tractor Stories

Farm tractor sales continue to be a story of ... well, of two stories. Both are told in the April 2023 Ag Tractor and Combine report, a monthly narrative of preliminary retail sales of ag equipment published by the Association of Equipment Manufacturers (AEM).

Story No. 1: Small tractors, less than 40 horsepower and those 40-100 hp continue, as they have for many months, to take it in the chops. These units were the stars of early COVID, a bright spot in the industry, as small landowners set up offices at home and decided the work out their windows required a new tractor.

Times have changed. For April 2023, compared to April 2022, sales of less-than-40-hp tractors are down 20.1% -- a difference of 3,500 units. For the year, January-April 2023 compared to the same period in 2022, sales of these units are down 20.2% or almost 12,500 units.

It's a similar story for tractors 40-100 hp. April sales were off 13.7% compared to the same month last year. And sales in this grouping are off 12.2% or 2,400 for the year to date compared to the first four months of 2022.

Story No. 2: Commercial farmers seem intent to keep investing in commercial-sized tractors and combines.

Sales of 100-plus-hp tractors were up 5% in April 2023 compared to April 2022. April was typical for recent months. For January through April 2023, the industry sold 5.1% more tractors in this group than during the same four-month period in 2022.

Sales of the largest, four-wheel-drive farm tractors are up sharply. In April, compared to April 2022, four-wheel-drive tractor sales were up 54.1%, and are up 51.6% this year, compared to the January-to-April timeframe of 2022. The actual unit numbers sold are not as large as smaller tractors. But at plus-441 for the four-wheelers this year over the same period as in 2022, manufacturers won't complain.

Is the increase in sales of these tractors a continuation of the run to technology, an attempt to avoid higher interest rates or inventory turnover? It's hard to tell with these tractors. They are pricy, but there was good profitability in the 2022 crop. One farmer told me growers might be averse to supply chain problems -- a hard lesson learned over the last few years. Farmers may be buying the quality of new, rather than waiting on parts for old(er) equipment.

One thing is for sure: New-crop prices are not as favorable as last year. Will this good tractor market take a turn? The months ahead will tell the story.

Combine sales are also doing well. For the year, 2023 sales are up 71.9% compared to January to April 2022. For the month, April 2023 combine sales were up 23.1% over April 2022. Combines have been selling well all year. Sales were reported up 132% in February compared to February last year. Sales cooled a bit from February's unsustainable activity but were still plus-47.1% in March 2023 compared to March 2022.

Year to date, combine sales remain highly impressive. For the first four months of 2023, the ag machinery industry has produced 2,078 combines compared to the 1,209 combines sold during the first four months of 2022. Manufacturers rolled 564 combines off their assembly lines in April 2023.

Dan Miller can be reached at dan.miller@dtn.com

Follow him on Twitter @DMillerPF

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