In the middle of a gruesome war in Ukraine, with its death, destruction and economic disruptions, it is hard to decipher the worldwide impact on manufacturing. But it must be recognized that it is one more worry for purchasing executives looking to supply their production lines with parts and materials.
"It's just heartbreaking what's happening in Europe and Eastern Europe, in Ukraine," said Curt Blades, senior vice president, industry sectors & product leadership at the Association of Equipment Manufacturers (AEM). "There's not a ton of [ag] manufacturing [in Eastern Europe], specifically in Ukraine. But there is manufacturing in Russia. More, those are important [grain] production areas. As a result, they're important markets for machinery. And, obviously, we operate in a global market. I can't predict what all this is going to look like. I will be wrong six hours from now. But let's add it to the mix of things that are disrupting the supply chain right now."
Blades spoke with DTN/Progressive Farmer on Friday from the Commodity Classic in New Orleans. The Classic ended Saturday, March 12. He also spoke with us about the domestic tractor and combine market.
AEM has just released its U.S. February 2022 Ag Tractor and Combine Report. Total tractor sales year-to-date are up 5% through February 2022 compared to January-February sales in 2021, AEM reports. U.S. total farm tractor sales grew 9.2% in February 2022 compared to February 2021.
"Strength in the commodities markets is continuing to drive a lot of the sales growth, which we see in that continued growth in bigger row-crop units. And with fuel prices seeming to be on their way up for the foreseeable future, it's possible even more farmers will want to get in on the efficiencies that new equipment has to offer."
Sales of 100-hp-plus tractors are the hot sellers in 2022. Sales are up 27.9% in February 2022 compared to February 2021, AEM reports. Year-to-date January-February 2022, compared to January-February 2021, 100-hp-plus tractor sales are up 17.5%.
"I think that's a pretty good indication of where the farmer attitudes are," Blades said. "You don't go and invest in capital equipment if you don't think you're going to be around next year."
Small tractor sales remain up -- although not as sharply as had been the small-tractor trend for most of 2021.
Year-to-date, January-February 2022 over January-February 2021 sales of tractors under 40 hp are up 5.1%. For the month, February 2022 compared to February 2021, sales are up 8.1%.
January-February 2022 sales of 40- to 100-hp tractors, compared to the same two months in 2021 are up 1.1%. For February 2022 compared to February 2021 sales of tractors in this category are up 7.1%. February represents a positive reversal for 40- to 100-hp sales. In January this year sales were down 2.8% compared to January 2021.
"That five-year trend [for tractors under 100 hp] is huge," Blades said. "There continues to be solid demand. Everyone we've talked to said they can't make it fast enough."
Blades points to remnants of COVID-19 as perhaps one reason for market strength in under-100-hp tractor sales. "There are remnants of the pandemic that we're not going to fully understand for a while, what has been its impact on the workplace and on rural America. I'm hearing some interesting anecdotes, no trends, yet some interesting anecdotes of folks looking to slow their lives down a little bit. If you have an acreage, small tractors are a necessity. It might be that simple."
The February 2022 report did not contain good news for combines. AEM reports while combine sales are up 3.1% in February 2022 compared to February 2021, they are down 25.6% so far this year compared to the first two months of 2021. Combine sales dug a deep hole in January 2022 -- down 41.4% in January 2022 compared to January 2021. It's just going to take time to dig out.
Dan Miller can be reached at firstname.lastname@example.org
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