Many years ago I had the opportunity to tour several different ag machinery production facilities for John Deere. Arranged by our local dealer, a busload of eastern Nebraska farmers traveled eastward and saw how tractors, combines, planters, drills and even cotton harvesters were assembled.
While we were at the tractor assembly facility, I noticed some slightly different tractors rolling off the assembly line floor. This would have been about 1999/2000, so I believe the "ten" series (7610, 7710, 7810) was being produced at that time.
I asked our tour guide what was the deal with these slightly different looking tractors and he told me these tractors were bound for other countries of the world. These places used tractors more like how we use trucks and these tractors saw more road time so they had to be slightly narrower and had faster road gears compared to North American tractors, he said.
People farm all over the planet but how they farm is completely different.
U.S. farm equipment manufacturers ship thousands of pieces of machinery all over the world every year. Currently, the export market is not doing well.
Exports of U.S.-made agricultural equipment dropped 16% for the first half of 2015 compared to the first half of 2014. Exports totaled $4 billion of farm equipment shipped to global markets, The Association of Equipment Manufacturers (AEM) reported in press release.
Gains were seen in some regions while other areas saw drops. Asia gained 19% for a total of $502 million while Central America increased 5% for a total $554.
The rest of the world was not as good. Europe declined 31% for a total of $832 million, followed by South America down 30% to $368 million, Africa dropped 22% for a total of $132 million, Canada fell 18% to a total of $1.3 billion and Australia/Oceania declined 2% for a total $355 million.
Benjamin Duyck, AEM director of market intelligence, said the second quarter of 2015 marked the sixth consecutive quarter U.S. agricultural equipment exports and imports have experienced year-over-year declines. This is a stark contrast to the construction equipment exports, which have experienced growth in imports.
"A logical explanation may be that the domestic market demand for construction is still stable, while the U.S. farmer lacks resources or incentive to buy new equipment," Duyck said in the release.
The only ag-related category for which exports grew was in components, while exports of dairy/milking machinery remained stable, he said.
The top countries buying the most U.S.-made agricultural machinery during the first half of 2015 was led by Canada ($1.3 billion, down 18%), followed by Mexico ($487 million, up 10%), Australia ($318 million, down 1%), China ($284 million, up 36%) and Germany ($132 million, down 24%).
Rounding out the top 10 would be Brazil ($126 million, down 45%), France ($105 million, down 9%), United Kingdom ($95 million, down less than 1%), Belgium ($95 million, up 14%) and South Africa ($86 million, down 24%).
Duyck said AEM's Agritech Business Barometer, which tracks the worldwide climate for agriculture equipment, is not set to come out until sometime in October. However, one can assume that lower commodity prices are taking a toll on farmers in other countries as well, he said.
In addition to low commodity prices, a stronger U.S. dollar is plaguing U.S. manufacturers, making U.S. farm equipment less competitive. In September, the Broad Weighted Trade Index for the U.S. dollar, had grown 18.2% compared to January 2014 and 21% compared to January 2013, Duyck reported.
So while farmers all over the world grow different crops and livestock with different kinds of farm machinery, there is at least one thing all farmers have in common: they don't want to spend money for new farm equipment when commodity prices are lower. It doesn't matter if they are farming in Minnesota or Mozambique.
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