Approximately 40% of farmers don’t expect to purchase machinery this year
Are you planning to add new or new-to-you iron to your operation in the next few months? In an early January Farm Journal Pulse, 1,500 farmers and ranchers answered the question: How many pieces of farm machinery do you expect to purchase this year?
Nearly 40% of the respondents reported they would purchase no farm machinery in 2014. A quarter of the respondents plan to add one piece of machinery, while 20% expect to add two. Only 4% plan to add five pieces of machinery or more.
Machinery sale slump? Farm Journal Media’s used equipment expert, Greg Peterson (aka Machinery Pete), who tracks the equipment market, is not surprised by these results. "I’ve been hearing more negativity from farmers for a while now," he says.
Why are farmers less eager to purchase machinery this year? Peterson says it is a combination of factors. The realization of softer grain prices is playing a big part.
"The changes to the tax law, specifically Section 179, are affecting purchases," he adds. Section 179 of the Internal Revenue Service tax code allows for an immediate income write-off for any business asset purchase (new or used) made during that calendar year. It was at an all-time high of $500,000 in 2013, but it is set at only $25,000 for this year.
"Most expect Washington to adjust the level upward, but no one knows for sure," Peterson says. "This uncertainty is keeping many farmers from big-time machinery purchases."
Finally, most farmers have bought quite a bit of new and used equipment during the past five years. "As a result, it easier to adopt a more defensive position regarding future purchases," he says.
You can e-mail Sara Schafer at firstname.lastname@example.org.
To see a full listing of past Farm Journal Pulse polls and to sign up to participate in the survey, visit www.FarmJournalPulse.com
- Mid-February 2014