AEM Tractor, Equipment Sales Results Latest Sign of Ag Financial Struggles

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Retail sales of 40- to 100- HP tractors fell by their largest amount in Dec. 2015, with sales of large equipment also reported down, according to information released by the Association of Equipment Manufacturers (AEM).

Sales of 40-100 HP tractors fell to 5,685 units in December, down 16.2% from Dec. 2014, the steepest decline on record, according to AEM. Sales of 100-plus HP tractors were down 34.5% in December at 2,186 units. Sales of tractors under 40 HP were at 7,856 units, up 11.4% from Dec. 2014.

For all of 2015, AEM said sales of 40-100 HP tractors were down 2.9% at 59,401 units while sales of 100-plus HP tractors dropped 25.5% to a level of 23,930 units. Sales of tractors under 40-HP were at 118,348 units, up 8%.

Other notes from the group:

• 4WD farm tractor sales fell 3.3% to 409 units in December with 2015 sales at 3,111 units, down 39%.

• Total farm tractor sales were at 16,136 units in Dec., down 8.3%, while overall farm tractor sales were down 1.5% in 2015 at 204,790 units.

• Self-propelled combine sales were 689 in December, an 8.4% decline, with 2015 sales at 5,381 units, down 32.5% compared to 2014.

Comments: This continues a trend seen in particular in the larger tractor sales that have been falling as farm income conditions have declined. The rise in sales of small tractors likely reflects acreage-type sales and was not enough to keep the overall sales from falling year-over-year in December and for 2015 as a whole. With additional farm income pressure ahead, these sales numbers may not improve a great deal. However, tax shifts embodied in the overall budget plan for Fiscal 2016 could help stem the decline in equipment sales, but farmers and perhaps more importantly their lenders’ advice are not likely to lead to much expansion in equipment purchases until the income picture improves.

“Last year was a challenging year for the Ag industry as farm incomes dropped due to low commodity prices, decreased exports from a strong dollar and an oil price that eroded ethanol margins,” said Charlie O’Brien, AEM senior vice president. “Although these issues are still of great concern to US. farmers, the good news for 2016 is that Section 179 has been extended and is retroactive, which will help encourage production ag equipment sales.”

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.