Sales of small farm machinery are benefiting from increased home-and-yard spending during the coronavirus outbreak, but the pandemic’s impact on larger equipment is uneven.
The 102,000 new tractors under 40 horsepower sold during the first half of 2020 is about 13% higher than a year ago, according to the Association of Equipment Manufacturers.
The trend has only seemed to pick up steam recently, with AEM reporting that unit sales in the smallest tractor category surged 37% last month compared to a year ago.
“Anything that has to do with home improvement or making your home more enjoyable — all those businesses seem to be doing well,” said Curt Blades, senior vice president of agricultural services for AEM.
Dealers of building materials, garden equipment and supplies saw their sales increase about 10% during the first half of 2020, according to the U.S. Census Bureau.
The solid market for small tractors is especially remarkable because this category had already seen healthy sales for several years, Blades said.
These smallest tractors are usually bought by hobby farmers and large property owners, while the 40- to 100-horsepower tractors more commonly used for farm chores, livestock and light tillage in commercial agriculture, he said.
“For the most part, that’s someone who’s deriving income from the farm or significant income from the farm,” Blades said.
Sales of new tractors in the 40-100 horsepower category rose 6.6% during the first half of 2020 and 27.5% last month, which is likely due to the need to replace machinery rather than optimism about the agricultural market outlook, he said.
Despite the uncertainty caused by the coronavirus and tensions over biofuels and trade, farmers realize they’re in business for the long haul and likely have pent-up demand for mid-sized replacement equipment, Blades said.
In the immediate aftermath of the coronavirus lockdown this spring, the “spigot shut off” for such tractor sales, so farmers have more recently been “playing catch-up,” he said.
“Often those decisions are separate from the economics,” he said. “As we recognize we’re in troubling times right now, this too shall pass.”
Sales of new tractors above 100 horsepower, which are used for heavier tillage, have decreased by 3.5% for the first half of 2020 but grew by more than 3% last month.
New four-wheel-drive tractors, the largest category, declined by 11.5% in unit sales during the first half of 2020 and by nearly 34% last month.
For bigger machinery, farmers may be deciding to defer investments until the economic outlook has improved, Blades said.
“They’re really darned expensive and it’s a big purchase,” he said.
The sales surge experienced by some tractor categories in June indicates “quite a turnaround” since coronavirus-related restrictions began being lifted, though its durability is unknown given the recent upswing in illnesses, said Joe Dykes, vice president of industrial relations for the Equipment Dealers Association.
“Whether it will continue, I certainly can’t speculate on that,” he said.
As essential businesses, farm equipment dealerships mostly remained open even when coronavirus restrictions were at their most stringent, Dykes said. The lockdown nonetheless hurt machinery sales, but revenue from parts and service helped make up for that drop.
“Farmers didn’t stop planting their crops because of the pandemic,” he said. “Instead of getting a new piece of equipment, they were getting what they had fixed.”
Since unit sales of the largest tractors involve relatively small numbers, changes in sales tend to be more volatile percentage-wise, Blades said.
For example, manufacturers have sold about 1,100 four-wheel drive tractors so far in 2020, compared to 8,300 tractors over 100 horsepower and 30,800 tractors between 40-100 horsepower.
Even so, sales of new combines — also a big-ticket item with low unit sales — are down less than 2% during the first half of 2020, which may reflect farmers being willing to take delivery on machines they’ve already ordered, Blades said.
Inconsistent weather in recent years may also be a factor, as farmers may be willing to invest in additional combines to ensure they can complete harvest operations in a narrower time window, he said.
“I don’t want to give the impression it’s rosy out there because it’s still a tough time,” he said. “I would love to say the market’s going to come back strong. I don’t have any ability to say that with any degree of certainty.”
Sales of new machinery are also affected by the availability of well-maintained used machinery with low operating hours, since many growers will opt for older equipment if they can get it, said Dykes. “The used market has been pretty attractive.”