FCC report indicates future growth in equipment sales

Cash receipts are deciding factors in machinery purchases

By Diego Flammini
Assistant Editor, North American Content
Farms.com

A new report by Farm Credit Canada says that despite a slower market in 2016, sales in farm equipment could grow over the next two years.

“Total farm equipment sales are projected to decrease by 7.1 per cent (in 2016 compared to 2015)” said FCC Chief Agricultural Economist J.P. Gervais, adding that combine sales could drop by 5.2 per cent.

But sales in 4WD tractors could increase by as much as 24.5 per cent in 2016 and have continued growth in 2017.

“We expect a stronger market in 2017 with even a possible rebound,” Gervais said. “Total farm equipment sales could increase by 7 per cent.”

The report projects combine sales to increase by 8.9 per cent and 4WD tractor sales to go up by 2.4 per cent.

When it comes to the factors driving equipment sales, there are a few main variables to consider.

“Total equipment sales are associated with total farm cash receipts since they are used on all types of farming operations,” the report reads.

It states that crop receipts could increase by 5.8 per cent in 2016 and 3.8 per cent in 2017.

Another important factor contributing to equipment sales in the weakness of the Canadian dollar – a weaker dollar means it costs more to import machinery from the U.S.

The third variable to consider is interest rates.

The report says lower interest rates should also help increase sales of large equipment.