Farm equipment sector winning battle on supply chain woes

The pull effect of two years of high sales has worked its way through the system and supply chain complications have eased. That means farmers are more likely to get their equipment when they’re supposed to, says a Canadian farm equipment leader.

“It depends on the manufacturer and on the model and the product, but across the board we could say (delivery times) have improved substantially and that we are almost back to where we want to be in meeting the commitments we make on delivery times,” said John Schmeiser, president of the North American Equipment Dealers Association for Canada.

“Right now I kind of think we’re as close to pre-pandemic conditions than we ever have been since March of 2020. If we’re not, we’re very close.”

Driven by high commodity prices and low interest rates, 2021 farm equipment sales in Canada shot up, but pandemic supply issues made it difficult to get that equipment delivered on time. Some farmers waited up to a year before orders reached their farms.

That setback didn’t cool the demand for big new iron, at least not at first. In 2021, sales of four-wheel-drive tractors in Canada rose 33 per cent, 100-plus horsepower tractors were up 34 per cent and combines were up 23 per cent.

Although sales in some categories took a steep dive in early 2022, the industry rebounded. April 2023 numbers from the association reveal that sales of four-wheel drive tractors in Canada are up 52 per cent from April 2022 and combine sales are up 133 per cent.

Not everyone is buying new, however. The pandemic saw a significant pivot toward used equipment because new implements were frequently unavailable or late, said Schmeiser.

“Customers did switch over to purchasing used because there was certainty the dealer had it in inventory and they knew that they were going to get it.

“You can imagine the frustration that customer has when he places an order for a (new) 4-wheel drive tractor in October and has been promised a Feb. 1 delivery and then he’s told he’s not going to get it until June or July. Well, how does he plan to put his crop in?”

The burgeoning used market had its own pitfalls, particularly when it came to finding parts. Schmeiser said manufacturers across the board saw their parts fill rates (the number of orders that can be filled without running out of inventory) dip below industry standards.

“The pandemic put a lot of challenges on the producers of raw materials, the companies that made specialized components like wiring harnesses, cabs, tires, everything. And then on top of that, there was a computer chip manufacturing challenge as well,” said Schmeiser.

However, these roadblocks have eased.

“It just took time for all of these different layers in the production of farm equipment to be sorted out,” he said. “We had a lot of manufacturers predicting that the worst would be over by the end of 2022 and in the end, that’s kind of what’s happened.”

Central Alberta’s Trochu Motors was able to weather the pandemic storm thanks to strong parts inventories as well as sales relationships with multiple manufacturers.

“We didn’t see a huge problem with parts availability,” said general manager Landis Stankievech.