After a strong start to the year for large equipment sales, a slowdown is anticipated in the farm equipment market. With falling commodity prices, high operating costs and lower profits, farms are placing a greater emphasis on their price per acre equipment costs according to Farm Credit Canada’s (FCC) 2025 outlook for the Canadian farm equipment market.
“Farmers are looking for cost saving measures including delaying purchases and planning to further reduce equipment costs,” said Leigh Anderson, FCC senior economist. “But as demand slows and prices adjust, there may be opportunities for producers who are looking to invest in new farm equipment.”
The year began with a surge in demand for large farm equipment, particularly combines and 4WD tractors. New combine sales in the first half of 2024 saw a five-year high, and 4WD tractor sales trailed only slightly behind 2021 sales. A slowdown in sales in the United States allowed manufacturers to send more pre-orders to Canada earlier. Usually, the Canadian combine market sees the most sales in the second half of the year.
This burst of activity is not expected to last through the remainder of the year and into 2025. However, the decline in new farm equipment sales is expected to be less severe than in 2024, and sales of 4WD tractors should stay above the five-year average.
The early arrival of new equipment has led to an increase in trade-ins, injecting a considerable volume of used equipment into the market, particularly used combines. It’s estimated total used combine sales have dropped by 18 per cent compared to the same period last year. Smaller used horsepower tractor sales are down 40 per cent, and sales of used seeding and planting equipment have declined by 23 per cent year over year. Lower sales of used seeding and planting equipment mark a slowdown compared to the previous year.
In the United States, farm equipment manufacturers have reduced production to align with lower demand. In Canada, manufacturing sales have fallen 8.7 per cent compared to last year, and new orders are down 9.2 per cent, suggesting sales will continue to decrease.
“The trends to monitor as we go into 2025 are equipment prices, farm revenue, interest rates and the Canadian dollar,” said Anderson. “Lower interest rates combined with strong revenues in select sectors could make it a great time to invest in new equipment as it’s more affordable per acre. But a lower Canadian dollar could increase imported equipment prices.”
By sharing agriculture economic knowledge and forecasts, FCC provides solid insights and expertise to help those in the business of agriculture and food achieve their goals. For more economic insights and analysis, visit FCC Economics at fcc.ca/Economics.
Source : FCC-FAC