Falling crop prices leave farm equipment sellers with a surplus of unsold tractors and harvesters. To deal with it, dealers are discounting machinery, halting new orders and even auctioning off equipment at discounted prices. Slower equipment sales are a secondary effect of corn and soybean prices falling to more than three-year lows as U.S. farm income plummets and equipment manufacturers and dealers are forced to quickly turn back after a boom period. business, writes Reuters.
Ten equipment dealers, mostly in the Midwest, as well as farmers and analysts who say low crop prices combined with persistently high interest rates are deterring farmers from buying machinery. As farmers make fewer purchases, equipment inventories rise, reducing profits for both dealers and large producers. Manufacturers Deere and CNH Industrial struggled to meet strong demand for tractors in 2022 as farm income hit a record high and pandemic relief payments gave farmers extra cash to upgrade their fleets. Both now expect slower sales to hit the bottom line this year.
Josh Gruett, principal dealer at Waupun Equipment in Waupun, Wis., which sells farm, construction and other equipment, said his inventory has grown 30% to 35% since the end of 2023. A glut of unsold machines has prompted Gruett to halt new orders from companies including CNH, AGCO and Polaris in hopes of balancing supply and demand, he said. U.S. high-horsepower (300-plus horsepower) tractor inventory levels rose nearly 107% year-over-year in April, with combine inventories up 17.63%, according to Sandhills Global, a market research firm. specialized in tracking used inventory for industrial manufacturers.
Chris Tanner, a fourth-generation farmer, said some dealerships in his town of Norton, Kansas, have cut prices as much as 30 percent with the added incentive of zero percent interest. “They’re giving big discounts on combines and tractors — but after going through a drought and experiencing low prices, we don’t have the money to spend,” Tanner said.
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