Agricultural machinery manufacturers expect overall 2011 business to the U.S., Canada and worldwide to grow in the 6-7% range by year-end but then taper off 2012 through 2014, with exports sales anticipated to increase the most, according to the annual business "outlook" survey of the Assn. of Equipment Manufacturers (AEM).
AEM is the North American-based trade group representing the off-road equipment manufacturing industry. Each year the association polls its agricultural equipment manufacturer members about anticipated sales.
The survey asked respondents to rank how several factors would influence sales. Commodity prices were cited as a key positive factor, as well as interest rates and increased export demand. Negative factors included the state of the general economy and steel prices.
Looking at combine and tractor sales for the U.S. and Canada, declines are mostly expected for combines. Four-wheel-drive tractors, sales are expected to be stronger in 2011-12 and then decline. Among 2-wheel-drive tractors, business is predicted to grow the most overall for machines in the 40-100 horsepower range. For other types of equipment, demand is expected to remain in the plus column for most products 2011 through 2014.
Report Highlights
Highlights from the just-released AEM agriculture equipment "outlook" survey include:
- For 2011, overall business in the U.S. is expected to grow 6.4% compared to the previous year; Canadian business is forecast to increase 7.6%; and industry business to the rest of the world is anticipated to gain 6.9%.
- U.S. agricultural machinery business is then predicted to grow 4.9% in 2012, 2.9% in 2013, and 2.8% in 2014.
- Canadian business overall is expected to be 4.8% higher in 2012, then increase 2.2% in 2013 and 1.7% in 2014.
- Industry business to the rest of the world is anticipated to gain 5.1% in 2012, 4.7% in 2013, and 4.6% in 2014.
"Agricultural equipment manufacturers overall fared very well in an otherwise struggling economy. Recent growth has been positive in most categories, and exports to emerging countries are rebounding. Strong commodity demand and prices have translated into equipment sales. Net farm income is expected to be up 28% in 2011, and net cash income to grow nearly 19%," says Charlie O’Brien, AEM agriculture sector vice president.
The general economy has stalled somewhat in recent months, and we are always aware of the potential for boom-and-bust cycles; manufacturers are assessing the business landscape for any possible slowdowns in domestic demand as well as overseas. Agricultural equipment plays a vital role in boosting productivity to meet the need to sustain a growing world population and the increasing prosperity of many countries. These are sound fundamentals for long-term business," O’Brien said.
"We continue to push Congressional leaders to work together for passage of meaningful policies that strengthen manufacturing and create jobs. Our 'I Make America' grassroots effort has been successful with a focus on export-friendly policies that help U.S. farmers and manufacturers stay in business by selling their products internationally and a focus on adequate transportation funding to help them get goods to market more efficiently and safely."
"O’Brien added, "A thriving agricultural industry sets off a very positive ‘trickle down’ effect that plays an invaluable role in generating domestic jobs and revenue in the country. Job creation is still a major issue to help bolster the economy, and we plan to expand ‘I Make America’ to other industry issues such as the 2012 Farm Bill. We are facing an election year and a very divided and acrimonious Washington environment in which negotiations will take place."
Tractor & Combine Business
For 2011, U.S. sales of combines are expected to decline 0.3% by year-end, with declines predicted in 2012 of 4.8%, 0.5% in 2013 and 3.0% in 2014. For Canada, 2011 combine sales are anticipated to gain 2.5% by year-end and then drop off, with declines of 3.8% in 2012, 0.5% in 2013 and 3.0% in 2014.
For 4-wheel-drive tractors, U.S. sales are predicted to gain 5.4% in 2011 and 0.2% in 2012, then drop 2.0% in 2013 and 4.8% in 2014. For Canada, 2011 business is expected to grow 0.5% in 2011 and 2.5% in 2012, with declines in 2013 of 2.0% and 3.5% in 2014.
Sales of 2-wheel-drive tractors in the less-than-40 horsepower range are expected to grow 2011 – 2014 in both the U.S. and Canada: For the U.S, gains are predicted of 1.4% in 2011, 3.2% in 2012, 4.3% in 2013 and 4.8% in 2014. Canadian sales are anticipated to grow 2.6% in 2011, 3.4% in 2012, 4.0% in 2013 and 4.5% in 2014.
U.S. and Canadian sales of 2-wheel-drive tractors in the 40-100 horsepower range are also expected to be positive 2011-2014 for both the U.S. and Canada. For the U.S., growth is seen for 2011 of 3.3%, 2012 of 3.9%, 2013 of 4.3% and 2014 of 6.6%. For Canada, the expected gains are 4.3% for 2011, 4.6% for 2012, 2.8% for 2013 and 5.6% for 2014.
For over-100 horsepower 2-wheel-drive tractors, in the U.S., gains are predicted for 2011 of 2.7%, 2012 of 2.8%, 2013 of 1.3% and 2014 of 0.6%. For Canada, growth is expected in 2011 of 3.3% and 1.8% in 2012, followed by declines of 0.8% in 2013 and 1.8% in 2014.
Scope of Survey
In the AEM "outlook" survey, each business-activity forecast is the average of responses from manufacturers in each product line, predicting industry-wide expectations rather than individual company performance, and unit sales rather than company profitability. This year’s edition of the "outlook" report covers 22 types of farm-related equipment. Click here for full survey results – online at www.aem.org in the market information section.