It wasn’t that long ago when we were talking about U.S. farm equipment being younger than it had been in decades. With the ag boom of 2010-14, farm tractors were literally flying off the shelves. North American sales of high horsepower equipment peaked at a little over 50,000 units in 2013. A sustained downturn started in 2015 and in the ensuing years sales struggled to reach half of the units sold in that peak year.

According to USDA’s 2012 Census of Agriculture, 16% of all tractors over 100 horsepower had been built in the previous 5 years. This slipped to 14.5% in the 2017 Census. Since AEM figures show sales of this equipment have fallen even lower, it’s no surprise that manufacturers are talking about the “aging fleet” of farm machinery today. The immediate implication is there is a pent up demand building.

One manufacturer told us earlier this year that their equipment in the field was the oldest it has been since 1990, by a wide margin.

“Aging fleet” was a term Deere & Co. executives used several times during their conference call with analysts following release of their earnings report on May 22. But beyond the anticipated pent up demand that comes with farmers hanging on to their equipment longer than they typically would, Deere’s brass see other opportunities to farm equipment getting older and it appears they’re not waiting for the tide to turn.

The most obvious, of course, is in aftermarket sales. Cory Reed, president of the company’s Ag & Turf Division, said, “Number one, we have an aging fleet. We've been down in new volumes over a number of years, so as the fleet ages, there’s opportunity for aftermarket potential. If you look back 4, 5 or 6 years ago, some of the highest machine populations were put in [the field] and that aftermarket opportunity is huge. We’ve put infrastructure in place to be able to connect to those machines, to keep our customers up and running. We put systems in place at our dealers that allow them to transact in an e-commerce way that differentiates them in the market, and they've continued to grow their aftermarket business as a result of it.”

Deere execs also sees opportunities beyond the aftermarket and this is where old equipment and new technology mesh.

“We have a fleet that’s sitting as old as it's been in probably a decade or a decade and a half, which means, one of the things that you see is the technology is available today that provides opportunity for customers to lower their cost structure,” said John May, Deere’s chairman and CEO. “In an environment where overall demand is the question, the thing that customers can do is invest to make sure they have the lowest cost of production of anyone in the market. So, we see technology being driven across those acres. So, even with the old machine fleet, we have the ability to change the cost structure on each acre. And if you take an aging fleet and you can change the cost structure, you have the ability to generate sales.”

Despite trade issues and COVID-19, Reed says they have had success mixing the old equipment with the new technology. “Yes, our unit [sales] have been flattish and at a lower level, but we continue to grow the per unit sales as customers continue to buy higher spec, more productive machines. And so, that’s a phenomenon that gives us a little more confidence that even if industry is maybe a little bit challenged, we're going to be able to outperform given our value proposition and given our customers’ propensity to continue to upgrade and purchase our latest and most productive equipment.”

Of course, the Deere execs are putting a happy face on a difficult time for the ag equipment business. That’s their job. But it seems they are adherents to the Ralph Waldo Emerson adage: This time, like all times, is a very good one, if we but know what to do with it.

What Deere is doing is acknowledging that new equipment sales are down and probably will be, at least in the short term, but they’re not sitting around waiting for things to get better. They know the same things we all know: If a farmer can see a way to be more productive — lowering costs while improving efficiency — they will invest in it. But you have to show them how it can happen and make it happen. That’s what Deere says it intends to do. You should too.