Optimism for the farm equipment market despite production challenges
By Andrew Joseph, Farms.com
In a recent release from Farm Credit Canada (FCC), it noted that despite the uncertainty brought by COVID-19 last year, 2021 has shown strong sales of new farm equipment, and optimism for the farm equipment market despite production challenges.
Considered to be Canada’s largest agricultural term lender, Farm Credit Canada enhances rural Canada providing specialized and personalized financial services to farms. FCC noted that despite the pandemic, Canadian farms did reasonably well.
Citing a strong commodity price and increased delivery opportunities, FCC said Canadian crop receipts increased by 10.9 percent in 2020 over the previous year and showed an impressive 18.1 percent increase in the first half of 2021. It also noted that livestock receipts recovered in 2021, offering a year-to-date increase of 12.7 percent. Increase, increase, increase equals a demand for and greater number of pre-orders of farm equipment.
For farm equipment dealers, the 2020 demand for farm equipment greatly impacted new and used stock with strong sales.
FCC said that new farm equipment manufacturing sales increased 33.6 percent through the first seven months of 2021.
Because of the strong farming market and high pre-orders, strong sales of farm equipment are expected to remain positive through the remainder of 2021 and into the early part of 2022.
After that—the outlook isn’t as rosy, as the 2021 drought hit western Canada’s crop farms hard with a 25.6 percent expected decrease in yield compared to 2020. Other factors such as high feed costs are also playing into Canadian farm profitability in 2021, meaning fewer farms will look to reinvest in more farm equipment.
Another talking point mentioned by FCC is that farm equipment manufacturers are having difficulty accessing required parts, mostly because of supply chain issues related to the ongoing pandemic. The end results are fewer pieces of new equipment available, a higher cost to purchase and possible delays for pre-orders.