Falling crop prices are leaving agriculture equipment sellers with an excess of unsold tractors and combines. To cope with the surplus, dealers are discounting machines, suspending new orders, and even auctioning off equipment at reduced prices.
The slower equipment sales are a knock-on effect of corn and soy prices dropping to more than three-year lows as USA farm income plummets and equipment makers and dealers are forced to pivot quickly after a period of booming business.
Equipment dealers, mostly in the Midwest, as well as farmers and analysts, say low crop prices combined with persistently high interest rates are deterring farmers from purchasing machinery. As farmers make fewer purchases, inventories of equipment are swelling, cutting into profits for dealers and big manufacturers alike.
Manufacturers Deere and CNH Industrial struggled to keep up with the strong demand for tractors in 2022 when farm income hit a record high and pandemic assistance payments gave farmers extra money to upgrade their fleets. Now both expect slower sales to hit their bottom line this year.
Josh Gruett, dealer principal at Waupun Equipment in Waupun, Wisconsin, which sells farm, construction and other equipment, said his inventory has risen 30% to 35% since the end of 2023.
The excess of unsold machinery prompted Gruett to halt new orders from companies including CNH, AGCO and Polaris in hopes of balancing supply and demand, he said.
In April, inventory levels of high-horsepower tractors (300 and above) in the USA surged by almost 107% year-over-year, with combine inventory experiencing a 17.63% increase, according to Sandhills Global, a market research firm specialising in tracking used inventory for industrial manufacturers.
Chris Tanner, a fourth-generation farmer, said some dealerships in his town of Norton, Kansas, have slashed prices up to 30% with an added incentive of zero percent interest to move machinery off their lots.
“They’re heavily discounting combines and tractors — but after coming through a drought and experiencing poor prices we don’t have the money to spend,” Tanner said. The pain has also spread to those who sell spare parts.
