Like land, equipment is a major asset required by agricultural producers and agribusiness owners. Forty-two per cent of them who responded to a Farm Credit Canada (FCC) Vision Panel survey plan to increase spending on equipment in 2010.
FCC Vision Panel survey findings can be found at www.fccvision.ca/research in the following reports: Impact of Economic Conditions on Canadian Producers and AgriBusiness and Farm operations — Pooling Resources. The survey was completed in November 2009 by over 900 producers across the country.
"We created the survey to learn more about equipment purchasing trends because we lend money for equipment to producers and agribusiness operators directly and through our relationships with over 700 equipment dealers across Canada," says Darren Bly, FCC vice president, partners and channels.
"What we didn't see was a large decrease in planned spending compared to 2009. This was a bit of a surprise since increased commodity prices in 2008 helped drive record sales that year."
While 42% will spend more on equipment, 45% are not planning any change in spending and 14% stated they will spend less.
Quebec producers (21%) are significantly more likely to state that they plan to decrease spending on equipment than producers from Alberta (8%), British Columbia (6%) and Ontario (9%).
The survey also asked primary producers about equipment ownership. Nearly three-quarters of respondents (74%) own their equipment and 14% own some equipment and rent the rest.
Interestingly, over one-third of producers (37%) share one or more pieces of equipment with a neighbor. Producers from Quebec (48%) are significantly more likely to do this than producers from other provinces: Alberta (32%), British Columbia (25%), Saskatchewan (33%) and the Atlantic provinces (29%).
"The average amount of an equipment loan at FCC has increased in the past 2 years from approximately $70,000 to $76,000," says Bly. "Sharing equipment may be a good business decision as the cost of equipment increases and producers seek alternative ways to save. FCC has responded by creating a leasing program for farm equipment. It's really important that producers have the right equipment for the job. They need to do their homework to assess when they should replace equipment at the most cost-effective time for their operation."
As Canada's leading provider of business and financial services to farms and agribusiness, FCC advances the business of agriculture. Operating out of 100 offices located primarily in rural Canada, FCC employees are passionate about the business of agriculture. A healthy portfolio of more than $18 billion and 16 consecutive years of portfolio growth are a reflection of our customers' success. For more information, visit www.fcc.ca.