Nearly two-thirds of farm equipment dealers surveyed in earlier this year expect higher interest rates on retail equipment will cause their farm customers to think twice before deciding to buy new equipment in 2018.
Generally, North American farm equipment dealers remain positive about their prospects for improving sales in the year ahead, according to the most recent results from the monthly Ag Equipment Intelligence Dealer Sentiments & Business Conditions Update survey.
As reported in the March issue of Ag Equipment Intelligence, several manufacturers of farm machinery and components registered solidly better sales in 2017 than the previous few years and are looking for more of the same this year.
Despite U.S. farmers taking on more debt in recent years, their ability to pay it down remains steady and nowhere near the situation they found themselves in during the mid-1980s.
In its Feb. 4 Ag Finance Databook and Feb. 15 Ag Credit Survey report, the Federal Reserve Bank of Kansas City characterized current credit conditions as “stabilized modestly but continuing to show signs of weakness … despite signs of stabilizing in the fourth quarter, bankers’ expectations were for loan demand to strengthen and loan repayment rates to weaken slightly in the first quarter of 2018.”
Rabobank is forecasting that median Midwest corn farmers will be working with a margin of about 4% during the next 4-5 years. This is “unacceptable” and means they will need to increase their efficiency while continuing to cut costs, Kenneth Zuckerberg told attendees of the 2018 Precision Farming Dealer Summit in January.
The strength of the U.S. economy continues to provide support for the smaller tractor sales but the recent declines in the stock markets will have a sobering effect upon some future purchases.
In this episode of On the Record, brought to you by Associated Equipment Distributors, we look at President Trump's tariff reduction on ag equipment, the latest dealer sales forecasts, and how high input costs are keeping farmer sentiment down.
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