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Farm equipment sales expected to still be down in 2010

Wednesday, January 27, 2010

Sales of farm equipment couuld see further declines this year.
Sales of farm equipment couuld see further declines this year.

A recent report indicates that 2010 may still be a down year for sales of some forms of machinery, including farm equipment.

According to the Association of Equipment Manufacturers, combine sales are expected to fall 12 percent this year in the U.S., and may continue to fall by 7 percent in 2011. By 2012, however, combine sales are expected to be at about growth neutral, seeing a 0.3 percent decline.

Sales of other forms of equipment are also expected to decline this year. For example, sales of four-wheel drive tractors are expected to fall 19 percent in 2010, though they may see an increase of 2 percent the following year and 3 percent in 2012.

Regardless of their engine size, sales of two-wheel drive tractors are also expected to fall this year. For machines that are at or more than 100 horsepower, sales are expected to fall 9 percent. For machines with 40 to 100 horsepower, sales may drop 6 percent, while tractors with less than 40 horsepower are expected to sell 8 percent less.

"The recession reached the agricultural sector in 2009, and the drop in equipment sales in most categories is attributed to a combination of the fall in commodity prices, significant drops in net farm income, the tightening of credit throughout the ag equipment distribution channel, and the overall reduction in economic confidence," said Charlie O'Brien, vice president of agricultural services for the AEM.

Commodity prices may prove to fall further based on information from the U.S. Department of Agriculture. Both corn and soy crops saw record production in 2009, which could drive down prices.
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