MILWAUKEE, Wis. – Farm equipment sales are expected to be down in 2020 but could bounce back next year, according to the director of market intelligence for the Association of Equipment Manufacturers (AEM).

Benjamin Duyck cited a forecast from Oxford Economics that looked at how sales would play out under several scenarios, including the coronavirus pandemic, a global trade war or a global recession. In each case, sales were projected to be up in 2021, though the amount of improvement varied.

“The agricultural equipment industry is taking a hit in 2020 but there’s a possibility for a rapid rebound, though new models will have to show that,” he noted. “Predicting something like the COVID-19 pandemic is like staring into a deep, deep fog. All we can really do is adapt and remain flexible.”

Sales through April declined from the same period in 2019 in all but one category, AEM said. Two-wheel-drive tractors under 40 hp were up 0.6 percent; 40-100 hp dropped 2.9 percent and 100 hp or more fell 3.8 percent. Four-wheel-drive tractors were down 7.1 percent and self-propelled combines declined 10.7 percent, the organization said.

Duyck and officials with USDA, Farm Credit Council and the American Farm Bureau Federation participated in a May 12 webinar from AEM on the impact of the coronavirus on the agricultural industry.

In February, USDA projected a $3.1 billion – to $96.7 billion – bump in net farm income this year, Duyck said. “This outlook was from February. Since that time, hog, cattle and dairy prices have all plunged. We’ve engaged in the COVID-19 pandemic, ethanol returns fell into the red and soybean and corn future prices have declined significantly. U.S. jobless claims have soared to record highs.”

A forecast released in mid-April by the Food and Agricultural Policy Research Institute (FAPRI), based at the University of Missouri, estimated net farm income in 2020 would be down to $86 billion.

AEM surveyed its member companies last month about their perceptions of the impact of COVID-19 on the industry, Duyck said. Almost all of those surveyed felt there was a very negative impact on the overall economy. If the pandemic lasts another three-six months, 38 percent thought they could resume normal operations within 90 days. Fifty percent said they could do so within a year after the pandemic. Members understand the situation and look to reopen and get back to normal when they can do so safely, he added.

The International Monetary Fund has lowered its growth estimates for global Gross Domestic Product (GDP) as a result of the pandemic, said Robert Johansson, USDA chief economist. Previously, the organization had projected growth in the 3-4 percent range this year, but more recently, estimated a decline of about 3 percent, he said.

“GDP growth is very important to U.S. agriculture,” Johansson explained. “It provides a bellwether for the export potential in the upcoming year. We expect our export potential will be likely truncated in 2020.”

FAPRI has estimated the impact of COVID-19 on farm cash receipts for various agricultural sectors in 2020, he said. The institute estimated $9.6 billion less in cattle receipts; $4.7 billion less for corn; $4.1 billion less for poultry, $4 billion less for dairy; $2.2 billion less for hogs; and $2.1 billion less for soybeans.

“This was several weeks ago and I think we’ve seen some more severe economic impacts since this time,” Johansson stated.

The primary job for the farm credit system is to find that best possible outcome for the customers, said Todd Van Hoose, president and CEO of the Farm Credit Council. The agricultural industry came into the pandemic already weakened, he pointed out.

“This struggle comes on top of another struggle,” Van Hoose said. “We’ve had a number of years of low commodity prices. We’ve had a number of years of trade disruptions. We’ve had some of the worst weather disasters, one on top of the other, this country’s ever seen.”

Agriculture was already in the eighth year of an economic downturn before the pandemic, said John Newton, chief economist for the America Farm Bureau Federation. Since 2012, net cash income was down 29 percent. In the years following World War II, income fell 30 percent. Income dropped 45 percent over eight years beginning in 1973.