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Supply chain issues cited as farm equipment sales fall 
 
By Michele F. Mihaljevich
Indiana Correspondent

MILWAUKEE, Wis. – Farm equipment sales were down in April for the second straight month as demand for machinery outpaced available inventory, according to dealer and manufacturer representatives.
“The problem is inventory, a lack of inventory,” explained Kim Rominger, president and CEO of the Equipment Dealers Association. “If dealers had it, they could sell it. Everything is in demand. The unfortunate part is dealers are missing an opportunity to sell. There are so many external issues playing on our industry right now. In my lifetime, I haven’t seen anything like it.”
Curt Blades, senior vice president of agriculture for the Association of Equipment Manufacturers (AEM), said he’s not surprised at the drop in sales. “We’re comparing month over month, year over year, with 2021, which was a really good year. March and April 2021 were good months. We’re comparing to a high.”
Farm equipment inventory is really tight, he noted. Manufacturers are dealing with supply chain problems, such as a lack of some key parts, a labor shortage, transportation and the recent shutdown in China, Blades pointed out. The Ukraine-Russia war and the availability of computer chips are also impacting manufacturers. “It’s not one thing, it’s a whole bunch of things,” he said.
Rominger said demand is outstripping production. “We’re in weird times. Farmers are looking for equipment. They have good grain prices, they’ve had good income the last couple of years. They want the new equipment.”
In some cases, units are done but are waiting for a part or so, said Rominger, also executive vice president and CEO of the United Equipment Dealers Association. Those parts could be computer chips or something like a front-end loader.
Sales of smaller tractors – two-wheel-drive under 40 HP – were down 16.6 percent through April 2022 compared with the same period last year, according to AEM.
The drop may be a signal that market is leveling off, Blades said. The tractors had been popular the last couple of years with hobby farmers and suburban landowners. The market might be more vulnerable with inflation and higher gas prices, he said.
Sales of most other farm machinery monitored by AEM were also down. The organization released its latest sales report May 10.
Self-propelled combines were down 14.5 percent and four-wheel-drive tractors fell 8.1 percent. Two-wheel-drive tractors of 40-100 HP were down 11.3 percent, while those of 100 HP or more rose 9.5 percent.
Manufacturers are doing what they can to ramp up production to meet demand, Blades said, but they want to remain at a sustainable rate. “I think we learned a little bit 10 years ago when the farm economy was on fire. Manufacturers ramped up quickly. They do a good job to find the right mix.”
Dealers are able to get some units delivered fairly regularly, but the equipment many not have all the options the customer wants, Rominger said. “These days, large equipment is almost always custom ordered. You’re looking at a year at least (for those). The smaller stuff is still out there, but you may just not get every option you want.
“It’s a scramble right now,” he said. “If there’s an issue with cost, it comes down to the dealer not being able to give a price. They’ll sell it at their normal margin, but they can’t tell you the price. They don’t know what it will cost.”
Manufacturers and dealers are facing labor shortages. Rominger said technicians, mechanics and specialists are in demand at dealerships. “They’re way short,” he said. “Some dealers could add 10-20 techs today just to keep up.”
Workforce issues have been ongoing for 10 years, Blades said. “(The problems) aren’t adjusting themselves any time soon. It’s a local challenge. Manufacturers have to work with the local community to find workers. This is a bigger problem than just equipment manufacturing. There’s a lack of skilled workers who want to get into the trade. I don’t think the labor market is going to fix itself any time soon. That will be with us for awhile.”
Rominger said if nothing changes, the industry could be in a similar situation through 2023, though more optimistic predictions see the situation improving by mid-2023.
AEM research shows suppliers think it could take six-12 months to work through the bottleneck, Blades said. Those suppliers are a bit more optimistic than original equipment manufacturers, who think the timeline for improvement may be longer, he added.
Demand could be impacted by inflation and higher interest rates, Blades said.
“Commodity prices are high, which is great. Unfortunately, input prices are also high. But if you’re a professional farmer, you need equipment. You’re not buying it for one year, but for the lifetime of the equipment.
“Our manufacturers take the seasonality of the market very seriously,” Blades said. “Parts need to be delivered on time, equipment needs to be delivered on time. This isn’t a luxury item. Delivery impacts peoples’ livelihoods. Manufacturers take that very seriously.”
5/24/2022