INDIANAPOLIS – U.S. farm machinery sales in all but one category monitored by the Association of Equipment Manufacturers (AEM) were down for the first half of the year.

The latest report from the organization, released July 11, reflected some of the results from the June edition of the Purdue University/CME Group Ag Economy Barometer regarding producer sentiment toward making large capital purchases. The monthly barometer was released in early July.

A farm equipment manufacturer, Deere & Co., is expected to announce additional layoffs this week, according to media reports. In early July, it said nearly 600 workers would be let go. The company said at the time that production positions were being cut at two factories in Iowa and one in Moline, Ill.

AEM reported sales of all two-wheel-drive tractors were down 11.7 percent from the first six months of 2023. Tractors of less than 40 HP fell 13.8 percent, while those 40 to 100 HP dropped 8.6 percent. Those 100 HP and over dipped 4.2 percent.

Self-propelled combines fell 17.3 percent from a year ago. Four-wheel-drive tractors were the bright spot as sales rose 2.7 percent.

In addition to reporting numbers for the first half of the year, AEM also released sales for June 2024 as compared to June 2023. Two-wheel-drive tractors fell 16.3 percent from June 2023, and four-wheel-drive tractors dipped 1.3 percent. Combines dropped 31 percent.

“June’s sales of ag tractors and combines follow a May that also showed a slowdown in sales,” Curt Blades, AEM senior vice president, said in a release. “This softness in the market follows a robust five years of sales. The challenges facing the subcompact tractor market illustrate why the passage of a strong farm bill is so needed to lift rural America and our farmers and growers.”

In the Purdue Ag Barometer survey, the farm capital investment index rose one point from the previous month. The current reading is just one point above the all-time low for the index, according to Jim Mintert, director of Purdue’s Center for Commercial Agriculture. Mintert spoke during a podcast released by the center.

Producers who said now is a bad time to make large investments in their operations pointed to the impact of rising interest rates and the high cost of farm machinery and buildings, he said.

“Over time, interest rates have become more important relative to the cost of farm machinery and buildings,” he explained. Even more interesting are the results of a question asked of those who said it’s a good time to make investments, Mintert noted.

“We’ve been asking this question for about a year now,” he stated. “Higher dealer inventories was really kind of taking off as a key reason the last few months. It dropped back this month and just to put that in perspective, I think last month, in May, around 45 percent of the people in the survey chose that as a top reason for being a good time to invest. In April, I think it was a little under 40 percent, maybe 37 or 38 percent. This month dropped back to 27 percent.

“It’s going to be interesting to see what happens to that going forward. I kind of feel like there could be a change in attitude here even among the folks that think it’s a good time.”

With dealer inventories increasing this year, Mintert said producers automatically started thinking about possibly having a little more bargaining leverage.

“I think initially, we were thinking people were thinking more dealer inventory, I can get a better deal on that tractor, combine or planted that I wanted,” he explained. “And now, all of a sudden they’re saying, maybe I shouldn’t spend the money on that.

“It’s not a good sign for dealers. It’s not a good sign for the manufacturers either.”