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Sales of Farm Machinery Rebound After Lean Years

Associated Press

Sales of big, four-wheel-drive tractors, the kind that go for as much as a quarter-section of land in some parts, rebounded sharply in 1988 and are expected to show further gains this year.

Preliminary estimates by the Agriculture Department show that 2,729 of the big tractors were sold last year, up 65% from just 1,653 in 1987. The gain may be around 14% in 1989 to about 3,100 units, the department’s Economic Research Service says.

But the gains still leave sales of the big machines far short of the more than 10,000 a year purchased in the late 1970s, just before heavy debts, falling commodity prices and other problems put a financial crunch on the nation’s farm economy.

Cost About $76,800

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The four-wheel-drive models are not the only tractors or machines that figure into today’s huge agricultural investment. But they are one of the barometers, and their costs are formidable. As of last October, according to USDA surveys, the tractors cost an average of $76,800 each.

A few other machines cost more, however. Large grain combines averaged $91,600 last fall, and self-propelled cotton pickers were $84,800. Comparatively, farmland nationally averaged only $548 per acre a year ago.

The USDA agency says in a new report that total farm machinery expenditures gained in 1987 after 7 consecutive years of decline. Overall, it said, farmers spent $5.77 billion on machinery in 1987, up from $4.61 billion in 1986.

Preliminary estimates put 1988 expenditures in a range of $5.9 billion to $6.5 billion, and the forecast for 1989 calls for a further increase to $6.4 billion to $7.1 billion.

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Machinery sales rose to a record of almost $12 billion in 1979 before beginning a slide of more than 60% to the $4.61 billion of 1986. Now, with farmland prices rising and credit more easily available, farmers are looking harder at machinery.

“The drought, improved farm equity and the increasing age of the farm machinery stock will likely have a significant influence on 1989 farm machinery sales prospects,” the report said. “A continuing rise in land prices not only improves farm equity but indicates an optimism on the future profitability of agriculture.”

Sales Up Last Year

Most new farm machinery sales were up last year, although the drought and its shriveling of grain yields “probably caused the 16% fall in sales of self-propelled combine units,” which dropped to 5,995 from 7,172 in 1987, the report said. Sales this year could rise to 7,300 units.

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“Farm machinery sales in the latter half of 1988 slipped as the extent of the drought became apparent,” the report said. “Farmers who saw yields declining delayed purchases of tractors, combines and other equipment.”

However, those farmers who did raise crops or had large quantities stored from previous harvests saw commodity prices climb. Thus, many of these farmers found it advantageous to replace or upgrade their equipment.

“Although the growth in sales continues to be good news for farm machinery manufacturers, there is still significant room for improvement,” the report said. “Within most machine categories, 1989 sales will likely approach only one-third of their 1978-80 average.”


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