Impact of farm economic downturn on equipment market

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Looks as if the farm economy as a whole could be in for some rough sledding in the coming months. According to a report from the Association of Equipment Manufacturers, “After several years of robust growth, partly driven by farmland values and a run-up in prices for many agricultural commodities, the revised 2014 net farm income is set to be $113.2 billion, down 13.8% from 2013.”

While that will put 2014’s net farm income at the lowest level since 2010, it will still be $25 billion above the 10-year average.

The entire report is well worth a read.

And what sticks out in this report is that lower commodity prices, while one reason for the downturn, isn’t the only factor.

From the report: “Capital expenditures on machinery are expected to decrease from past heights due to a change in tax incentives and subsidies….Farmland values are rising at a slow pace, limiting the farmer’s ability to use this as collateral and thus reducing their capacity to get credit…The used equipment market has become inflated as more farmers are offloading equipment they turned over during the strong cycle of past years. “


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