Farm Equipment Market to Remain a Challenge 

Strong demand and tight supplies will continue to make the farm machinery market a challenge for producers in 2023 and beyond, according to Farm Credit Canada (FCC). 

In a release Tuesday, FCC chief economist JP Gervais said farm equipment inventory levels will remain below pre-pandemic levels in the New Year, while strong cash receipts provide producers with an incentive to buy. It adds up to a situation that will require careful strategic planning to navigate, he said. 

In fact, Gervais said producers are likely to be facing tight equipment supplies through 2024 as well, noting current tractor inventory levels are 42% below the five-year average, with combines as much as 47% below. 

“Producers will benefit from strategic planning as inventory levels for farm equipment remain below pre-pandemic levels, something we expect could continue through 2024,” Gervais said. 

A farm income report released by Statistics Canada Monday showed national realized net farm income for 2021 at $13.7 billion, up 49.8% from a year earlier. A second report showed farm cash receipts throughout the first three quarters of 2022 also running ahead of the previous year. 

Although equipment manufacturers are expected to increase production of new equipment, pandemic-related shutdowns and supply chain issues have curbed output over the past couple of years. Meanwhile, amid a limited supply of new equipment and parts available, farmers adapted by having additional used equipment available for parts if needed. 

With less available to buy, the used equipment market is expected to stay robust for most of 2023 and into 2024 too, Gervais said. 

Farmers on this side of the border who need new farm equipment will likely have to pay more as well. Most new farm equipment is manufactured in the US, meaning expected depreciation in the Canadian dollar through 2023 will make purchases more expensive. 

Still, despite higher purchases costs – and rising interest rates – Gervais said strong commodity prices will continue to support overall demand for farm equipment. 

Source: DePutter Publishing Ltd.

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