Interest rates, cattle prices shaping market, dealers say

Farm equipment dealers across the country are seeing a decline in sales due to rising interest rates, high costs of restocking cattle and the effects of an election year.

United States combine sales dropped 31% year over year in June, 2-wheel-drive tractor sales dropped 16.3% YoY and 4-wheel-drive tractor sales fell 1.3% YoY, according to an Association of Equipment Manufacturers report.

However, in Mississippi, agriculture sales are bouncing back, Jordan Carlisle, director of sales and rental at Hattiesburg, Miss.-based agriculture and construction equipment dealer Parish Tractor, told Equipment Finance News.

“Our [lawn]mower sales were terrible, our hay tools sales were terrible last year,” he said. “Jumping into 2024, turf has been strong this year.”

Parish Tractor’s sales of hay tools, big tractors and lawnmowers year over year have recovered from poor sales in 2023 due to Mississippi’s historic drought, Carlisle said.

The Kubota dealer has six locations across Mississippi, Alabama and Florida.

The rise in hay equipment sales may also come from the high price of cattle, Carlisle said.

“A lot of people were selling cows, so they had all this income that came in, and for tax purposes or for whatever reason they needed to reinvest that money,” he said.

Compact tractor sales were down around 10% to 15% YoY for Parish Tractor, Carlisle said. The decline aligns with industry reports of rising compact tractor inventories.

That 2024 is a presidential election year could help explain the inconsistency, he said.

“It is an election year, and that always seems to play a factor in retail sales, regardless of what it is,” he said.

The dealer’s strategy is to continue to trim inventory and wait to see if interest rates drop, he said.

“During COVID, if it was orange and it rolled through our gate, for three or four years it was already sold,” he said. “[We’re] readjusting that and bringing our monthly supply on the ground down a little bit to adjust with the market.”

Iowa feels slowdown

Helle Farm Equipment, a Dyersville, Iowa-based agriculture and construction equipment dealer, has faced a rise in inventory and sale declines in line with recent trends, sales representative Phil Helle told EFN.

“The demand for machinery is softening,” he said.

Both used and new equipment are selling slower, Helle said. The combination of higher interest rates and a high cost to restock cattle has farmers hesitant to buy equipment.

“They’re holding things pretty tight because of the amount of investment they have made into what’s sitting in the last of their cattle lots right now,” he said. Livestock production equipment, like hay balers, is selling faster, while crop production equipment has slowed the most drastically, he said.

Higher interest rates pressure sales

Sales will remain slow until interest rates cool, Helle said.

“Farmers are handling a lot more money now without really seeing any profit margins,” he said. “It’s probably going to stay pretty level for a little while here.”

The Consumer Price Index — a measure of the change in prices of household goods each month — saw a 0.1% decline in June, its first decline since May 2020, according to the Bureau of Labor Statistics.

Subcompact and compact tractors are selling well while high-horsepower tractors continue to hold high inventory, Chad Vitiritto, sales manager at Des Moines, Iowa-based Capital City Equipment, told EFN.

“It seems like the bigger ag equipment is the slowest,” he said. “Over 100-horsepower tractors have slowed down for us, and it seems like that’s where our biggest soft spot is this year.”

The agriculture and construction equipment dealer is selling new equipment faster than used, he said, due to incentives that are driving new equipment prices down.

“The used market is actually on a huge downturn right now. It’s really devalued,” he said.

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