New Tractor Sales Are Declining

[5030]

The funny thing about what he (Torvy) said is invest it but there isn't anywhere to invest it right now. The equities market is no good, the bond market is crashing, mortgages are going way up which prevents purchasing income producing properties in real estate or doing low interest rate construction loans and the dollar is getting stronger by the day. There are no safe havens right now but spending it will take away your opportunity to invest it later when opportunities present themselves.

I'll just keep my rentals and maintain.

 

[Cahaba Valley Farm]

I'll just keep my rentals and maintain.

That's what were doing at the moment.

 

[zzvyb6]

How much of this is due to tractors having much longer useful lives than any other major machine or vehicle? I don't see people around here changing tractors every 3 - 5 years.

 

[Williy]

JUST % INFO:

https://www.aem.org/AEM/media/docs/Statistics/US-Month-Ag-Report-9-2022.pdf

willy

 

[rScotty]

How much of this is due to tractors having much longer useful lives than any other major machine or vehicle? I don't see people around here changing tractors every 3 - 5 years.

How much of what? Whatever it is, it may differ in different parts of the country. The only other major machine or vehicle I can think of are cars and trucks. Although they certainly last much longer than 3 to 5 years. Appliances, too.

But if you mean that tractors last even longer than other mechanical things I agree. At least for the utility and ag tractors. For compact tractors I think it is still too soon to know how long they last.

Utility or Ag tractors around here are like old trucks - usually just parked or scrapped when people want one with new features. There's nothing wrong with the old ones that couldn't be fixed fairly easily. I think that's just normal human nature for people to want something different and newer and more interesting....although come to think of it I could easily be wrong. When I mentioned the same thought in regards to jobs in this thread a few days ago, most disagreed.

rScotty

 

[ArlyA]

I asked a family memmber who farms how long they run there tractors and his response was in the 10,000 hours area.

 

[rScotty]

I asked a family memmber who farms how long they run there tractors and his response was in the 10,000 hours area.

Doing custom work from Texas to the Dakotas our family figured 6500 hours or ten years for tractors and less for combines and hay equipment. At that point they could still be sold for decent money.

Sometimes you just get a good one. We kept one grain truck so long it finally got retired. Last I heard it was still running fine. GMC.
rScotty

 

[TimberFarm]

Do you take advantage of every tax law?

Does anyone self employed take advantage of every tax law?

Of course we do. If not, we are naive.

Doug's operation has the equipment necessary to handle the volume of grain he harvests.

I am sure his operation qualifies for Millions of dollars in subsidies. I am sure he accepts them all. So would you.

If you live in the country and have fiber optics internet to your house you received a government subsidy. Funny how that works.

Just pointing out that the gov't subsidizes all kinds of industries.
So as the saying goes, "People in glass houses shouldn't throw stones".
Example: people criticize Tesla and the EV industry for getting all the subsidies and say they should have to stand on their own.
So, as far as your friend goes, how much of his income is from farming and how much from other investments? how much of his farming income is subsidies.
Subsidies take a big chunk of risk out of doing business for the industries they support.

 

[ovrszd]

Just pointing out that the gov't subsidizes all kinds of industries.
So as the saying goes, "People in glass houses shouldn't throw stones".
Example: people criticize Tesla and the EV industry for getting all the subsidies and say they should have to stand on their own.
So, as far as your friend goes, how much of his income is from farming and how much from other investments? how much of his farming income is subsidies.
Subsidies take a big chunk of risk out of doing business for the industries they support.

I don't know the percentages of his income. I do know his net worth has farming roots.

As to subsidies. Every sizable farmer I've talked to about government involvement wants the government out of it. The government regulates farming to provide the consumer with cheap food. If left to free enterprise a bushel of corn would cost $50. A standing butcher steer would cost $10,000. A gallon of milk would cost $25.

A farmer would much rather grow less and sell for more per unit.

 

[scootr]

In hard times people will pass on buying the new car or tractor. I know we had 2 4yr old trucks in 2008 due to be paid off and traded in 09. But times were similar to now so we just kept both of those trucks running and sold them off privately years later.

 

[2manyrocks]

The chart Williy linked shows a -14% YTD decline in tractor sales overall in 2022. Interesting, however, that there was a -17.5% decline in sales of tractors under 40 hp but a 11.6% gain in sales in tractors over 100 HP, but the 2022 sales trend line is slightly follows the five year average trend line.

IDK, maybe hobby farmers backed off tractor buying due to the increased cost of everything else, but the really serious farming operations bought 100+ HP tractors because they see inflation driving up purchase costs in the future?

Land costs have also gotten so expensive while many farms in middle Tennessee have been sold for subdivisions. Makes me wonder who is buying tractors these days.

 

[ArlyA]

Doing custom work from Texas to the Dakotas our family figured 6500 hours or ten years for tractors and less for combines and hay equipment. At that point they could still be sold for decent money.

Sometimes you just get a good one. We kept one grain truck so long it finally got retired. Last I heard it was still running fine. GMC.
rScotty

You do know I have a How Ag works thread here? Here is there harvest crew of one of my family member's.

 

[Hay Dude]

The chart Williy linked shows a -14% YTD decline in tractor sales overall in 2022. Interesting, however, that there was a -17.5% decline in sales of tractors under 40 hp but a 11.6% gain in sales in tractors over 100 HP, but the 2022 sales trend line is slightly follows the five year average trend line.

IDK, maybe hobby farmers backed off tractor buying due to the increased cost of everything else, but the really serious farming operations bought 100+ HP tractors because they see inflation driving up purchase costs in the future?

Land costs have also gotten so expensive while many farms in middle Tennessee have been sold for subdivisions. Makes me wonder who is buying tractors these days.

Depreciation write off for farmers (big Ag) and not for small hobby guys (small utility tractors)

 

[Hay Dude]

I asked a family memmber who farms how long they run there tractors and his response was in the 10,000 hours area.

It depends on usage and depreciation schedules.
10,000 hours could be far more than the depreciation schedule being used.
I see way more used big ag tractors for sale with 5,000-8,000 than 10,000. I think it’s because it takes 10 years or more to reach 10,000 hours, which is far past the full write off.

 

[Hay Dude]

Tell you something thats really increasing on the Ag end is tractor leasing.
Fendt has a gold star lease program where you lease and all expenses are covered in monthly payment. This includes oil changes-everything.
When you are done, you can walk away, or buy it out or finance with their terms.

 

[rScotty]

You do know I have a How Ag works thread here? Here is there harvest crew of one of my family member's.View attachment 767971

No I didn't, but thanks for the fascinating link. We leased Gleaners, not the JDs that big farmers had. The years of the 1950s were a whole different era. Post WWII, the adults were happy just to be alive and their joy was infectious. We lived in the best country ever, where anyone could do anything become anything. Shortcomings were temporary.

Any 12 year old could drive a grain truck until they grew enough to work a combine. Combines had no cabs, no masks, not even an umbrella - you are mostly standing anyway. Safety was your own lookout. Some older farmers wore hats, youngsters almost never.... endess fields of grain in the spring and summer, fruit & produce in the fall. Sleep on cots in a barn; showers with a hose, meals in paper bags. Mind-numbing work. Rain makes it a maintenance day.

Townies vs Harvies. New schools by the dozen. Every possession in a footlocker. Patches on patches. bowl haircuts, sunburns & crooked teeth. Polio. Rarely did a farm working family make enough to buy a house - much less their own farm. Happy just to be alive and to work outside - and so ignorant it makes me weep.

 

[ovrszd]

No I didn't, but thanks for the fascinating link. We leased Gleaners, not the JDs that big farmers had. The years of the 1950s were a whole different era. Post WWII, the adults were happy just to be alive and their joy was infectious. We lived in the best country ever, where anyone could do anything become anything. Shortcomings were temporary.

Any 12 year old could drive a grain truck until they grew enough to work a combine. Combines had no cabs, no masks, not even an umbrella - you are mostly standing anyway. Safety was your own lookout. Some older farmers wore hats, youngsters almost never.... endess fields of grain in the spring and summer, fruit & produce in the fall. Sleep on cots in a barn; showers with a hose, meals in paper bags. Mind-numbing work. Rain makes it a maintenance day.

Townies vs Harvies. New schools by the dozen. Every possession in a footlocker. Patches on patches. bowl haircuts, sunburns & crooked teeth. Polio. Rarely did a farm working family make enough to buy a house - much less their own farm. Happy just to be alive and to work outside - and so ignorant it makes me weep.

I grew up on a farm in the 50s and 60s. I take personal offense in you calling us ignorant. Your ignorance is fully displayed in that comment Sir.

 

[airbiscuit]

JUST % INFO:

https://www.aem.org/AEM/media/docs/Statistics/US-Month-Ag-Report-9-2022.pdf

willy

It looks like 2022 (black) is tracking pretty close to the 5 year average (red)

 

[airbiscuit]

Tell you something thats really increasing on the Ag end is tractor leasing.
Fendt has a gold star lease program where you lease and all expenses are covered in monthly payment. This includes oil changes-everything.
When you are done, you can walk away, or buy it out or finance with their terms.

My current New Holland came from an independent used tractor dealer. He had some sort of arrangement with New Holland dealers that leased tractors to vineyards. There were 700 hours on my tractor when I got it, and he had several. I'm not sure if there was a tax advantage to leasing, or if they had to have 100% reliable tractors during their busy season so they wanted their stable to always be pretty new. In any case it was a nice source of low hour CUTs for him to resell.

 

[scootr]

Ignorance is the lack of knowledge on a given subject. It is not stupidity. It is more akin to a lack of exposure to knowledge.
I hope this helps you ignorant ......