Tractor News What is driving up the demand for tractors?

[4570Man]

Your investments have gained probably well over fifty percent over the past twelve or thirteen years. It’s nonsense to look at a four week period and start fretting and wringing your hands.

Markets go up, and they correct and go down. Look at stock charts over the past fifty years. If you can’t deal with that fact from an emotional standpoint, you should probably stick with safer investments and stay out of the markets.

No risk, no reward, though.

I’ll throw 50 percent of my money away if you set the purchase power back to what it was 13 years ago.

 

[lman]

A high percentage of US grain crops are grown for export. If half the acreage was fallowed, we would still have more than enough for the US food market. I work for USDA and see the statistics.

Then prices would climb through the roof.

 

[Hay Dude]

I’ll throw 50 percent of my money away if you set the purchase power back to what it was 13 years ago.

Not me

 

[Ledgemere Farm]

For me, I believe it's two things. First, while looking at used tractors, I saw them jump $5,000 in price all of a sudden. They have been sitting on the lots for months at the original price. And then they have the new price. I've never seen this before with anything that's used. It happened at multiple dealers, all over my area of East Texas. This sort of encouraged me to act sooner, rather then later. Add to this that manufacturers are struggling to get the parts that they need to make cars and tractors, and with the cost of fuel skyrocketing, I knew that inflation was going to force the price of a tractor up even higher if I waited any longer.

Second reason is that the shortage of products in the grocery stores is becoming alarming. Inflation has actually gotten to the point that I'm no longer buying ribeye steaks for my wife and I to have every weekend. Sadly, I haven't even been able to find them the last 3 times that I was in the grocery store. What used to cost me $20 in steaks is now $35. $15 more wont break me, but with everything else costing more, I'm spending $50 to $80 a more every week in groceries, and it's only going to get worse. I want a bigger tractor so I can get more done on my land, and start producing livestock that I can sell, trade and consume. Having a little bit of land means that I have the opportunity to do this, and buying the bigger tractor means that I can get more done then not having the bigger tractor.

On a side note, here in East Texas, the cost of a home with a few acres has gone crazy. I am not the only person that feels it's important to have a garden and some livestock. I believe that with so many people buying land, you will have a huge increase in people wanting a tractor to work their land.

I just saw that fertilizer has tripled in cost all of a sudden. Fuel has doubled. Raising livestock is going to cost a lot more money. I believe that prices are going to continue to increase on food, and I really have no idea how bad it is going to get, but I believe that it is happening and it would be wise to be as prepared as possible to deal with it.

I believe that the reason so many people are wanting a tractor right now, is exactly why I want another tractor, and why I'm willing to go into debt to get it now.

Yes. Here in ME too. Tractors like a 1980 John Deere 950 4wD with a loader and say, 2500 hours in good shape was $3500-4500 in 2020 is $12000-14000 now. Old IH Farmall Ms that were $1500 are $4500. It’s stupid. People are sure buying up those 1980s diesels snd paying “Deerely” for them.

 

[Torvy]

Grain crop acreage in the US exceeds domestic use and a significant percentage of production is exported. If the export market didn’t exist, far less acres would be planted in the US.

https://crsreports.congress.gov/product/pdf/R/R46760

Ever since the Columbian exchange there have been significant crop exports. It is called trade. This is not news and certainly not significantly better or worse than years prior. Some people will argue we need that for 'balance of trade'.

As mentioned above, reductions would boost prices even higher. Food production is tricky from an economics standpoint. Even if calculations showed it more efficient to import 100% of our food...it would be irresponsible from a national security standpoint as we would be dependent on others just to eat.

See how the world reacts if the US were to cut grain production down to domestic use only. We would be pilloried over how we are starving poor and minority cultures. There would be UN resolutions condemning us for genocide.

 

[ovrszd]

I needed to replace my CUT with a larger tractor so made the deal in August but dealer didn't get the new tractor until December so signed the paperwork after sitting in my new tractor in December. It was still 0% interest in addition to a rebate which is difficult to understand with tractor shortages. My area is poor for real cash crops like soybeans and corn, but we can grow fantastic oats and people buying products made from oats (go Cheerios) have driven up the oats market. I shipped a couple semi loads to General Mills at year end that went for more than double, in fact 2.5 times, what I got the year before. High temperatures plus the drought caused real problems - many oat farmers in my area cut their oats for hay so I came out well. The tractor deal was made after my oats was in the bin and the price was 75% higher than the year before so when I actually sold it for 150% higher, I was glad I had made the tractor deal.

The subsidies following the tariffs on Chinese goods were a real cash cow for a lot of farmers. My oats only got me a small check but others in my state. Farm subsidies went from $4 billion in 2017 to $20 billion in 2020. Cash infusion and low interest rates, lots of people buying. More cash came in 2020 to stimulate the economy - my dealers said lots of their customers came in with cash from their stimulus checks to buy tractors since they weren't spending it on things they normally would have done - vacations, eating out, movies. My JD dealer, normally a 2.5 hour drive, put in a new facility only 30 minutes from me but only for the small equipment because so many customers in my area have their place "up North". Largest tractor they sell from this facility is the 5 series. People can still buy a wooded 40 up here for around $40k, have their hunting land, place for their ATV's, snowmobiles, store their boat. All need tractors. Customers new to tractors are leery of buying used. I was that way 20 years ago, bought a CUT, retired from engineering 6 years later, ended up farming and just keep growing - 6 new tractors since I retired.

The cost of natural gas, which is used to make many fertilizers, has been increasing, especially in continental Europe and the UK. In addition, Hurricane Ida shut down some fertilizer production in the US earlier this year. And power outages caused problems for fertilizer plants in China, prompting the country to start discouraging fertilizer exports to protect its own supply. I'm going to be hurting come spring because oats loves nitrogen but it was -29 degrees this morning - tough to get excited about that now.

Very good post MHarryE!!!!

Waste timber land here is bringing $2,500-$3,000.

Who's that young man in your Avatar???

 

[ovrszd]

Crops are not typically grown "for" export. Crops are exported when the demand in foreign markets is high enough to offset the cost of shipping and import duties. There may be some some farmers who specifically grow to meet the import requirements of some countries (non-GMO or whatever).

Percentage of U.S. Agricultural Products Exported

Graphic showing the percentage of U.S. agricultural production which is exported overseas. All told, more than 20 percent of U.S. agriculture is exported.

www.fas.usda.gov

I guess it also depends on what you consider a high percentage.

Excellent post.

 

[ovrszd]

Yes. Here in ME too. Tractors like a 1980 John Deere 950 4wD with a loader and say, 2500 hours in good shape was $3500-4500 in 2020 is $12000-14000 now. Old IH Farmall Ms that were $1500 are $4500. It’s stupid. People are sure buying up those 1980s diesels snd paying “Deerely” for them.

I paid $8,500 for this 1984 model, 47HP, FWA. What would a new one cost me?

 

[Hay Dude]

Yes. Here in ME too. Tractors like a 1980 John Deere 950 4wD with a loader and say, 2500 hours in good shape was $3500-4500 in 2020 is $12000-14000 now. Old IH Farmall Ms that were $1500 are $4500. It’s stupid. People are sure buying up those 1980s diesels snd paying “Deerely” for them.

People possibly seeing the end of the ICE age and wanting to hoard the simplest engines to repair & maintain? Most new diesels are tough to learn to repair and costly to have repaired.

 

[rScotty]

Not me

and not me either