2012 U.S. Farm Equipment Forecast

by: Yengsts Associates     URL: www.yengstsassociates.com

9/15/2011

According to Yengst Associates and as indicated in the table below, agricultural equipment sales are experiencing a small decline in sales in 2011 versus the levels achieved in 2010.

Tractor sales are expected to be down (all tractors sizes combined) by approximately 2 percent.

Big tractor sales (machines rated over 100 hp) are still going to be positive during 2011; small and compact tractor sales are where the decline is being felt the most. In 2012, tractor sales are expected to decline about 3 percent for all size categories from the 2011 results, although most of the decline will again be seen in small and compact tractors.

For harvesting combines, sales are slipping in 2011 for the first time since 2006 and likely going to be off about 6–7 percent from 2010 sales levels. An additional drop in sales of 8 percent is expected in 2012, as shown above.

U.S. Agricultural Economy

Agriculture is one of the few areas of the U.S. economy that is thriving. Net cash income hit new record of $92.3 billion in 2010, a 24 percent increase year over year. Farm cash receipts reached $314.4 billion and net farm income reached $79.1 billion, a nine and 28 percent respective increase over 2009, but did not exceed the record levels of 2008. All three measures of farm sector earnings are forecast to increase more than 20 percent each in 2011. Both net farm income and net cash income are forecast to exceed $100 billion in 2011. The increases are largely due to the increase in exported agricultural goods and high farm commodity prices. Crop receipts are to increase approximately $34 billion, more than 19 percent, and livestock receipts increase $22.4 billion, approximately 16 percent, in 2011.

The Department of Agriculture expects agricultural exports in fiscal year ended September 30, 2011 to reach $126.5 billion, a 16 percent increase over the prior year, and surpass the 2008 record of $114.9 billion. Demand for U.S. exports has increased over the last several years and crops in high demand include corn, soybeans and wheat. Canada is U.S.’s largest export market. China is expected to become the second largest importer of U.S. agricultural products behind Canada. Mexico, Japan, the E.U. and South Korea are also major importers of U.S. agricultural products.

Net farm income, income from production of current year whether or not sold in the calendar year, grew 28 percent in 2010 to $79.1 billion and is forecast to increase 31 percent, to $103.6 billion, in 2011. This increase is largely due to the increase in the value of crop production. Average farm household income is expected to increase four percent in 2011 to $86,352. Increases in crop prices and exports are driving the 2011 rebound.

Net cash income increased 24 percent in 2010 to $92.3 billion and is forecast to increase 24.4 percent in 2011 to $114.8 billion. Cash receipts increased nine percent in 2010 to $314.4 billion in 2010 largely due to higher livestock receipts. It is forecast to increase 18 percent in 2011 to $370.4 billion. The higher increase is in dairy, the area that took the hardest hit in 2009. Government payments increased one percent in 2010 to $12.4 billion and are forecast to decline approximately 18 percent in 2011 to $10.2 billion.