The Baltimore container ship accident will likely put a dent in the flow of new farm equipment, supplies, and parts for ag machinery, as well as for the auto market into the U.S., but the extent of the loss is unknown.
“The Baltimore port certainly impacted the farm equipment market and the auto market. It’s such an important port, and it's a little too early to tell what that’s actually going to mean,” said Curt Blades, senior vice president at the Association of Equipment Manufacturers (AEM), based in Iowa.
According to the American Farm Bureau Federation, the port has physically cut off major coal, container, and automobile terminals at the Port of Baltimore from the outside world. In 2021, the port’s terminals processed more than 37 million tons of combined import and export product.
“We will do everything we can to ensure there is minimal disruption of new equipment, parts, and supplies during the planting season,” Blades said. “We demonstrated we could do this during the pandemic and now we can do it again, given the timeliness of the ag equipment market and the timeliness of planting season.”
Blades pointed out that the good news is AEM members have solved some of those early problems with the supply chain that they had been dealing with since the pandemic.
“I think dealers are in a lot better shape now than when we were in 2020 with parts availability and other supplies,” Blades said. “It seems like we have crossed the major threshold of where we were having troubles with the supply chain, and then some of those challenges have sort of leveled themselves up, which is a good thing.”
Dealerships and retail suppliers have stocked up to more appropriate levels, so many of the ag retail outlets have already prepared for the 2024 planting season, he said.
The AEM Ag Tractor and Combine Report is provided monthly from AEM member companies through proprietary statistical reporting programs for monthly retail sales of ag equipment.
Data from AEM shows unit sales of 100-plus horsepower tractors increased slightly in February, and February is not known as a good month for selling farm machines. The month recorded an increase of 2.8 percent compared to February 2023.
COVID-19 was “surprisingly good” for selling small tractors, tractors under 40 horsepower.
“This year, we see the softness in small tractors, tractors under 40 horsepower. That softness is really coming off of some really remarkable highs that we had during COVID, and that demand has just been satisfied,” he said. “We don’t really see four-wheel-drive tractors and combines selling much in February, so the fact that 100-plus horsepower tractors are up is good.”
The low in combine and 4-wheel-drive tractors in February was expected and AEM members are keeping an eye out for how the year progresses.
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According to Blades, the ag market has been strong with sales for the last two years.
“There’s a replacement market, which always kind of keeps the market buoying along, but there also has been some new demand that has come about as a result of some increased farm income, which we have seen, including some new technology on the new machines,” Blades said. “Farmers wanted to take advantage of that new technology, so they bought some new pieces of equipment.”
That equipment with new technologies in it includes the new combines – there are a slew of new combines on the market – and new tractors.
“Some of that technology includes new seeding technology. All of it is connected with precision agriculture, which allows farmers to be more efficient and really do more with less,” he said. “We’re seeing some real demand-driven sales that are coming as a result of that new technology.”
Year-to-date data in 2024, however, reflects sales that are below 2023 in total units of ag tractors and combines. Sales in the U.S. are lower across all categories. Two-wheel-drive tractors are down 14.4 percent, four-wheel-drive tractors are down 7.2 percent, and combines are down 18.9 percent.
“We’re kind of down for the year, but up just a little bit for the month of February. It’s kind of an all-around softness in the ag equipment market for the February report,” he said. “The overarching story here, however, is that we know there are some storm clouds in the ag market. We know where commodity prices are; we know where our commitments are, and we know where projected farm income is. We’re coming off of several strong years of equipment sales, and we’re starting to see that level out just a little bit.”
While combine sales have been “really strong” for the last year and a half, those sales are leveling off a little bit, as well, maybe just indicating that the demand has been met.
With commodity markets at the beginning of April showing corn is expected to be up, there is almost a direct relationship to the sale of tractors and the price of corn.
“If that holds, then who knows? Maybe we’ll see some increased demand. If commodity markets are up, farm income goes up and equipment sales go up,” he said.
While the used farm equipment market is not tracked by AEM, often the two markets are interrelated.
“I will say that you need to sell used equipment oftentimes to sell new equipment, and that combined with interest rates and with optimistic outlooks of the farm economy – these are all factors in the sale of new equipment,” Blades said.
Blades said now that planting season is nearly here, AEM hopes farmers and others utilizing the roads stay safe.
“We’re approaching planting season, and we just ask everybody to be a little careful out there when sharing the road,” he concluded.