Between tariffs, rising oil prices, labor shortages and globalizing crop production, agricultural machinery manufacturing is facing persistent headwinds.
What’s the downstream impact for farmers? Declining inventory and presumably higher prices for some equipment.
As raw material costs go up, almost 90% of dealers predict prices could increase by 1% to 6% through the end of this year, according to a report by industry magazine Farm Equipment.
Notably, though, that doesn’t apply to everything. The latest Sandhills Global industry report noted general sideways or downward pressure on auction values for used equipment. The report attributes rising input costs to buyer hesitancy.
After all, higher equipment costs are just one more blow to U.S. farmers fighting to find a profit in the slim margin between production costs and commodity prices.
“I would like to see a ‘white swan’ every now and then, because it seems like everything is a ‘black swan’ these days,” said Iowa farmer April Hemmes. “My nitrogen and fertilizer price was up 30% last year. Now, they’re talking another 30%. That’s becoming hard to take with the high fuel prices, too.”
Manufacturing shifts
Second-quarter earnings reports from machinery manufacturing companies reflect these challenges, with lower year-over-year agricultural equipment sales. The North American large-ag-equipment market is expected to decline by 15% to 20%. Machinery brands, which operate in a global business environment, are slackening output to cut operational costs.
“We’re underproducing versus retail in 2026 by about 4%,” said Jim Nickolas, chief financial officer of CNH Industrial, in a first-quarter earnings call.
Dealer inventory has flattened as a result, amid “historically low industry demand in North America,” according to CNH CEO Gerrit Marx.
Tariffs are having a significant impact, with an expected “full-year cost of $120 million on the ag business,” according to Nickolas, while transportation expenses are up due to the ongoing Iran conflict.
Seeking more favorable markets, major equipment brands, including John Deere and Case IH, shifted some manufacturing to Mexico, while Claas moved production of its Lexion 8000 combine harvester from Omaha, Neb., to Germany.
Latest earnings
Amid these challenges, CNH Industrial reported consolidated net income of about $10 million in the first quarter of 2026, down significantly year over year, with manufacturing fully booked through the second quarter.
Agco Corp., likewise, “delivered healthy first-quarter sales and margin results,” according to CEO Eric Hansotia, profiting $55 million in the first quarter.
John Deere posted a $656 million profit, even though net income fell by 25% year over year. Construction and smaller-scale equipment sales drove revenue.
Looking ahead
For the second half of 2026, experts predict the ag machinery industry will stabilize as farmers who have delayed purchases replace their aging fleets. That’s starting to happen, according to the Association of Equipment Manufacturers latest ag machinery industry report. Combine sales ticked up 3.4% year over year in April, while tractor sales fell by about 1%.
“The April sales results of farm tractor and combine sales show the lingering softness in the equipment market,” said Curt Blades, senior vice president at AEM. “These reflect the lingering challenges and uncertainty in the ag economy. The progress on a U.S. farm bill is encouraging and creates hope for more long-term growth.”
Buyer sentiment will undoubtedly turn upward if those “black swan” events fly away for good — although if the recent past is any indicator, that might not happen anytime soon.
“If fuel prices fall, we’re sure to see a significant rise in [used truck] sales,” said Scott Lubischer, manager at marketplace publication Truck Paper. “Some organizations have been able to delay upgrading their fleets, [but] trucks and trailers will only last so long, and aging inventory will have to be replaced.”
Meanwhile, farmers like Hemmes are continuing to cut costs where they can, waiting out the down cycle if a need is not urgent.
“I’m not going to replace any equipment unless something major happens,” Hemmes said, highlighting plans to “clamp down and only buy what I need, not what I want.”