An ongoing trade war is expected to have a far-reaching effect on farm equipment, impacting myriad machinery components that could drive up costs on the dealer lot.
That was a common sentiment shared by exhibitors at the recent New York Farm Show, which took place Feb. 20-22 in Syracuse.
“Take common castings, bearings and products like that coming out of Asia, for example,” said Kevin Parr, CEO of RangeLine Group in Webster, N.Y. “China has taken on a lot of the bearing industry. There are some other options that we’ve been working with, vendors like FKL bearings, which are manufactured in Serbia. It’s hard to find a bearing that’s made here in the U.S.”
Optimistic dairy outlook
Some ag segments may be in a better position than others to weather the cost of higher equipment. Dairy profits, for example, are surging thanks to a combination of rising milk prices and significantly lower feed costs.
“I’m hoping milk prices will increase,” said Patrick Keem, a machine sales consultant with Milton CAT, which has 15 stores across the northeast from Pennsylvania to Maine. “Whenever they do, that’s money in the [dairy] farmer’s pocket and more discretionary income, which helps them upgrade equipment. Hopefully, that’ll have a positive effect.
“It would be a silver lining in this difficult time.”
Keem gestures across Milton CAT’s show booth toward a sparkling new 226D3 Skid Steer Loader. He’s noticed an uptick in sales over the last several months. This is an abnormality, he said, because skid-steer sales typically increase nearing the year’s end.
“Farmers may have received some money from the government they have to spend. That could be influencing this,” he said. “I’ve been delivering three machines a week.”
Another positive is more stable equipment inventories, following volatile post-pandemic years. But their price tags are rising alongside inflation. And tariffs could send prices into orbit. Stephen Knoph, who was representing Monroe Tractor at the New York Farm Show, is crossing his fingers.
“I hope [inventory] is flatlining now. I don’t know that, but I hope that it’s leveling out,” Knoph said. “Interest rates will be a big factor for us. Whether it be from the OEMs or secondary lenders, interest will become a factor.”
Even so, Knoph is optimistic about the coming year. He believes milk supply and demand will remain strong.
“At least for the Finger Lakes area, where I’m knowledgeable about, I think agriculture is going to have another good year. The dairy industry looks very, very promising,” he said. “Our cash crops are maybe going to be a little bit flat. But, overall, I think we’re just going to see a good $20 to $25 per hundredweight.”
Row crop equipment sales disappoint
But while strong milk prices are a reason for optimism, the outlook for row crops isn’t as cheery. Parr said he’s noticed a sales pullback in machines like planters due to flat commodity prices.
“It’s really hard to read,” Parr said. “I am definitely seeing a lot of interest in fixing what folks own now. They’re also looking at moving to higher-efficiency equipment. It’s a bit of a balance.”
While laying out working capital to upgrade equipment during an economic lull might at first glance seem risky, sometimes it’s sound advice. Machines that increase operational efficiency eventually pay for themselves.
As equipment gets larger and more expensive, farmers could benefit from the right long-term machinery investments, depending on the size of operation. It might be tempting to beat a financial retreat right now, and that might be the right call. But for some, future planning and smart investments could be a benefit in the long run.
Efficiency savings
“The further out [farmers] forecast and the earlier they determine their needs, the greater their rate of success,” Knoph said.
This might mean purchasing upgrades like high-quality closing wheels, better row cleaners and modern fertilizer applicators.
“Fertilizer spreaders can help farmers improve efficiencies on the farm because fertilizer costs are high,” he said. “We can make sure that we’re putting down the rates they want, where they want it. Section control ensures we don’t overspread.”
In an uncertain ag environment, enhancing efficiency is one thing farmers can control.
For example, Parr recently worked with a farmer with 2,100 acres in upstate New York, who paid off a new German-made Amazone ZA-TS 4200 dry fertilizer applicator in 18 months with efficiency savings.
“Before, he was paying an applicator to come in and put the fertilizer down for him,” he said. “With war and other things that are going on, especially in Ukraine and Russia where a lot of fertilizer products come from, there’s uncertainty. Then there are the tariffs. We’re just not sure.”
