Today’s ag economy challenges don’t rival the 1980s Farm Crisis, but it’s trending in that direction. Farmers tending financially fragile crops like cotton, which require expensive “single function” machinery like cotton pickers, are particularly vulnerable, according to Texas ag consultant Pete Weisenberger.
“We get fat, happy and dumb. We get complacent. ‘Oh man, things are good. Happy days are here again. Cotton will never go back down. Soybeans won’t go down,’” he said. “Everybody’s in some deep stress.”
Given the margins, farmers aren’t buying equipment. Instead, they’re pushing older equipment’s lifespan through upgrades or doubling down on repairs. More expensive new and newer machinery is collecting dust on some dealer lots.
Today’s sluggish ag economy follows several post-pandemic years when farm profits rocketed to new heights. Machinery manufacturers ramped up production quickly to compensate. When high interest rates, tariffs and stagnant commodity prices sunk profit, inventory quickly piled up dealer lots.
“There’s a glut of it. Whether you’re an equipment supplier or a farmer producing mountains and mountains of corn and other crops, we’re the victim of our own success,” Weisenberger said.
That could change if pushing equipment to its limit becomes untenable. Despite low profits, some might be forced to upgrade aging equipment — injecting new inventory into the marketplace.
“We haven’t seen much replacement over the last couple years,” said Josh Beal, director of investor relations at Deere & Co. “You have some folks that do need to look to replace despite what we’re seeing with ag fundamentals.”
Chain reaction
Newly available used equipment entering the marketplace could “free up the trade ladder,” Beal said, describing a domino effect that begins when one farmer sells their used tractor to a dealer, which in turn trades it for another grower’s machine and so on. It’s not just dealers that should see an uptick in sales if this happens. Inventory at auction, which is also limited right now, is showing signs of increasing availability.
“Dealers are hesitant to say that market conditions have improved,” said Ryan Dolezal, TractorHouse manager, about Sandhills Global’s latest machinery market report. “But increased retail sales and a slight uptick in auction values are a bright spot.”
At least for now, the number of used high-horsepower tractors available is following a downward trend that’s persisted for the last nine months. Concurrently, prices are somewhat decreasing. Used sprayers and planters are following a similar pattern, while combines and compact tractors are getting a little more expensive as inventory declines.
In the new machinery marketplace, February’s industry report by the Association of Equipment Manufacturers (AEM) documents a 12% decline in tractor sales compared to the same month last year. Sales of lower-horsepower tractors dropped the most.
U.S. combine sales tell a different story. While they declined 12% in February, year-to-date sales increased by more than 15%. Analysts chalk this up to steady demand for optimal harvesting efficiency achieved through technology.
Bottoming out
“Farmers remain focused on managing input costs while maximizing productivity,” said Curt Blades, senior vice president of industry sectors and product leadership at AEM. “While equipment purchases tend to follow broader farm income cycles, the long-term outlook for modernizing fleets and adopting advanced technologies remains strong.”
In combination, this demand for technology coupled with a change in buyer behavior due to aging fleets could hint at an industry rebound. Machinery brands like John Deere have signaled that might be the case. This year might plumb the bottom of this current downturn in the ag economy, with recovery beginning in 2027.
“We do feel like things are more stable, certainly than where we were end of last summer into the fall. We’ve seen China come back to the market. We’ve seen some stability in grain prices,” Beal said.
For savvy farmers who’ve delayed equipment purchases, loosening inventory could present buying opportunities in the short term, while others might benefit more from waiting until next year’s anticipated upturn. Either way, as more machines become available, deals can be found by those with enough liquidity to buy quickly.
“When times get tough, prices start coming down. There will be some deals to be found,” Weisenberger said. “Capitalism is always predictable. Some people lose; somebody is going to win. So if you’re in a position to, as they say, ‘get the dry powder,’ you can capitalize and pick up some deals.”