Dive Brief:
- U.S. sales of tractors and combines continued to decline in May as farm equipment manufacturers faced economic headwinds related to tariffs and rising input costs.
- The total number of two-wheel- and four-wheel-drive tractors sold during the month declined 11.9% from last year to 21,192, according to recent U.S. data from the Association of Equipment Manufacturers. That marked a difference of 2,864 units.
- Meanwhile, markets in Canada are experiencing a turnaround as the country distributes payments to farmers who adopt sustainable practices. Regional sales up 35.7% year-to-date for four-wheel-drive tractors.
Dive Insight:
U.S. tractor manufacturers have struggled with sales in recent years.
Deere & Co., the world’s largest farm equipment maker, reported a 30% year-over-year drop in net income to $7.1 billion in fiscal year 2024, due to market challenges as farmer incomes shrank.
In response, Deere and competitors have slowed production to align with weaker demand, slashing factory jobs and reducing hours of operation. As tariffs inject more uncertainty and volatility into the market, Deere Chairman and CEO John May said in an earnings call last month that the company is performing better than expected and is hopeful U.S. sales will begin to rebound this year after a sluggish start.
From January to May, U.S. sales were down 12.8% over last year to 80,332 tractors, according to the AEM. Meanwhile, 957 fewer combines were sold in the period, a decline of 43.3% over last year.
“This continued slump of U.S. tractor and combine sales reflects broader challenges in the ag economy,” Curt Blades, senior vice president of the AEM, said in a statement. “High interest rates, global trade uncertainty and increased input prices are causing farmers to delay major equipment purchases.”
As for markets in Canada, a rebound is already happening. Combine sales, for example, were up 15.7% in May over last year. Additionally, two-wheel- and four-wheel-drive tractors are slightly higher year-to-date.
Earlier this year, Canada’s government announced $35.3 million in payments to farmers who adopt sustainable farming practices, including efforts to reduce herbicide use and improve soil management. Some of the newer tractors on the market have digital monitoring systems to help farmers adopt more sustainable, cost-effective practices.
“We’re encouraged by the strong performance in the Canadian market and remain hopeful that overall conditions will improve as the planting season progresses,” May added.
