Today FCC Ag Economics released our report Projecting 2016-17 Farm Receipts and Equipment Sales.
We project a mixed outlook for equipment sales in 2016, with stronger sales in 2017. Total farm equipment sales are projected to fall 7.1% in 2016 before increasing 7.0% in 2017. Similarly, combine sales are projected to fall 5.2% in 2016 before increasing 8.9% in 2017. However, 4WD tractor sales could increase by as much as 24.5% in 2016, and again 2.4% in 2017.
This outlook comes following weaker sales in 2015, when sales declined 13.8% from 2014. 2014 was a near record year, only surpassed in volume by sales in 2008. So 2015 sales appeared low, but were in line with the 10-year average. Expectations of weaker commodity prices and a weaker Canadian dollar that raised the price of equipment also contributed to depress 2015 sales.
Projections for farm equipment sales are driven by projections for farm cash receipts in both the crop and livestock sectors. Farm cash receipts are projected to remain stable in 2016 with a small increase of 0.1%, to be followed with an increase of 3.3% in 2017. But despite what should be strengthening farm cash receipts, total farm equipment sales are projected down in 2016 given past upgrades and purchasing decisions of producers.
Last year, we showed how total farm equipment and combine sales are leading indicators of farm health. The projected declines in total farm equipment and combine sales in 2016 indicate trends in agricultural markets can show some bumpiness ahead, but increased sales in 2017 suggest optimism in agriculture over the long term.
Madeline Turland, FCC Ag Economics Student Intern