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Archive for Sunday, March 30, 2003

Weather conditions, poor grain prices slow farm equipment sales

March 30, 2003

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— Sales of farm equipment are drying up as the effects of a drought that stretched across the nation's farm belt last summer combine with an uncertain economy.

"I'm extremely concerned. I'm hoping and praying we have a good spring and a good crop year," said Dave Kahler, executive vice president of the Ohio-Michigan Equipment Dealers Assn.

Dealers across the nation's heartland are feeling the pinch. Sales of new, expensive farm equipment have come to a standstill in some areas, and new, big-ticket equipment is collecting dust in showrooms.

"A lot of it is the price of the tractors," said Tom Less, owner of Quad County Implement in Blairstown, Iowa, noting that a new tractor can cost as much as $100,000. "The darned things are so high-priced."

Last year, sales of big tractors and combines dropped by 20 percent, according to the Milwaukee-based Association of Equipment Manufacturers, which represents 700 farm and construction equipment makers across the country.

Tractor sales for February were down by 3 percent when compared with last year. Combine sales dropped by 20 percent, according to the equipment manufacturers association.

In the United States last year, there were 5,000 combines sold compared with 6,400 in 2001, according to the equipment association.

"That's a little bit more than one per dealer," said Mike Kraemer, spokesman of the Fenton, Mo.-based North American Equipment Dealers Assn., which represents 4,500 farm, industrial and outdoor power equipment sellers in the United States and Canada. "This industry has had a tough four or five years."

Besides the weather and the economy, the consolidation of farms also has been a factor.

"If you had 10 farms owned by 10 people, they had 10 tractors and 10 combines," Kraemer said. "One person now owns that, and a 10,000 acre farm doesn't need 10 tractors."

Kahler said that in Ohio and Michigan, eight out of 10 farm equipment and lawn and garden sellers say they're having a down year.

Kahler was among those hit hard by the drought a year ago.

His corn crop dropped from an average of 214 bushels per acre three years ago to 68 last year.

"That doesn't buy a lot of tractors and combines," he said. "Thank goodness for the crop insurance, but that still doesn't buy the big high-priced equipment."

Dean Van Vorhis, whose family has been in the farm equipment business for 40 years in northwest Ohio, said used tractors and combines are selling much better than new machines. A new combine runs about $160,000, compared to a used one that can cost between $50,000 and $70,000.

Van Vorhis said most of his customers are buying only because they need to replace their worn tractors -- not because they are trying to upgrade to the latest equipment.

Jeff Creeger has been farming in northwest Ohio since he got out of high school 23 years ago. Even though his corn and soybeans took a hit last year, he just signed a lease for a tractor with an agreement to buy it next year.

"To be in this business you have to be optimistic," he said. "You can't just jump ship after one year."

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