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Farm Equipment Markets See Modest Growth in North America
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The year has challenged experts who predicted a weak market for farm machine manufacturers.

Manufacturers of farm equipment--and their suppliers--faced mixed messages when predicting market performance this year. When farmers have cash, they may invest in new equipment, so last year's higher grain prices fed manufacturers' recovery from the slowness of 2009. Farm equipment sales rose 5 percent in 2010, and have surpassed predictions in 2011 too, although they haven't sustained the apparent boom seen last March in Creighton University's Mainstreet Index.

The type of equipment farmers are purchasing has changed since 2009, too. North American farmers are buying more versatile utility tractors, special-use items such as GPS-equipped machinery and replacement equipment.

At the same time, global growth in farm equipment sales is robust. Farming in China, India, Brazil, Russia, Indonesia and Thailand is increasingly mechanized, and the greater productivity is giving farmers more money to invest in operations. Urbanization in these countries and the related shrinking farm labor pool are producing even greater need for capital equipment.

Of course, farm equipment manufacturers in China, Brazil, and India are big players in these markets. China is now the largest global supplier. While their reputation for quality is not as high as that of their North American competitors, prices are attractive. North American companies are forming joint ventures with some of China's farm equipment manufacturing companies to hold a place in the global market.

What does that mean for the North American farm equipment supply chain? Competition from Chinese suppliers is growing. The North American market is flat. On the plus side, as companies like Deere and AGCO invest in foreign operations, finding entry into their supply chains may lead to opportunity. And as more foreign farm equipment sells in North America, demand for replacement parts may provide niche opportunities for smaller manufacturers.

The article you read was prepared for general information purposes by McMurry. These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.These articles may provide reference to Internet sites as a convenience to our readers. While PNC endeavors to provide resources that are reputable and safe, we cannot be held responsible for the information, products, or services obtained on such sites and will not be liable for any damages arising from your access to such sites. The content, accuracy, opinions expressed, and links provided by these resources are not investigated, verified, monitored or endorsed by PNC.