With grain prices trending lower in recent months, many are expecting the pace of farm equipment sales to slow in 2014.
Steve Koep, vice president of sales for AGCO Corp., says sales may be softer in some categories this year but that certain segments show promise of continuing to do well. He was interviewed during a media event hosted by AGCO prior to the World Ag Expo.
Sales of hay harvesting and handling equipment have been and continue to be strong, in part, due to higher milk prices. The AGCO event was held at Lakeside Dairy, a Kings County, Calif., entity owned by Mike and Manuel Monteiro.
The Monteiros talked about how they struggled with low milk prices and high feed costs not long after they opened Lakeside in 2008. They weathered those thanks to good management and cost-saving strategies such as installation of a solar power array and have now begun to enjoy the fruits of higher dairy prices.
AGCO demonstrated some of its new Hesston harvesting equipment, using models the Monteiros had purchased to improve their own hay handling efficiency and keep their operating costs for the 3,500-cow dairy herd down.
“If you go to the smaller tractor sizes a lot of those are being purchased by homeowners or people who own acreages,” he said. “And, as the economy improves that market we see improving. We’ve seen evidence of that in the last year, and it looks to be continuing.
“Some market segments – I’m standing next to a large square baler – and actually because of the dairy industry’s marked improvement in the last year or two the hay tools business is exceptionally good. You really can’t say that the industry is going to be up or down. I think you have to look at the individual market segments and each segment is impacted by different external forces.”
Some growers forward contracted corn for more than $5 a bushel back when grain prices were on the upswing, and those will have a different outlook on equipment purchases.
“Each farmer’s circumstances will be a little but different right now, but if you look at cash corn prices now, it’s $4.30 or $4.35 a bushel depending on how far away you are from the river,” he noted. “Arguably, it’s going to be a different market this year than it was a year ago.
“Frankly, we have a lot of customers who are looking for efficiency tools, and one of the advantage of new equipment is the efficiencies we build into these machines be it a baler or a tractor. You can talk about fuel economy, the ability to get more work done, the ability to make a bigger or more dense bale of hay; all of those things contribute to the farmers ability to make money, and they’ll prove their worth in a market like we have in 2014.”