During a presentation at the 2023 Associated Equipment Distributors Summit held January 10-12, Pinion Principal Marc Johnson forecast 4-6% growth in large ag equipment sales for 2023. Johnson said while the forecast may seem disappointing, it comes after 2 years of notable growth.
“We’re still guessing we’re going to be somewhere in that 4-6% growth range for our dealers, which sounds terrible when you grew 45% last year, and you grew 30-35% the year before that. But remember, that’s 4-5% on top of the 30%, which is on top of the 45%. So, we’re not going backward at least, that’s good. But it’s not as good as what we’d like to see. Now, that looks like it will probably get a little worse as the year goes through. Most of that pullback would be in the back half of the year, if there’s any at all.”
Johnson noted Midwest dealers would be more likely to see 5% growth and could possibly see up to 6% in 2023.
Among the many factors Johnson looks at when making these forecasts is the Ag Economy Barometer, specifically the percentage of growers considering it a bad time to make large investments, including buying equipment. In the latest update to the barometer, the percentage of farmers considering the next 12 months in the ag sector to be financially bad was 46%. Johnson thinks part of that could be farmers’ perception of losing bargaining power with dealers. “If I go to buy something from you guys [dealers] anyway, I’ve lost all my bargaining power. Because I’m going to go in and say, ‘I want this tractor,’ and, you’re going to say, ‘I’ve got one, and nobody else has got it. This is my price, and I’m not negotiating.’ And that’s what they ran into. So that’s part of what we see as the bad times.”
EDITOR’S TAKE:
If supplies normalize at all in 2023 for large ag equipment, our guess is the percentage increase could be double of Marc Johnson’s estimate. Looking at the Ag Barometer is only one set of perceptions that reflect the mood of farmers/ranchers on a given day. However, if we examine the actual sales reports from the Association of Equipment Manufacturers, it was pushing double digits for the last several months of 2022 for larger tractors and combines. Farmers and ranchers have money. They have excellent credit and they like new equipment, especially in lieu of paying taxes to Uncle Sam. Good news – they also like new trucks. Surveys show they plan to purchase a lot of them in 2023. We’ll keep reporting on equipment sales and we hope you will keep pursuing sales to farmers and ranchers in 2023!
