AKRON—The farm tire industry experienced a see-saw effect in 2009: A fairly robust first-half marred by slower sales later in the year.
Whether the market will improve or continue on a downward trend in 2010 is unclear.
In its most recent farm income and costs report, the U.S. Department of Agriculture estimated net farm income for 2009 fell 34.5 percent, or $30 billion, from the near-record level of $87.1 billion in 2008. A sharp decrease in crop prices, including corn and soybeans, sparked the decline. However, both are expected to reach record or near-record production levels in 2010 despite shrinking demand.
Livestock commodities also dropped as a result of declining exports and a lag in production adjustments for changing market conditions.
Although farm expenses fell, net farm income in 2009 was $6.5 billion less than the 10-year average of $63.6 billion, the USDA said. Yet that revenue still is the eighth-largest amount generated in the history of U.S. farming.
Ag business segments like hobbyists, small-time farmers and the forestry industry took big hits last year, according to Ken Allen, president of Bridgestone Americas' agricultural tire division, but overall it was a relatively successful year for the farming industry and its tire suppliers.
“In net, it wasn't as tough a year as we perhaps thought it was going to be,” he said. “On a rolling 10-year basis we saw very good pricing on the agriculture commodities, trailing record highs.”
Like other tire makers, Bridgestone Americas had to reduce farm tire production in response to slower sales.
“We've adjusted some of our production,” Allen said. “We've been fortunate that we've been able to accommodate that without any permanent layoffs, which is something we're very proud of.”
Maurice Taylor Jr., Titan International Inc. chairman and CEO, is upbeat about 2010, after seeing his firm's agriculture-related tire and wheel sales fall 16 percent in the first nine months of 2009. Speaking to analysts, he said most of Titan's customers will have depleted their inventories and need new tires.
Tire manufacturers and dealers alike are hesitant to predict what 2010 will hold for the farming industry, with most citing pricing on crops as the biggest determining factor.
“It depends a little on what they do with the price of corn,” said Gary Henry, manager for Bruna Implement Co., a farm equipment dealership in Seneca, Kan. “If corn doesn't really come up, yeah that's going to slow it down.”
Henry said sales at the store have actually been up in 2009 and that farmers “have been buying tractors and combines pretty readily.” As for his expectations in the coming year, Henry said he feels sales may finally start to slow.
“To really be truthful, my gut feeling is we're probably going to see a little resistance and there's probably going to be a downward trend,” he said.