Farmers in the U.S. have been struggling the past few years with low commodity prices and this year may be no different, but they and their equipment suppliers are banking on a slight upturn.
The American Farm Bureau Federation expects the same relatively flat farm economy this year that the industry has experienced over the last few years, with flat prices throughout 2018.
"It is a situation where we're looking at more of the same. Prices have been in this relatively flat range for quite a while," John Newton, AFBF market intelligence director, said in an AFBF report. "Farmers are burning down equity. They've been doing that for a number of years."
In 2018, early reports are speculating the gap between production and consumption to narrow slightly.
This year the farmers and the OE manufacturers that supply them are positive and hopeful, according to David Graden, operational marketing manager, agriculture, for Michelin North America Inc.
"OE manufacturers speculate positive growth throughout 2018, and we expect ag tire sales to OE manufacturers would mirror this," he said.
Net farm income was expected to be stable in 2017, compared with 2016, after three consecutive years of farm sector decline, according to the U.S. Department of Agriculture.
"Overall, the 2017 farm industry faired OK. Early in 2017, some expected the average farm income to decline by about 8 percent. However, the end of 2017 showed an uptick of about 3 percent in North America," Graden said.
He added that last year, many areas were suffering from drought while others saw an abundance of rain, and grain production outgrew consumption, which negatively impacted grain prices and farm income.
"Farmers still invested in their businesses in 2017. However, they were more frugal," he said.
The Association of Equipment Manufacturers reported increased sales of new tractors and combines in 2017.
"When we look at 2017, U.S. retail sales, especially from mid-year on, the bright spot continued to be the small-tractor sales under 40 horsepower with consistently positive numbers, while tractors 40- to 100-hp have essentially been flat," Curt Blades, AEM senior vice president for ag services, said in a report.
Sales of 100-plus hp tractors fell about 8 percent in 2017 from 2016, according to the AEM.
"For the larger ag tractor sales (100-plus hp two-wheel-drive), we saw some real softening at the beginning of the year but some sizable reversals to end at a negative 8 percent, and 4WD tractors and combines ended on a positive note with modest gains," Blades said.
Four-wheel-drive tractor sales in 2017 increased nearly 5 percent over 2016 sales.