There’s a lot happening in the machinery sector lately. Big-ticket equipment sales driven by higher-than-usual commodity prices, and confidence that those prices are going to stay where they are for a while, are certainly factors. But, there’s also an issue in supply of units.
In the second quarter of 2021, money that had been diverted by the pandemic from travel and other affected activities into the small tractor market has started to return to normal use, according to the Association of Equipment Manufacturers (AEM). However, sustained ag commodity price gains have resulted in farmers continuing a buying spree for larger tractors and harvesters, as reflected in the organization’s monthly Ag Tractor and Combine reports.
Curt Blades, senior vice president of ag services at AEM, published a blog post through AEM’s website, explaining why there’s a decline in inventory at dealerships, compared to one year ago.
“I think everyone knows, if you’ve tried to purchase anything — whether that’s a truck, a tractor, a combine, a pinball machine — whatever it is, everything’s in short supply right now,” says Blades. “We’ve got significant supply chain issues, kind of around the globe. Largely related to the pandemic, but not exclusively related to the pandemic.”
The supply chain is tight, and demand has been really strong in the last months. Semi-conductors are absolutely part of it, says Blades, an issue that’s fueled by the increased demand in consumer electronics since the onset of the pandemic, which made the issue more prominent.
Letting the calendar turn over a few more months will clear the supply chain issues up, says Blades, and the light at the end of the tunnel is the release of pressure — optimism among farmers is strong.
Ag dealerships are able to thrive when there’s demand for new and used equipment, and with that optimism and strong ag economy, there’s a lot of demand for equipment out there, Blades says.
Listen to the full conversation with Blades and RealAg Radio host Shaun Haney, for specific sales numbers, or download for later: